Sunday, March 05, 2006

Sharks cost

According to this morning's Journal-Sentinel, the parties in the litigation brought by Miller Park against Mitsubishi for negligence in the construction of the stadium's roof spent 37 million dollars on legal and expert fees.

Lawyers say the fees were reasonable given "what went on" and "what was at stake." The stadium district's claim was for 50 million. Mitsubishi counterclaimed for 78 million, although that was substantially reduced by the time the case was ready for trial.

Was this outrageous? Kind of looks that way. I have been involved in cases where more money was involved and where the nonfinancial stakes were considerably higher.
I understand the desire to be thorough but the amount of work that needs to be done does not increase proportionately with what the client can afford or is willing to pay. This is a tsunami of fees. I can't remember ever getting into the same continent as this. According to audits of the bills, experts invoiced for as much as 1.7 million without even describing the work that was done. That is unheard of.

This doesn't imply, by the way, that anyone involved was dishonest or cavalier about the clients' money. In the litigation business, sins of omission are much more feared than sins of commission. No one wants to get burned by something that they didn't do. It takes a lawyer who not only has great command of the issues, but great confidence, to know that something need not be done.

There is also a subtle effect exerted by the client's circumstances. The file will "bear" more fees when a lot of money is at stake.

But what happened here is we resolved a dispute in which the lawyers and consultants made almost as much as the claimant and in which the transactional costs associated with resolving the dispute were anywhere from a quarter to a half of what was really at stake. That has always struck me as wildly inefficient.


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