• July 21, 2011

In May, 2006, the Wall Street Journal published a news story about alleged “backdating” of executives’ stock options that was explosive for quite a few U.S. corporations and perhaps none moreso than United HealthGroup.  Executives lost their jobs, the company and UHG executives paid fines, at least one executive, personally, lost hundreds of millions of dollars.  All told, the tidal wave of litigation caused a massive shift of well over $1 billion from UHG and executives back to investors, and to investors’ legal counsel, and to legal counsel for UHG  and legal counsel for UGH executives.

Even before that huge hit, UHG had been challenged with monstrous multi-forum antitrust litigation.  Even before the back-dating scandal, UHG was spending tens of millions of dollars on legal fees to defend against claims of wrong-doing.  Even before then, the giant insurer was fighting with insurers for insurance coverage of litigation costs (the original complaint was filed in 2005; here is a 2009 amended complaint).  

And it is still fighting for reimbursement of related legal fees.

One issue to be decided: are the “best firms on earth” (for example, these guys)  that much better than all the rest of us lawyers to justify their relatively stratospheric rates (how could this ever be definitively determined?)?  Should insurers not have to pay what such firms charged UHG?  Can experts really opine with disciplined methodology as to what attorneys’ fees are “reasonable” and what are “excessive”?  What is the methodology and what standard is applied?

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