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April 14, 2011 12:39 PM

TARP Watchdog's Report Finds Treasury Lax on Legal Bills

Posted by Brian Baxter

An audit report released on Thursday by a special inspector general for the federal Troubled Asset Relief Program says that the U.S. Treasury Department risks paying too much in legal fees by not adequately reviewing bills from large firms.

The National Law Journal, a sibling publication, reports that the TARP special inspector general (SIGTARP) focuses on Venable's billing practices and questions about two-thirds of the firm's fees as reviewed by auditors.

Though Venable is singled out for scrutiny, the report by SIGTARP Christy Romero, a former financial restructuring counsel at Akin Gump Strauss Hauer & Feld, finds that similar billing issues can be found in the legal bills from at least four other firms. (Click here for a copy of the 31-page audit report, courtesy of The NLJ.)

Romero's report finds that Venable lawyers and other professional timekeepers often failed to adequately detail their work in invoices totaling $676,840 submitted by the firm to Treasury. Venable lawyers used vague descriptions time and again to rack up escalating fees and other charges, a practice called "block billing," The NLJ reports.

Since Treasury staffers did not question the bills submitted by the firm, the SIGTARP report finds that the government ran the risk of being overbilled. As such, quality-control methods of reviewing bills to outside firms before making payments must be revised and improved.

The SIGTARP report does note that the fees paid to Venable are not necessarily improper--its auditors don't have enough information to make such a determination, given the vague work descriptions provided by the firm. Instead the reports fault both Venable for its billing practices and the Treasury's Office of Financial Stability (OFS) for a lack of oversight. (The NLJ notes that the audit report redacts the names of individual Venable lawyers handling TARP work.)

A Treasury spokesman notes that a previous report by a congressional oversight panel has found that the department's "procedures follow well-established norms for monitoring contract performance." The Government Accountability Office, which has monitored TARP contracting since the inception of the program, has stated that OFS "put in place an appropriate infrastructure to manage and monitor" its network of contractors.

In a statement to The NLJ, a Venable spokesman said that the firm "fully cooperated with SIGTARP'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 other four firms mentioned in the SIGTARP report are Cadwalader, Wickersham & Taft, Locke Lord Bissell & Liddell, Simpson Thacher & Bartlett, and McKee Nelson, which merged with Bingham McCutchen in July 2009.

The five firms have so far received about $27 million in legal fees from Treasury as of December 31.

 

•RELATED STORIES:

TARP Panel Details Law Firm Earnings from Government Contracts

TARP Ends and Treasury Hires 13 Firms to Run What Remains

Cadwalader Declines to Testify Before Congressional Oversight Panel

A Year Later, Simpson Thacher Still Treasury's TARP Go-To

Working for the Government: A Matter of Prestige, Not Profits?

Do Bailout Firms Have a Conflict of Interest?

Hughes Hubbard, Squire Sanders Pulling in Profits From TARP

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