A new audit report on the federal government's Troubled Asset Relief Program is knocking the billing practices of the Venable law firm, and is questioning about two-thirds of the firm's fees the auditors reviewed.
The 35-page report is set for release on Thursday, and it says Venable lawyers and timekeepers often failed to describe their contract work for the government program adequately. In some cases, they billed fees for time spent reviewing billing. In others, they used vague descriptions over and again.
The report blames both the Venable lawyers and the contracting officials in charge of paying for the legal work at the Treasury Department’s Office of Financial Stability (OFS).
“Venable submitted, and OFS paid without questioning, fee bills that contained block billing, vague and inadequate descriptions of work, and administrative charges not allowed under the contract,” the audit report says. “As a result, in many instances OFS could not have adequately assessed the reasonableness of the fees.”
Though the report focuses on Venable, it says similar issues could be found in the fee bills of four other law firms that worked on contract for TARP: Cadwalader Wickersham & Taft; Locke Lord Bissell & Liddell; McKee Nelson, since merged with Bingham McCutchen; and Simpson Thacher & Bartlett.
The report does not argue that the fees paid to Venable were necessarily improper because, the auditors write, many descriptions were too vague to make a determination.
Asked for comment, a Venable spokesman released a statement: “Venable fully cooperated with [the inspector general’s] review. We have not had the opportunity to read the full report, however, we are confident that Treasury received fair value for the services that we provided.”
The report comes from the acting special inspector general of TARP, an office nicknamed “Sigtarp” and headed on an acting basis by former Securities and Exchange Commission counsel Christy Romero. According to the report, the Treasury office in question has already changed the level of detail it requires from contracting law firms as a result of initial audit findings.
In one instance, a Venable timesheet used the same description for nine separate days of work: “Review and revise transaction documents; conference calls; internal conferences.”
Other timesheets billed for “attention to weekly reporting and billing issues,” for “review billing statement and weekly report” and for “attention to weekly report and administrative matters.” Such charges were not allowed under Venable’s contract with the government, the auditors wrote.
In all, the auditors examined invoices totaling just over $1 million in fees, and auditors questioned $677,000 worth of fees. On one invoice, auditors questioned 94 percent’s worth. (As of Dec. 31, the five law firms had been paid $27 million in fees.)
The report does contain a silver lining for Venable. It redacts the names of individual lawyers and amounts that would make clear their billing rates, though similar information is public in venues such as bankruptcy court. Kris Belisle, a spokeswoman for the inspector general, said the Office of Financial Stability requested the redaction of “proprietary information and names of individuals.”
Update (9:07 a.m.): Click here (PDF) for a copy of the audit report.