'Block' Billing Dispute: Duane Morris Sued for $100M

Duane Morris LLP is being sued for at least $100 million by U.S. Precious Metals Inc. The firm and partner Keli Isaacson Whitlock allegedly committed legal malpractice and breached fiduciary duties. Whitlock was named one of the top "40 Under 40" outstanding business leaders by the Baltimore Business Journal.

However, according to an SEC filing and complaint filed in the Supreme Court of New York, the law firm and partner used "block billing." U.S. Precious Metals alleges that the firm ran up $2.6 million in charges using block billing without detailing the nature or reason for the work.

"Block billing" is considered an unethical billing practice where an attorney provides no description or an inadequate description of the work performed. For example, the attorney might have an entry on the invoice that states "legal research" or "checking email." The problem with such billing is that it does not inform the client of the nature of the work, the source and nature of the communication, or why the work was necessary. Attorneys often have difficulty collecting legal fees when they use block billing. A good invoice should be specific and particular regarding the work completed and the necessity of the legal services performed.

In addition, U.S. Precious Metals seeks a refund of $159,000 from its former CEO Michael Kugler and an annulment of a pledge it made to Duane Morris of its mining concessions in Mexico, citybizlist.com reports. The mining concessions came in the form of a lien pledged to Duane Morris to secure its fees. The SEC filing states that this was unenforcable. The lien would have provided Duane Morris with a security interest in U.S. Precious Metals' Mexican mining operations.

Michael Silverman, General Counsel of Duane Morris was adamant that his firm did nothing wrong, "...we have always dealt with US Precious Metals professionally and ethically, and we intend not only to prove that, but to collect the outstanding legal fees we are owed."

It's sure to be a blockbuster legal dispute so stay tuned, we'll keep you posted and in the meantime, you might want to give your firm's invoices a once over.

Related Resources:

• Researching Attorney Discipline (FindLaw)
• Billable Hour Reform and You (FindLaw's Greedy Associates)
• The Endangered Billable Hour (FindLaw's InHouse)