Month: May 2013

Further proof of the toothlessness of corporate billing policies.

We are continuing to analyze Wells Fargo’s counsel’s bills. Aside from identical billing entries for both identical or differing amounts, it seems that the firm may have figured out a way to recoup its investment, then waste it, on electronic discovery aids.

There are a number of paired entries where one legal assistant bills a .10 or .20 to tell another legal assistant to input documents into a Summation database. Summation, like the program our firm uses, Caselogistix, is a database that enables the law firm to categorize and search discovery documents, among other things. Then the second paralegal bills for importing the documents into the database and categorizing them.

The irony? I could see no laptop computer on the other side of the table. Summation has “briefcasing” abilities that allows the entire database, including the word index, to be saved on a laptop and used at trial. Caselogistix has the same functionality and I had my client’s entire database on my laptop. The other side, however, had a collection of banker’s boxes and no laptop in use that I could see. Whenever there was a document issue, I could see the senior associate leafing through the exhibit notebooks (one 4 incher and one 3 incher) trying to find a document to address the question. Again, no laptop.

Clients should not be paying for such inefficiency. I had Wells Fargo’s entire notebook in electronic form on my laptop. It was in a pdf file and I could word search it. I had better searching capabilities of Wells Fargo’s exhibit book than Wells Fargo did.

Wake up, corporate America. If you publish a billing policy, enforce it. I represent corporations with billing policies. I follow them. I have clients with e-billing and UTBMS codes. Most billing policies I’ve seen, other than one client that actually was part of FedEx, prohibit the routine use of overnight delivery services. But the fee affidavit I referred to was sent to me by email around 3:30 on Friday afternoon and then a hard copy was sent “Priority Overnight” for delivery Monday morning. I received it before 9:00 a.m. For what reason? Wells Fargo shouldn’t pay for this waste and neither should my client as the recipient of the fee application.

Dear reader (readers?), please instruct your staff about the judicious use of overnight delivery. If I am sent an email, what requirement is there to send a Priority Overnight FedEx, unless you have family members whose incomes depend on the success of FedEx?

I have represented very large corporations, and still do. But there are people within some corporations who seem to feel that a large law firm, with all of its inefficiencies, is the only way to get effective representation. Or the in-house decision-maker feels a large law firm provides “cover.” But when they do this, and pay the bills that contain obvious wastes of resources, how will a law firm ever become more efficient? Paying the bills of a firm that uses Summation in the office but not at trial, but instead sends a high-priced associate to manage the paper, rewards inefficiency. Most firms I represent will not allow two lawyers to attend a hearing without prior permission. Was there permission?

This was a $200,000 collection case. My firm has two lawyers and a paralegal. Wells Fargo is an enormous corporation. Did they think I was going to outgun them with my “vast” resources from the world HQ in Jupiter, FL? At one point they had five people working on this file. That’s two more people than I have in my firm. The staffing on this file was ridiculous as was the billing.

That’s the incredulous view of one lawyer from Jupiter, Florida. I’m Marc Dobin and I billed no one for this blog entry.

Florida Supreme Court rules – Statute of Limitations Applies to Securities Arbitration

The application of a limitations period in arbitration has always been a source of controversy. FINRA has its famous “six year rule.” But other than that, there didn’t seem to be much order when it came to applying a time limitation. Some arbitrators followed Florida or Federal law, some didn’t. It was the wild west.

Now there is order. The Florida Supreme Court has ruled that Florida law on time limitations applies to arbitration. In a unanimous ruling, the Court held that arbitration is a “civil action” for the purposes of Florida law. Therefore, the justices ruled, the Florida statutes of limitation apply.

What does this mean? First, it means that the time limitation for certain actions may be time-barred. Second, it means that the FINRA “six year rule” may not be the only deadline in play.

And remember the lawyers and regulators who wanted arbitration to be optional? Now arbitration will have the same time limitations as court.

That the view of one lawyer from Jupiter, Palm Beach County, Florida. I’m Marc Dobin.

Corporate Billing Policies – Proof They are a Joke.

Within the last 20 years, corporate billing policies have become much more prevalent. This was a result, in my opinion, of lawyers and law firms becoming pigs and billing for ridiculous things and outrageous amounts. Most law firms, chastened by this increased scrutiny, tightened up their billing practices and changed the way they do business. Most clients did so as well.

Well, I found an exception. As I mentioned, I just finished trying a case against Wells Fargo Advisors. In connection with that case, which was tried in less than two days, I submitted a bill for the work my firm did, including costs, to the arbitrators. That bill was in the low $30,000 range. That’s about right for a case of the type and size I was handling.

Opposing counsel, however, apparently did a lot more work than I did. Their bill was over $150,000! That’s not a typo folks. For a two day collection case, with defenses. At the hearing, the law firm sent a senior partner, at a higher rate than mine, and a senior associate, who’s rate was about 75% of mine. Collectively, the firm seems to have billed its client about $10.50 per minute for the hearing.

There are many outrageous entries. There’s a 36 minute entry by opposing counsel to review a two-line email that I sent to FINRA. Then a 12 minute entry to write a two-word response. There’s what appears to be duplicate billing. There’s billing for administrative tasks like changing the due date on a calendar. I saw at least one entry where the file was billed for one legal assistant to tell another what to do.

There’s billing for hours and hours of reviewing the arbitrators’ bios. There’s billing for “organizing arbitrator ranking award information.” I thought that corporate clients stopped paying for administrative tasks a long time ago. Apparently Wells Fargo is in the minority. The firm even paid for legal assistants to update pleading binders, a task that most corporate clients stopped paying for. If you’re a lawyer and you’re reading this, get Wells Fargo’s work. It seems that they either pay for stuff that most clients no longer pay for, or they don’t review their bills closely enough to see that they’re paying for things that their policy, if they have one, prohibits.

When I received this affidavit of fees on Friday, I only looked at the total. Now that we’re digging deep into the bill, we found that this firm, which claims to represent brokerage firms, charged their client to research FINRA rules on whether or not exhibit notebooks had to be exchanged. This is basic stuff. Any firm that does this work would know that there is no such requirement without spending 48 minutes to figure this out. They could have asked their client and only billed twelve minutes for that.

There are plenty more examples of entries that a corporate client should not pay but apparently did.

That’s the view of an astounded lawyer from Jupiter, Palm Beach County, Florida. I’m Marc Dobin and I did not bill my client for this message.

The latest cold call cowboy – Spencer Trask & Co.

Again, someone didn’t do their homework. This time it was Thomas Charpie from Spencer Trask Ventures, which is related to Spencer Trask & Co..

He introduced himself then told me that his firm works exclusively with attorneys. I told him I wasn’t interested and hung up. I have heard of the firm before and don’t need their help.

So I decided to look at their website. No mention of working exclusively with attorneys. And Mr. Charpie? He’s been a broker for a total of less than 3 years. Sure, Tommy, I’ll take your advice. I’m sure you know more about this stuff than I do.

Leave me alone, guys.

Things I learned at an arbitration with Wells Fargo Advisors last week.

As you might know, I handle a lot of securities arbitrations. I usually end up learning a thing or two during the course of the arbitration. I thought I’d share some things with you.

1 – Wells Fargo Advisors does not have a policy stating that commissions generated by a client only belong to the “broker of record.” This may be the practice, but the branch manager testified that there is no such policy.

2 – Wells Fargo Advisors, as a matter of course, compounds interest monthly when it calculates the amount it is claiming on promissory notes. However, the promissory notes do not provide for monthly compounding of interest. When the witness was asked why the interest was compounded monthly, he essentially said “because that’s how we do it.” Wells Fargo withdrew its monthly compounding of interest calculation and was going to submit the simple interest calculation by affidavit. Haven’t seen the affidavit yet.

3 – Wells Fargo Advisors has a prepaid management fee agreement. A Wells Fargo witness claims that it is electronically attested to. No such agreement was produced.

4 – Wells Fargo Advisors’ practice of conducting most supervision through a central office, rather than at the branch level, has actually reduced the level of supervision, in my opinion as someone with over 25 years’ of experience in the securities business, not increased it. For example, a central supervision office employee has no “feel” for the office. That employee won’t recognize patterns or put a broker’s rep number to a name and then wonder why the broker is engaging in certain transactions. Instead, it appears that the branch manager pretty much waits for the central office to tell him/her what to do. In the meantime, there are certain things that the central office doesn’t look for and the branch manager can’t see. It’s a shame, too.

I used to describe being a branch manager as requiring as much art as science. Walking around the office, the branch manager can “feel” what’s going on. The manager can tell who is working and who isn’t. But if the manager is simply waiting for a computer to tell him or her what to look for, rather than being proactive, then it may be too late. And then to remove many of these tasks and assign them to some remote office to look at, well that’s just asking for a problem.

As an example, many years ago, probably close to 30, a regional administrative manager walked into a satellite office at 2:30 or so in the afternoon. The lobby was full of clients waiting to see one of the two brokers in the office. The office looked very busy. But the office had only entered 3 or 4 order tickets by 2:30. The regional admin thought it was odd and they decided to close the office and move the the brokers to the main office, under greater supervision. The brokers refused to relocate and resigned. After they left the firm, the wheels came off of the Ponzi scheme they were participating in. The regional admin was right. A computer could not detect what the regional admin understood. By the way, that regional admin is now a branch manager with Wells Fargo. And I hope his talents aren’t being wasted by relying only on computer printouts.

Today I enter my 21st year as a resident of the Sunshine State. When I left New York, branch managers managed. They reviewed. They gave sales advice. They mentored. Now they wait for HAL (that’s a Space Odyssey reference there) to tell them what to do. In my opinion, heavily relying on computers for branch office supervision (and I love computers for many things) is a mistake. Computers don’t feel. They don’t see. They don’t hear. But that’s what good managers do. Or at least they did until someone decided that computerized supervision was the next big thing.

That’s the view of one lawyer from Jupiter, Palm Beach County, Florida. I’m Marc Dobin.