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: Legal Blog Watch

Is Marking Up Contract Lawyer Costs Worse When Plaintiffs Lawyers Do It?

By Carolyn Elefant

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The practice of law firms marking up the cost of contract lawyers has been around for ages. Nearly two years ago, I posted that bar rules allowing firms to mark up the cost of U.S.-based contract lawyers without disclosure gave firms incentive to treat contract lawyers as profit centers, and discouraged them from offshoring document review, because in that situation firms would be required to disclose their markup to clients. Notwithstanding the general recognition that contract lawyers provided a profit center for law firms, I rarely saw any criticism of the practice. To the contrary, use of contract lawyers was touted as a cost-saving tool for clients, since even with the hefty markups, firms claimed that contract lawyers still cost less than full-fledged associates. But now that plaintiffs firms are using contract lawyers too, someone is voicing opposition to the practice. In this week's issue of Forbes, Cardozo Law Professor Lester Brickman asserts that plaintiffs firms' use of contract lawyers and markup of their fees has "turned [shareholder] suits into ATM machines." Brickman explains that plaintiffs firms use contract lawyers to tag, code and sort documents, tags that could be accomplished more affordably and efficiently through use of technology and...

Full post as published by Legal Blog Watch on July 24, 2009 (boomark / email).