7th Circuit Makes Paralegal Pay Big Law

Late last month, the United States Court of Appeals for the Seventh Circuit issued a decision, Stephens v. Baker & McKenzie, Nos. 18‐2375 & 18‐2963 (7th Cir. Apr. 26, 2019) affirming a district court ruling granting the defendant's motion for attorney's fees and its motion to strike a defamatory filing. Among other lessons that can be drawn from this decision, it shows how strictly the federal courts will enforce discovery obligations under Rule 37.

The appellant was employed as a paralegal with Baker & McKenzie. Her suit alleged that she was fired because reported being sexual harassed and mocked on the basis of her Russian ethnicity. She sought $200 million in compensatory, emotional and punitive damages.

Stephens failed to comply with two discovery requests. The first concerned information about how she gained access to the firm's confidential listserv (which she accessed after she left). The second asked that she account for the damages she demanded. Rather than answer either of these requests, Stephens asked the court to dismiss her suit, even though she was given the option to seek $100,000 in damages instead. The lower court, "ruled that whether Stephens had used a confidential listserv for personal reasons was relevant to Baker & McKenzie’s defense, so it ordered Stephens either to explain how she acquired the list or surrender her computer so the firm could investigate." Id. at 4. Stephens explained that she did not want Baker to have access to her computer.

The defamatory filing was Stephens' response to a motion to compel, which McKenzie never had a chance to reply to because the suit was dismissed. Baker was awarded more than $35,000 in fees. The Seventh Circuit rejected Stephens' appeal specifically because of her refusal to comply with the court's discovery order. It cited Federal Rule of Civil Procedure 37(b)(2)(C) which requires a party rejecting such an order to pay, "reasonable expenses, including attorney’s fees, caused by the failure, unless the failure was substantially justified or other circumstances make an award of expenses unjust.”

The Seventh Circuit also rejected an appeal of the motion to strike, holding that the district court's broad discretion to strike filings allowed it to strike a filing the plaintiff abandoned and which the court never actually considered.

So even when a paralegal goes up against one of the biggest law firms in the country, she or he may still held accountable for failing to take discovery obligations seriously.

PACER's One Free Look

Parties that appear on the official email notice list for cases filed in the federal district courts, get one free look at PDFs of filings by any party on PACER. The standard PACER charge is 10 cents per page with a maximum of $3.00 for filings other than transcripts. The District Court for the Northern District of Ohio has a posting on its site which describes how a party can ensure that it gets its one free look, and bypass the PACER login.

1. The filing must be accessed by a registered ECF user through an email generated by the ECF system.

2. The filing must be accessed within 15 days after it is filed with the court.

3. If the user receives a blank screen, it's recommended that the Internet Preferences be changed in Adobe Reader, unchecking 'Display PDF in browser' and 'Allow fast web view'.

4. In the Utilities section for an ECF account, under 'Maintain Your ECF Account' you can enter a secondary email, if your firm's network blocks access to the free look.

ABA Formal Opinion 93-379 on Billing Practices

The American Bar Associations Formal Opinion 93-379 addresses how attorneys bill for professional fees and other expenses. The opinion establishes some basic guidelines:

1. Time periods for billing may be rounded up to the nearest tenth or near quarter.

2. Overhead expenses cannot be billed to a client.

3. Services such as computer research, photocopying, and secretarial overtime can be billed to a client at actual cost.

4. Multiple clients should not be billed for the same hours.

5. Clients billed by the hour should receive receive an itemization of billable tasks rather than an invoice only listing a total dollar amount.

6. Recycled work product should not be billed to a new client.

7. If an agreement has been reached to bill a client a certain number of hours for a particular project, the client should not be billed for the full amount if it is performed more efficiently. "When that basis for billing the client has been agreed to, the economies associated with the result must inure to the benefit of the client, not give rise to an opportunity to bill a client phantom hours."

8. Disbursements such as reporter fees or travel expenses can be charged to a client.

9. Discounted rates received from third party providers should be passed along to a client.

10. For in-house services an attorney may charge, "the direct cost associated with the service (i.e., the actual cost of making a copy on the photocopy machine) plus a reasonable allocation of overhead expenses directly associated with the provision of the service (e.g., the salary of a photocopy machine operator)".

11. Additional sources of profits cannot be created beyond what is contained in the provision of legal services.