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Interesting Opinion on Lawyer Contingency Fees … And Proof that no good deed goes unpunished.

By Zachary Kitts on May 2, 2013 in , , ,

Virginia Qui Tam Law.com -- The first blog dedicated to the Virginia Fraud Against Taxpayers Act and to Qui Tam Litigation in Virginia

 

 

 

 

 

 

 

Interesting Opinion on Lawyer Contingency Fees … And Proof that no good deed goes unpunished.

An interesting opinion was issued a few days ago in the U.S. District Court for the District of New Jersey concerning contingency fees and the fee-shifting provisions of the federal False Claims Act.  There are very few such published opinions because issues related to retainer agreements between whistleblower lawyers and whistleblowers are normally seen as matters of contract, and thus typically decided under state law, so the opinion makes interesting reading for that fact alone.

It is also interesting because it goes to show that no good deed goes unpunished —  Marc Raspanti, who is by any measure one of the best qui tam lawyers out there, delivered an excellent result for his client, then vountarily lowered his fee; the result was a challenge to that same fee by what appears to be a rather ungrateful client.  More on that in a minute….

The underlying qui tam case was filed on behalf of the relator — one Dr. DePace — in 2008 by Mark Raspanti.   The Complaint alleged that the defendant hospital paid millions of dollars in illegal kickbacks to physicians to induce them to refer patients to Cooper Health Systems for expensive in-patient and out-patient cardiac services, in violation of the federal False Claims Act and the New Jersey False Claims Act.

The retainer agreement between Dr. DePace and Raspanti

Prior to filing, of course, Raspanti (like any smart, ethical lawyer) entered into a written retainer agreement providing for a contingency-fee.  That agreement clearly provided that in the event the case was unsuccessful, Raspanti and his firm would not be entitled to a fee; alternatively, if the case was successful, Raspanti and his firm would be entitled to a contingency fee equal to 40% of the relator’s recovery, plus statutory attorney’s fees, which are mandatory under 31 U.S.C. § 3730(d).

This was made clear in the language of the retainer agreement, which provided as follows:

If there is a judgment, settlement or arbitration award, the Federal and state False Claims Act statutes provide that attorney’s fees and costs may be paid by the defendants (“Statutory Attorneys’ Fees and Costs”). This is in addition to any Attorney’s Contingency Fees we may receive pursuant to Paragraph 6B of this Agreement.

This is all very typical in FCA/qui tam cases.  The 40% portion of the relator’s share was justified, in part, because Raspanti and his firm needed local counsel in order to prosecute the case.  The FCA also has a mandatory fee-shifting provision which requires defendants to pay the hourly rates of relator’s counsel.  I do not know of any state bar that allows lawyers to share attorney’s fees with non-lawyers, and so the client is not allowed to share in the hourly fees recovered by his or her counsel.

So far so good — then, in 2013 the Department of Justice (and the state of New Jersey) intervened in the case, and simultaneously announced a total settlement in excess of $12.5 million.  Thus, Raspanti and his firm delivered on the first and foremost objective of any lawyer representing a qui tam relator — they convinced the government to intervene in the case. Raspanti delivered on a second major objective as well — out of the money received from Cooper Health, the United States agreed to pay Dr. DePace $1,951,110.00 and New Jersey agreed to pay Dr. DePace $442,890.00.  That is a total relator’s share of 20%, which I am certain Raspanti had to fight tooth and nail to get for his client.

Finally, as part of the settlement agreement, Cooper agreed to pay Dr. DePace’s counsel $430,000 for expenses, attorneys’ fees, and costs.  Specifically, the Settlement Agreement stated that “Cooper agrees to pay Relator’s Counsel, and Relator’s Counsel agree to accept as full payment $430,000 for expenses, and attorney’s fees and costs in accordance with subsection 3730(d)(1).”  In an invoice detailing all the hours spent by the Pietragallo Firm on this case sent by the Pietragallo Firm to counsel for Cooper shortly prior to settlement, the Pietragallo Firm represented its total fees and costs to be $458,420.55.

Raspanti then did the correct thing and prepared a distribution memo explaining all of the above, and he circulated that to his client.  And then, once Raspanti had delivered such a great result for his client, everything went south.

Hell hath no fury like a problematic client

Dr. DePace disputed the fee award to Raspanti, on the basis that the settlement agreement — which provided that Raspanti had received $430,000 paid for his hourly rate and his costs —  trumped the retainer agreement between Dr. DePace and Raspanti.

Yes, you read that right.  Dr. DePace took the untenable position that the settlement agreement in the case superceeded the retainer agreement between him and Raspanti, and so Raspanti was entitled to nothing more than the $430,000 he received for his attorney’s fees and costs …  and if any of the lawyers reading this are thinking that this smacks of a non-lawyer’s attempt to practice law using his or her limited knowledge, I think you are exactly right.

Clearly, Dr. DePace thought he had found an “A-ha!” moment of the kind that all laypersons just LOVE…but he was sorely mistaken.  The opinion notes that Dr. DePace prevailed on his “personal lawyer” (previously he had insisted that his personal lawyer serve as Raspanti’s local counsel) because that lawyer renounced his entitlement to the one-quarter contingency of the 40% contingency fee to which he was entitled.  Meaning, Raspanti’s 40% share of the relator’s portion was to be split between local counsel and Raspanti with 1/4 going to local counsel.

And, as an aside, I can tell you that in my experience, 100% of the clients who refuse to deal with a lawyer without going through their own “personal lawyer” are going to be ungrateful, problematic clients.  I mean, who has such a guilty, suspicious nature that they can’t even talk to their own lawyer?

Raspanti then did the right thing — when the “personal lawyer” refused to accept one-fourth of the contingency fee, Raspanti gave that back to Dr. DePace, with the result that Dr. DePace received 70% of the relator’s share, and Raspanti received 30%.  But no good deed goes unpunished, as the title to this post indicates, and Dr. DePace then disputed the rest of Raspanti’s fee, as noted above.

In addition to arguing that the Settlement Agreement superseded the Contingency Fee Agreement, Dr. DePace argued that the fee shifting provisions of the Federal False Claims Act do not permit an attorney to recover both a contingent fee and statutory attorneys’ fees.  This argument fared no better than his other arguments and was in my opinion the further work of a non-lawyer mind.

DePace also argued that he should not have to pay the contingency portion of the fee because New Jersey Rule of Professional Conduct 1.5 states that “a lawyer’s fee shall be reasonable.”  In this regard, the New Jersey Rule is identical to   Virginia Bar’s rule of professional conduct 1.5.  The Court also found this argument to lack merit.

I encourage everyone with an interest in qui tam litigation, legal ethics or lawyer fee agreements to read the opinion.

 

K&G Law Group is a boutique-style law firm based in Nothern Virginia and practicing nationwide

 

 

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West Virginia Attorney General Patrick Morrisey reviews his first 100 days in office…and puts a West Virginia False Claims Act at the top of his wish list

By Zachary Kitts on April 25, 2013 in , ,

Virginia Qui Tam Law.com -- The first blog dedicated to the Virginia Fraud Against Taxpayers Act and to Qui Tam Litigation in Virginia

 

 

 

 

 

 

 

West Virginia Attorney General Patrick Morrisey reviews his first 100 days in office…and puts a West Virginia False Claims Act at the top of his wish list

Virginians will elect a new Attorney General in 2013.  Our neighbors in West Virginia, however, elected a new Attorney General last November, Republican Patrick Morrisey.

The first thing we can say about General Morrisey is that he has guts.  He challenged five-term Attorney General Darrell McGraw and won handily.  Unseating an incumbent is never easy, but he did exactly that.

After his election, General Morrisey set out an ambitious 17 point program for his first 100 days in office.  Yesterday he reflected aloud in the Huntington Herald-Dispatch about his first 100 days in office and his progress towards meeting those goals.  Not surprisingly, several items on his 17 point list pertain directly to the lack of a West Virginia False Claims Act.

Brief History of the West Virginia False Claims Act

A bit of history is in order here.  In the 2010 and 2011 West Virginia legislative sessions, a West Virginia False Claims Act was introduced; in both sessions it failed to get off the ground.  Perhaps as a result of these failures in the 2012 and 2013 legislative sessions, no one introduced a false claims act bill.

Although this blog is always harping on the need for a multi-term Attorney General, there is an important qualifier.  Having a multi-term AG is desirable if — and only if  — he or she is going to do something with the office.  It doesn’t seem like McGraw did much of anything during his nearly 20 years in office.  What’s worse, I know for a fact that McGraw did exactly nothing to support West Virginia False Claims Act in 2010 and 2011.

I find it inspiring that Morrisey would come out of the gate with such an ambitious agenda.  Perhaps this plan was put together in an effort to draw a further distinction between himself and the McGraw administration.

Conditions are now optimal for a West Virginia False Claims Act!

Having the state Attorney General on board is of course critical to passage of a state false claims act, so with General Morrisey supporting the effort, perhaps we will see a win in West Virginia for the 2014 legislative session.  It is never too early to start planning….and I will, as I have in past years, volunteer to help the great state of West Virginia, but this time, with General Morrisey at the helm, perhaps my offer will not fall on deaf ears.

 

K&G Law Group is a boutique-style law firm based in Nothern Virginia and practicing nationwide

 

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One way to handle the other side’s resistance to paying attorney’s fees – “We’re made from rubber, and you’re made from glue….”

By Zachary Kitts on April 20, 2013 in , , ,

Virginia Qui Tam Law.com -- The first blog dedicated to the Virginia Fraud Against Taxpayers Act and to Qui Tam Litigation in Virginia

 

 

 

 

 

 

 

One way to handle the other side’s resistance to paying attorney’s fees – “We’re made from rubber, and you’re made from glue….”

As regular readers know, I take an interest in fee-shifting litigation (that is, litigation involving one party’s liability to the other party for attorney’s fees).  Because the American Rule (which is not a substantive rule of law but is rather a common law presumption followed in the United States) requires that each litigant bear its own attorney’s fees, fee-shifting litigation is the exception and not the rule in American common law.  In fact, such litigation more or less occurs only by way of a statute with a fee shifting provision or by way of a contract between the parties requiring one party or the other to pay the other’s attorney’s fees if litigation takes place.

Both the Virginia Fraud Against Taxpayers Act and the federal False Claims Act contain fee-shifting provisions–however, there is not a great deal of case law analyzing the fee-shifting provisions of those statutes.  I attribute that to several factors.  First, successful qui tam cases under those statutes will normally generate a fee far in excess of a lawyer’s standard hourly rate.  Therefore, no one worries so much about the hourly rate the lawyer receives from the defendant.

Second, and perhaps more important, is the fact that there is always an 800-pound Gorilla in the room, or at least right outside the door, when relator’s counsel discusses his or her entitlement to a statutory attorney’s fee in a qui tam case.  The 800-pound Gorilla is the government, who has the final right to either bless or reject any kind of proposed settlement in a qui tam case under the VFATA or the FCA.  Relator’s counsel should therefore push back if a defendant refuses to pay any money whatsoever for attorney’s fees (and defendants will pretty much always try this at first) but the wise relator’s counsel will be able to negotiate a fair amount for the fees without threatening the entire settlement.

So, there is far more fee-shifting case law out there concerning federal statutes like the Fair Labor Standards Act, Fair Debt Collection Practices Act, and so forth; litigation involving a contractual entitlement to attorney’s fees, by way of contrast, is more likely to be decided under state law principles.

So I read with some interest an opinion last week from the U.S. District Court for the Southern District of Illinois regarding defense counsel’s production of detailed billing statements for their client, CDW-G in U.S. ex rel. Liotine v. CDW Government, Inc., 2013 WL 1611427 (S.D.Ill.,2013).

In Liotine, relator’s counsel responded to a defendant’s request for his hourly billing records in an interesting fashion–he asked for the billing records of the defendant’s lawyers…hence the subtitle of this post is “We’re made from rubber and you’re made from glue, anything you say bounces off of us and just sticks to you.”   When the Magistrate Judge granted the motion, the defendants took exception to the the Magistrate Judge’s ruling (in other words they appealed) to the District Court judge…who upheld the Magistrate Judge’s ruling.

It will be indeed interesting to see what comes of the billing records of the defendant’s lawyers.  I myself have never used this approach in a FCA case or FLSA case for several reasons.  First and foremost, the defendant’s billing records are not important to me in these cases because there is more or less zero chance that my clients will be responsible for paying it.  (Note that this is limited to statutory-fee shifting that is a one-way street.  If a fee-shifting provision arises in a contract case, for example, I might very well ask for some information about the other side’s fees if the provisions requires payment to a prevailing party.)

But I am sure there must have been a good reason for the relator’s counsel to ask for such discovery in this case, and we shall see what turns up …

K&G Law Group is a boutique-style law firm based in Nothern Virginia and practicing nationwide

 

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My two-cents on law as a career — for what it’s worth

By Zachary Kitts on April 17, 2013 in ,

Virginia Qui Tam Law.com -- The first blog dedicated to the Virginia Fraud Against Taxpayers Act and to Qui Tam Litigation in Virginia

 

 

 

 

 

 

 

A (mostly) young lawyer’s thoughts on trouble in the legal profession…

Spoiler Alert — today’s post is slightly off-topic….

Like all of my fellow law bloggers–or blawgers but I refuse to use that term–I am not only the author of a lawyer blog, I am a lawyer blog fan.  I have therefore followed with interest the blogs discussing law schools, new law school graduates, the employment prospects of new lawyers, the growth and contraction of the mega-firm world, and general discontent of new lawyers with life and (seemingly) everything else.  The question has been asked repeatedly on some of these blogs if law school is “worth it,” and various economic tests have been devised to find an answer.

Some commentators have spent a great deal of time discussing the miseries and woes of newly-minted lawyers; indeed,  AboveTheLaw.com, seems to have been founded by young lawyers specifically to discuss the woes of newly minted lawyers.  Law professors–always in search of something to write about–have wandered into the field,  and have done some very sobering analyses of the facts of life for newly minted lawyers who want to buy a house as just one example.

When law professors and folks publishing on-line lawyer magazines and blogs talk about trouble in the legal profession that is one thing.  As Michael Gambon says to Daniel Craig in the movie Layer Cake–when Craig’s character learns that his idol in the criminal underworld has for many years been a police informant:  How did you think these people make a living? 

But when noteworthy law bloggers  like Steven Harper, who have real legal careers start retiring from big law firms to write full-time about lawyer reform, well, that’s another thing entirely.  I have touched upon topics like law firm economics and qui tam history before in this blog, but today’s post is a little different.

Suprise young lawyers — making a living as a lawyer always has been, and always will be, tough

Some of the criticism offered by the above sources (and by other sources) is on-point.  Some of it is not. All of it is worth reading, for reasons I may or may not get around to explaining in later posts.  But what I want to talk about today–because I am afraid at least some members of Generations X and Y may not know this–is the fact that it always has been, and always will be, damn hard to make a living as a lawyer.

Lets start with that most important of all figures to legal education–OWHJ, or Oliver Wendell Holmes Jr.  Most of us heard about him while we were applying to law school, and 100% of us heard his name on the first day of law school.  OWHJ had by any measure a towering intellect.  He used a word where the rest of us use a sentence.  He thought in paragraphs.  His judicial writings rise above the normal fodder of lawyers and are in fact nothing less than English prose.  His public speeches on everything from the Civil War to the meaning of life are worth reading and re-reading.

But he was a miserable failure in the practice of law; and in fact he failed to make enough money to support himself.

From 1866 (when he was admitted to the Massachusetts Bar) to 1882 (when he accepted a position at Harvard Law School) Holmes struggled to make a living.  Law Professor James Chen  made headlines with his formula for calculating how much money new lawyers would need to make to payoff their loans and buy a house, but home ownership didn’t become difficult for young lawyers recently, because OWHJ lived with his parents until they died.

And yes, he was married, to one Fanny Bowditch Dixwell.  And yes, Mrs. OWHJ was very unhappy that her husband didn’t make enough to buy thier own house.  But don’t take my word for it, just read Yankee from Olympus.  That book is also important for another reason relevant to this post.  Yankee from Olympus captures–and very well in my opinion–a snapshot of the Holmes family in all of their historical grandeur.  You see, OWHJ wasn’t just a great legal mind, he was a bona fide product of the Boston upper classes.

When OWHJ was a small child Henry Wadsworth Longfellow read to him; at age seven he had a first-row seat at the funeral of John Quincy Adams, the Sixth President of the United States.  All three of his names–that is, Oliver, Wendell and Holmes–were given to him to make sure that everyone would know that he was part of not one but three privileged families.

In short, the family history of Oliver Wendell Holmes was nothing short of the history of Massachusetts.

So yes, to say he was well-connected doesn’t quite do it–this guy knew everyone who was anyone.  So if he couldn’t bring in enough clients to pay the bills, how are any of the rest of us supposed to make it?

He was not the only one.  In Southwest Virginia, near my great-grandfather’s ancestral home, one can find this Virginia Historical Marker:

Virginia Historical Road Market S45 Winfield Scott Law Office

 

 

 

 

 

 

 

 

 

 

That’s right, Winfield Scott–whose impression on the United States Army can still be seen to this day, and is rivaled only by George Marshall–started out as a lawyer.  When he couldn’t make a living in private practice, he changed careers and joined the United States Army.

In fact, I think the sign says it all–“Just to the West Stands the Law Office Occupied in Early Life by Lt. Gen. Winfield Scott.  Admitted to the Bar in 1806; joined the Army in 1808.”

And these are just two of the noteworthy people who were unable to make a living as lawyers–how many non-noteworthy lawyers failed to cut it in the practice of law in history? More than a few I assure you.  How many political careers were launched by the inability to make a living as a lawyer?  More than a few.

In those days, of course, you didn’t need a six-figure debt to get a law license, you didn’t even need an apprenticeship, although it was better to have one under your belt.  Certainly the need for an expensive and lengthy education serves as a “barrier to entry” to the practice of law, and that of course is by design.  You see, back in the 19th century–when the practice of law was still open to any snake-oil salesman with a distaste for physical labor–the market for legal services wasn’t less crowded that it is today, it was more crowded.

So lawyers did what every other group of tradesmen did in the 19th century when their livelihood was threatened–they closed ranks and organized to protect their own.  This is according to Lawrence Freidman.

The moral to the story is this–and it is sometimes said to be the oldest wisdom in the book.  There ain’t no such thing as a free lunch.  Are there too many law schools?  Yes, there certainly are, but I am betting we will see as many as one-third fewer law schools ten years from now.  Do law schools charge too much for tuition nowadays?  Yes, they certainly do.  But they charge what the market will support; otherwise they would be out of business, and therefore the question becomes a more fundamental question about the nature of our economy and about the fundamental human desire to make money and become famous.

Simply put, I  think that much of the discontent among young lawyers is because they think it is an automatic given that everything should be handed to them.  They want to dial it in, so to speak, and make tons of money.  They just don’t understand that to make a good living in a profession, a person has to become the right blend of artist and businessperson.  Too much of one or the other and you are in trouble.  And you most definitely can’t dial it in–it takes constant effort and constant attention.

Perhaps most important, to make it as a lawyer, you absolutely positively MUST be a self-starter.  There is no room in this profession for someone who wants everything handed to them…

I offer no opinion on whether a “young person” should go into law as a career, but I can say this–I am glad I chose to become a lawyer.  Moreover, what is happening with the legal profession is not limited to the legal profession, as many commentators  from other sectors of the economy point out.  If anyone really, really wants to get at the bottom of what is going in the legal profession–and elsewhere in our economy–I think a must-read book is Tyler Cowen’s The Great Stagnation.  It’s a short book but an important one for those of us interested in where things are headed.

 

K&G Law Group is a boutique-style law firm based in Nothern Virginia and practicing nationwide

 

 

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Checking in on the 2013 race for Virginia Attorney General…

By Zachary Kitts on April 8, 2013 in , , , , , , ,

 

 

 

 

 

 

 

Checking in on the 2013 race for Virginia Attorney General…

The 2013 race for Virginia Attorney General seems to have been uneventful so far, at least when compared with the 2009 primaries.  The 2009 primary season, you’ll recall, saw three strong Republican candidates–Ken Cuccinelli, John Brownlee and Dave Foster–participate in countless debates across the Commonwealth.  In fact, I got the distinct impression that so many groups hosted so many debates in 2009 largely because people knew (1) if they invited the Republican contenders, they would all show up, and (2) they knew that the debate would be lively; (3) the top two contenders (Cuccinelli and Brownlee) both have charismatic and forceful personalities and are great competitors, and (4) the race was a dead-heat.

This year, we have two strong Republican contenders in the form of Del. Robert Bell and state Sen. Mark Obenshain.  (For future reference, I always list candidates in alphabetical order, lest I be accused of showing any favoritism.)

THE 2013 REPUBLICAN CONVENTION

As in 2009, Republicans this year can be proud of the fact that they have two strong candidates.  The race has, however, been uneventful, as the two candidates genuinely seem to like each other.  In fact, in a recent debate at George Mason University’s School of Law, the two candidates agreed more often than they disagreed, and both talked a great deal about how many pieces of legislation they had co-sponsored.

Boy, that is quite a shift from the Brownlee-Cuccinelli dynamic back in 2009…

In terms of who is the front-runner on the Republican side, it’s impossible to say at this juncture.  My own–admittedly informal and very unscientific–poll of folks I consider to be in-the-know from across the Commonwealth shows the two Republican candidates neck and neck, which is to say that half favored Bell and half favored Obenshain.  And, I note, all quasi-official results seem to show the same thing.  For example, Del. Bell won a straw poll in Hampton Roads by the margin of 56% to 44%, but for a straw poll that is well within the margin of error.

As noted earlier, both Republicans are in the Virginia General Assembly, which means that both have access to the sorts of big donors (and influential people) that come in handy in any election.  Of course, because the Republican candidate will be chosen via a convention, the money factor is not as important as it might be if this were a primary.

Again folks, anything goes in a convention like this, absolutely anything.

For the record, I am a firm believer that the role of money in politics is usually overstated, at least in state and local government elections, and that is even more true when the election will take place at a convention instead of a primary.  A convention is quite literally anybody’s ballgame.  Still, money does come in handy in any political race, and it also provides one way to compare the two candidates to see who is winning.

THE DEMOCRATIC PRIMARY

The Democrats are having a primary this time around (which they usually do, I can’t ever recall them having a convention).  On this side of the ball, state Sen. Mark Herring is facing off against former federal prosecutor (and first-time office seeker) Justin Fairfax.

It would be easy to say that, as a state Sen. for the last eight years, Herring has the access to big donors and influential people that any member of the General Assembly enjoys, and he therefore wins in a landslide over a 33-year old political newcomer…but wait, if that is the case, why hasn’t Herring put this one away?

Simply put, Fairfax is still very much in the fight, and this one is anybody’s ball game.  All of Herring’s “straw poll” victories have been razor thin, and Fairfax has been able to land a  number of heavy-weights on his campaign staff…he also seems to have more charisma than Herring.

If anything, it seems like Herring is becoming frustrated at his inability to lock this one down and start getting ready for the general election…

Plus Fairfax has real, bona fide experience as a federal prosecutor, which as regular readers know is something very important to us here at VaQuiTamLaw.com.

So here is the spiel folks….

As regular readers know, there is a specific reason that this non-partisan, non-political blog covers the Virginia Attorney General race every four years — the individual occupying the Office of the Attorney General is very important to fraud-fighting efforts in the Commonwealth.  While the Office of the Attorney General has traditionally been seen as little more than a stepping stone to Governor, it doesen’t necessarily have to be that way.  The Attorney General is not term-limited, and he or she could serve as many terms as the Commonwealth’s voters allow.

I have assembled a wish-list of qualities that I would like to see in an Attorney General, and I will be inviting all of the candidates to weigh in whether they are willing to support all or some of this agenda…

So stay tuned folks, the AG race is in full swing, and so is our coverage here at VaQuiTamLaw.com….

 

K&G Law Group is a boutique-style law firm based in Nothern Virginia and practicing nationwide

 

 

 

 

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Building a Precedent — First Recovery for a Local Government Employee under the Anti-Retaliation Provisions of the Virginia Fraud Against Taxpayers Act

By Zachary Kitts on April 6, 2013 in , ,

 

 

 

 

 

 

 

K&G Law Group is pleased to announce the first ever recovery for a state and local government employee under the Virginia Fraud Against Taxpayers Act’s anti-retaliation provisions.

The story was picked up by Virginia Lawyers Weekly this past week, and it has apparently gained some attention in the City of Alexandria.

Stay tuned, more to come…

K&G Law Group is a boutique-style law firm based in Nothern Virginia and practicing nationwide

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All Federal Court Practitioners Should be Aware of Proposed Changes to the Federal Rules of Civil Procedure

By Zachary Kitts on March 23, 2013 in , , , ,

 

 

 

 

 

 

 

Today’s post looks at some proposed changes to the Federal Rules of Civil Procedure from the Committee on Rules of Practice and Procedure.  Actually, I do not think these proposals are actually proposals just yet, and that is a good thing.

The process for promulgating an amendment to a rule involves multiple levels of consideration and requires approval from different committees.  First, the appropriate advisory committee must rview and approve a rule, followed by the Committee on Rules of Practice and Procedure. Following approval by the Committee on Rules of Practice and Procedure, proposed amendments must be considered and approved by the Judicial Conference, the Supreme Court, and then Congress.

Public comment and input is invited at every step of the process, and lest any cynics out there think otherwise, the comments made by practitioners do count.  In fact, public comment via emails and letters can — and not infrequently does — result in either suggestions or in actual changes to the rules.  I encourage all readers who practice in federal courts to visit the United States Courts website and make comments on these rule changes.

The overall purpose of the Federal Rules of Civil Procedure is stated in Rule 1 — “to secure the just, speedy, and inexpensive determination of every action and proceeding.” Fed. R. Civ. P. 1.  That is a goal that all litigators everywhere should support, and I have not yet met a client who wanted anything other than a just, speedy, and inexpensive end to their case.  And, given that the majority of my practice is in the U.S. District Court for the Eastern District of Virginia, I have gained a real respect for the sort of legal culture that is necessary for a Court to be able to move cases along.

So I read with interest the recent proposals — all of which are designed to speed up the discovery process — because I think any proposal to speed up the discovery process is one that should be embraced generally….but I cannot say that I think the recent proposals should be adopted, and that is my reason for today’s blog post.

The main thrust of the new proposals is as follows:

1) Limiting the number of requests for documents in Fed. R. Civ. Pro. 34 to 25, and thus adding a presumptive limit where one does not currently exist;

2) Reducing the presumptive limit on depositions in Fed. R. Civ. Pro. 30 to 5 from 10;

3) Reducing the presumptive time limit per deposition to 4 hours from 7 hours;

4) Reducing the presumptive number of interrogatories in Fed. R. Civ. Pro. 33  to 15 from 25;

5) Limiting the number of requests for admission in Fed. R. Civ. Pro. 36 to 25; as with Rule 34, this would add a presumptive limit where one does not currently exist.

I do not think these proposed changes will do anything to expedite civil discovery; in fact, much to the contrary, I think these changes would cause delays.  I say that because the only way to truly make cases move faster is for courts to exercise a firm hand in enforcing the already existing rules.  And the only way that will happen is for the legal culture of a given locality to change such that it does not tolerate slack behavior from lawyers on either side of a case.  As I have discussed in past blog posts, I agree with the Judges in the E.D.Va., who think that the speed and precision of our courts are the result of our legal culture in the E.D.Va.

The simple truth is that lawyers have a natural tendency to fear — and thus to postpone — the necessity of committing to a particular version of facts in discovery.  This is not an issue of “plaintiff’s lawyers vs. defense lawyers” or of “greedy corporate interests trying to stick it to the little guy” or of a “greedy cabal of wealthy plaintiff’s lawyers” (although some folks in the legal community seem to see everything that happens in the legal community through that lens.)  It is human nature to avoid making tough decisions.

In fact, I would say that judgment is perhaps the most important — but the least seen — skill among lawyers.  When I say judgment, I mean the ability analyze a case, decide what facts are relevant what facts are not, and then tailor the discovery to fit the theory of the case.  This is all first year law school stuff, but the courage to actually do it is rare. The exercise of lawyer judgment is rare because it is easier not to do it, and because it preserves options in the future.

I do not think there are many flaws in the civil discovery process we have now, but the flaws that we do have start  where everything else in civil discovery starts — with the numbered paragraphs of the Complaint and the Answer.  How many times have we seen answers like the following: “the allegations of paragraph * of the Complaint consist of legal conclusions to which no response is required…”

The simple fact is that that is not a sufficient answer to an allegation in a Complaint, but it appears all the time.  The other side then has to send interrogatories to the other side and/or take deposition testimony on those allegations.  The correct thing to do is to file a Motion to Strike under Fed. R. Civ. P. 12(f) because there is no reason for Plaintiff to incur additional expense and time doing discovery on simple matters that should be either admitted or denied in the Complaint.

This is not a problem limited to defensive litigation, of course.  There are many negative things that plaintiffs do in Complaints that create equal problems and delay on the other side, I mention this example merely by way of example.

Another simple thing that could be done to speed cases along is to put real teeth into the mandatory initial disclosures of Fed. R. Civ. P. 26(a)(1), but no one seems interested in that…in fact, the Committee reported in its January 2013 report that “[T]he value of Rule 26(a)(1) initial disclosures is regularly debated by various groups.”

Then again, it sure is easy to sit here and blog about what would make everything right….and answers in the real world always seem more complicated…

 

 

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A Happy Belated Birthday for the federal False Claims Act!

By Zachary Kitts on March 12, 2013 in , , , ,

 

 

 

 

 

 

 

 

I had a five-day jury trial last week (i.e., March 4-8) so I apologize for missing the 150th birthday of the federal false claims act on March 2, 2013.

I received the “birthday card” below from qui tam lawyer extraordinaire Jim Helmer (while I was at trial) and I wanted to share it with you all now.

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Greetings.

Today is the 150th anniversary of President Lincoln’s execution of the False Claims Act.

The original Act was four handwritten pages.  Each page is in a different cursive handwriting.  The Act would not be printed until several years later.

Congress began debating the need for protection from war profiteers in 1862.   At that time there was sentiment that those who cheated on their federal contracts should be executed for treason as war criminals.   The argument then shifted to trying such villains not in a civil court but rather before a military courts martial and applying military discipline.   Both such concepts were eventually rejected as the double damages and $2,000 per false claim penalties were determined to be a sufficient deterrent.  In today’s dollars the $2,000 penalty is equivalent to about $17,000.

Contrast Congress’ 1863 rage with the 1943 debates over repealing the Act due to parasitic lawsuits.  In 1943 several Congressman attacked not the contractors who cheated the taxpayers but rather the whistleblowers who brought qui tam actions, referring to such relators as “shysters.”  In fact, the House voted on April Fool’s Day in 1943 (with only 26 members present and hearing no testimony) to repeal the False Claims Act’s qui tam provisions.  The previous year the Senate had itself passed such a bill (S. 2707).

But in 1943, led by testimony from one relator from St. Louis, Missouri, the Senate rejected the House’s repeal attempt and instead enacted an amendment to the qui tam provisions which barred any relator’s suit when the government already had any knowledge of the fraud.   While qui tam survived, this change effectively meant that any qui tam case which was brought would be dismissed as the government could always find somebody who knew something about the fraud.   In fact, DOJ’s Civil Fraud Division had just one lawyer assigned specifically to so move to dismiss every qui tam case filed after 1943.   It turned out to be a part-time government job with no heavy lifting.  That is why there are virtually no qui tam reported decisions from 1943 until 1986.  The handful of qui tam cases filed during this period all met premature demises.   DOJ’s main conference room in Washington is now named after the anti-qui tam specialist who single-handedly accounted for more dismissals of relators’ suits than anyone.

The 1986 Amendments, of course, eliminated the “any government knowledge” defense to qui tam actions and substituted the public disclosure sections in its place.   This change—and some others to encourage and incentivize private suits—revitalized America’s fight against those who fail to turn the square corners with the government.

False Claims Act and its Amendments have been signed by four Presidents:  Lincoln (1863), F. Roosevelt (1943), Reagan (1986) and Obama (2009 and twice in 2010).  It is perhaps significant that both major political parties are represented by such leaders.

Pendulums swing. The successes of political parties waxes and wanes.  It is hard to know where you are if you do not know where you have been.   We have a 150 year history to guide us.   Hopefully, with vigilance, there will be other great anniversaries to celebrate.

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And to that, Jim, I add my hearty Amen!

Another point of that may be of interest to readers comes to us from Columbia Missouri from the Columbia Tribune.  It seems that none other than Brooks Brothers, a name well-known in men’s fashion, was one of the single biggest violators of the original false claims act.  Brooks Brothers apparently supplied uniforms for the Union Army that were not quite up to par.

 

K&G Law Group is a boutique-style law firm based in Nothern Virginia and practicing nationwide

 

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Updates from Annapolis — House of Delegates Committee Hears Testimony on the Maryland False Claims Act of 2013

By Zachary Kitts on February 22, 2013 in , , ,

 

 

 

 

 

 

 

 

On Wednesday of this week I went to Annapolis to testify in support of Maryland House of Delegates Bill HB509, the Maryland False Claims Act of 2013.  I was joined by a couple of the top qui tam lawyers from the great state of Maryland,  Vince McKnight and Brian Markovitz.

Our testimony seemed to be well-received for the most part — and, unlike in 2010, there were very few anti-FCA lobbyists present, in fact I saw only one.  The poor fellow had an uphill battle — Del. Arora (who is the chief patron of HB509 — delivered, shall we say, a rather rigorous cross examination.

The media didn’t seem to take much interest this time around.  I assume that is because in 2010 the bill was at the very top of Gov. O’Malley’s legislative agenda.  That could also be because this year we weren’t taking on the health care lobby directly, and historically the health care folks have been one of the most powerful lobbies in Maryland.

All three of us submitted written testimony in advance — for my testimony click here , for Brian’s testimony click here and for Vince’s testimony click here.

Assuming we get a favorable report from the House Judiciary Committee, the battle will move over to the Senate where we are already busy lining up sponsors…stay tuned folks…

K&G Law Group is a boutique-style law firm based in Nothern Virginia and practicing nationwide

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The National Conference of State Legislatures Identifies the Top Ten Issues Facing State Governments in 2013…

By Zachary Kitts on February 16, 2013 in ,

 

 

 

 

 

 

 

 

A loyal reader brought an interesting article in  the January issue of State Legislatures Magazine to my attention, and I thought other readers might find this of interest.  The article addresses the top 10 challenges facing state governments in 2013.  By way of introduction, for those of you who don’t know, State Legislatures Magazine is published by the National Conference of State Legislatures, a non-profit, bi-partisan organization dedicated to improving state governments across the country.

The top ten issues identified by the NCSL are as follows, in no particular order: 1. Stabilizing Budgets, 2. addressing health care, 3. protecting state pensions, 4. building and maintaining infrastructure, 5. ensuring future energy needs are met, 6. saving on corrections costs, 7. educating the workforce, 8. strengthening education, 9. creating jobs, and 10. helping to protect families.

The way I see it, state false claims act legislation directly assists state governments with items 1 through 4 and indirectly assists with 5 through 10.  We have seen, just in the past two years, a number of excellent examples of how state FCA legislation assists with the main items on the list.

For example, in 2011 a number of qui tam lawsuits began to be unsealed against the two major banks handling foreign exchange transactions on behalf of state pension funds.  Those lawsuits–brought by a qui tam relator pursuant to each state’s false claims act– would not have been possible without state false claims acts in Virginia, New York, California, and Florida among others.

And just last year, the Virginia Medicaid Fraud Control Unit announced a $1.5 billion settlement with Abbott Labs, which is the the largest Medicaid settlement in history.  In total, the state governments participating in the settlement received $239 million to cover their portion of the Medicaid payments wrongfully obtained by Abbott.

Little wonder, then, that the NCSL has been real asset in the state-to-state battle to pass state false claims legislation.  NCSL regularly features articles, commentary, and other helpful materials promoting the value and efficacy of state FCA legislation and qui tam litigation developments.

I encourage all readers to check out the NCSL website and the January issue of State Legislatures Magazine.   

K&G Law Group is a boutique-style law firm based in Nothern Virginia and practicing nationwide

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