Risk Update

Financial Risk — Inflated Billing Accusation & Engagement Letter Interpretations

Suit alleges BigLaw firm used LexisNexis product to inflate bills for flat-fee legal research” —

  • “A corporate litigant disputing the legal bill charged by Squire Patton Boggs has filed a third-party complaint alleging that LexisNexis helped the law firm inflate its fees.”
  • “The suit alleges that LexisNexis charged Squire Patton Boggs a flat rate, but the law firm billed more than $100,000 for what appeared to be separate searches with the help of a LexisNexis product. The product, called PowerInvoice, can be used to generate customized reports. The product was used ‘to construct sham bills,’ according to the suit, filed in Florida’s 15th Judicial Circuit.”
  • “‘We believe LexisNexis aided and abetted Squire in a breach of fiduciary duty and a fraud against my client,’ said Michael Smith, a lawyer for the Armor Screen Corp., in an interview with Law.com. ‘We think the PowerInvoice product is a product created and designed in a way that enabled that kind of fraud.'”
  • “A LexisNexis representative told Law.com that it does not comment on pending litigation. Squire Patton Boggs told Law.com in a statement that its billing for legal research complied with ABA rules.”

Law.com adds commentary from cost recovery consultant Rob Mattern:

  • “Mattern said most of his law firm clients spell out their legal research billing terms in their engagement letters. The Squire letter, however, allowed the firm to change clients’ rates from the bulk agreement prices it received from its vendors.”
  • “‘The only fair reading of it is they’re asserting that they are negotiating these arrangements to give the client a better rate,’ Smith said. ‘Instead what internal memoranda show is they used the PowerInvoice product and other aspects of the arrangement to generate documents that look like the actual bills charged from Lexis—the amount charged from Lexis to Squire—when there’s no relationship to the amount charged.'”