Wednesday, September 21, 2011

Barnes & Thornburg Continues to Fleece the State's Taxpayers In Representing FSSA

The Indiana Law blog picks up on story by Ken Kusmer of AP on the Barnes and Thornburg contract to represent FSSA:
Brian Burdick
INDIANAPOLIS (AP) — Indiana's legal bill in its lawsuit with IBM Corp. over a canceled welfare outsourcing contract could grow by more than half its original value, topping $8 million by the end of next June, state documents reveal.

Critics of the administration of Republican Gov. Mitch Daniels criticized the growing costs Tuesday while his press secretary and a spokesman for welfare administrators defended them.

The Family and Social Services Administration will pay as pay as much as $8.05 million through June 30 to the well-connected Indianapolis law firm of Barnes & Thornburg to represent it in the lawsuit with IBM under an amended contract approved Aug. 30 by the attorney general's office. The original contract approved a year ago paid the firm $5.25 million over the same length of time

The firm's attorneys on the case include longtime Republican activist Peter Rusthoven and Brian Burdick, the brother of Daniels' deputy chief of staff, Betsy Burdick.

Peter Rusthoven
FSSA sued IBM to recover more than $400 million it paid before Daniels canceled the 10-year, $1.37 billion contract in 2009 amid complaints about the automated welfare system IBM had installed. The Armonk, N.Y.-based technology giant countersued for about $100 million for costs including computer equipment it claims the state has held onto.
The contract's original terms called for FSSA to pay Barnes & Thornburg $5.25 million over the course of three state fiscal years ending June 30, 2012, but the amended terms show the agency paying $5.25 million through June 30, 2011, and the additional $2.8 million during the current state fiscal year that began July 1.

Rusthoven is billing the state $475 per hour, Burdick is charging $405 per hour, and John Maley, a third attorney, is charging $465 per hour.

"This is a sweetheart deal from the get-go, and it just got sweeter for Barnes & Thornburg," said Julia Vaughn, policy director for the government watchdog group Common Cause/Indiana. "It's disappointing that they've come back to the public trough."

Daniels' press secretary Jane Jankowski, defended the administration's use of the firm.

"They're among the best in the business, and if there had been a conflict, the firm would not have been selected," Jankowski said.
To see the rest of the AP article, click here.

John Maley
Jankowski's statement is flat-out wrong.  As discussed previously on this blog, the State's own contract with Barnes and Thornburg explicitly identifies a conflict the firm has in its previous representation of ACS, which was the main subcontractor on the Medicaid privatization contract.  In the contract Barnes & Thornburg says in representing FSSA against IBM it may have to sue ACS, which is still its own client. In the contract Barnes and Thornburg seeks to get around this conflict by suggesting ACS consented to the conflict and that if Barnes and Thornburg sues ACS, which is again B&T's current client, it will set up a wall at the firm so the B&T attorneys suing ACS will be separated from the B&T attorneys who represented ACS in the Medicaid privatization.  The only thing is that the ACS conflict of interest is clearly a nonwaivable conflict of interest under the Rules of Professional Conduct.   The reason why is obvious.  Is B&T really going to zealously represent the FSSA if it means suing and possibly losing a major client, ACS?  Of course not.   No other law firm in the State would even attempt such a brazen violation of the conflict of interest rules that we attorneys are obligated to follow.

As far as B&T law firm being "among the best in the business," Jankowski should talk to attorneys in the legal profession who quickly would set her straight. Barnes & Thornburg is about power and political influence and often quality legal work is not the firm's bailiwick. B&T's legal work is typically subpar when it comes to the bigger law firms such as a Baker & Daniels or Ice Miller.

Noting that the hourly rate of the five Barnes & Thornburg attorneys identified in the contract as working on the deal are John Maley - $465; Brian Burdick - $405; Peter Rusthoven - $475; Patrick Price - $255; Curtis Greene - $265, the Indiana Law Blog crunches the numbers: 
"If all 5 lawyers are working at once, that is $1,865/hour. If all 5 lawyers are working at once, 8 hours/day for 50 weeks a year, that is 2,000 hours x $1,865/hour = $3,730,000 per year ..."
So are we to believe Burdick, Rusthoven and Maley set aside all their other clients to work full-time, indeed overtime, on this case?


guy77money said...

Simple math! Don't worry folks some of that money will be put into various campaign war chests so the firm can keep racking up over priced government contract work.

Jon said...

Paul, dollars to donuts the good old boys down at B&T will say it is a simple billing error they just under reported the hours but the total is correct...

Downtown Indy said...

But they surely have dozens of paralegals, clerks and who knows what else on their staff to pad out their invoices.