"Together, Bromwich and Nigro will oversee Apple’s internal antitrust compliance policies and employee training on them for the next two years."
$1,100 an hour is not an unusually high fee for internal investigations work, nor does $70,000 per week seem unusually high for an ongoing compliance investigation and policy restructuring of an organization as large as Apple. This sort of work usually involves getting down into the weeds and looking at how even fairly low-level employees go about their jobs. The going rate for this sort of work tends to be pretty high, because companies who hire law firm to do an internal investigation tend to be in a pretty tight spot.
>Would the argument be the same if a private firm was charging the government at the same rate? Or would we be here with pitchforks demanding answers?
Have you looked at attorneys' fees for this kind of work? $1,000/hr is not unreasonable whatsoever. My friend isn't even a partner in an IntProp firm (just a five year associate) and he is billed out at $650-700/hr for the most basic of tasks.
You're not paying for the work, you're paying for the expertise regarding knowing what work needs to be done. Moreover, you're paying one of the best lawyers in the country the market rate for his time and effort, which he could just as easily earn working to oppose monitoring efforts.
You've probably heard this story before:
One day, Pablo Picasso was sketching in the park when a bold woman approached him.
“It’s you — Picasso, the great artist! Oh, you must sketch my portrait! I insist.”
So Picasso agreed to sketch her. After studying her for a moment, he used a single pencil stroke to create her portrait. He handed the women his work of art.
“It’s perfect!” she gushed. “You managed to capture my essence with one stroke, in one moment. Thank you! How much do I owe you?”
“Five thousand dollars,” the artist replied.
“B-b-but, what?” the woman sputtered. “How could you want so much money for this picture? It only took you a second to draw it!”
To which Picasso responded, “Madame, it took me my entire life.”
For a valid contract Picasso should have stated his rates upfront.
Also, it's not exactly the free market hiring thia compliance firm. Where is the competition for his services ready to pay $1k an hour? And demanding to intervieq all the famous bigshots? I think the complaint is valid whether or not they win.
For a valid contract Picasso should have stated his rates upfront.
The contract is valid if the woman accepts it; a valid contract doesn't require that the rates be stated upfront so long as the terms are disclosed and consented to by both parties.
Also, it's not exactly the free market hiring thia compliance firm. Where is the competition for his services ready to pay $1k an hour?
The other market participants for his services are other potential clients who would otherwise incur his time. Michael Bromwich works for Goodwin Proctor in the White Collar and SEC compliance groups. http://www.goodwinprocter.com/People/B/Bromwich-Michael.aspx (Goodwin Proctor is one of the biggest law firms in the world.) His client base consists of multinational conglomerates and multi-billion dollar companies, most of whom would gladly pay $1000/hour or more to avoid criminal sanctions and other penalties that could run into the tens or hundreds of millions.
And demanding to intervieq all the famous bigshots? I think the complaint is valid whether or not they win.
His job is to ensure compliance. He does this by interviewing those in charge of complying, i.e., the CEO and any executives overseeing the relevant company divisions to make sure they have taken, or are in the process of adopting, steps to ensure compliance. According to the monitor, those in charge of complying have thus far evaded most of his meeting requests, so it is necessary for him to keep issuing meeting demands until they actually agree to meet with him.
The alternative is for him to get into the nitty gritty by auditing Apple's corporate and business-line practices. This is a far more involved job, which would entail a significantly higher billing rate (mostly for additional staff, not his own personal billing rate), significantly more time spent and billed, and a significantly greater disruption to Apple's business activities.
"The contract is valid if the woman accepts it; a valid contract doesn't require that the rates be stated upfront so long as the terms are disclosed and consented to by both parties."
Actually, it depends on the type of contract, and where in the world you are.
In the US, UCC contracts don't require a price term, but other contracts do.
Since UCC does not cover services contracts, Picasso's contract would have required a price term, or some other show of consideration.
In the specific case of lawyers, most states require fee agreements that state prices up front in writing.
Oh, so you can centrally plan all of our wages and prices? I suggest you look back and see how well this concept has historically worked out.
EDIT: Allow me to illustrate the absurdity of your comment: I want to pay Mark Cuban $500/hr to do consulting for me. Why is he billing me at $25,000/hr, if he even responds? This is garbage. No human should be paid that much.
I don't think you understand what you're saying. It's not about centralized salaries or any other such nonsense. It's a simple matter of market forces at work.
To touch upon your example: If you want Mark Cuban to do consulting work for you, you pay him what he wants to be paid to do that work. He wants $25,000/hour. If you don't want to pay the rate--you don't have to and he doesn't have to do any work for you. If you just want consulting work done for $500/hour, you could probably hire anyone--but you're not getting Mark Cuban. You're also not going to get anywhere close to the best consultants--they usually charge $1000/hour or more. They can get away with this because the markets, or specifically, other people looking for consultants, are willing to pay them that much for their time. Consequently, they have a choice--$500/hour consulting for you, or $1000+/hour working for others. Most likely, they'll choose to work for the higher rate unless they have a compelling non-financial reason to work for the lower rate. You may not think they deserve that much (and on an equitable basis, they probably don't), but such concerns are not relevant to determining what the market rates for their services are.
In your example, you especially want Mark Cuban and only Mark Cuban. He is saying that, at today's market rates, no person needs $1000 an hour to live on anywhere. Those that make that much are only making it because, for one reason or another, they are providing a very scarce or indispensable service. In this case the scarcity may be artificial.
Yet, in the world that we both live in there are plenty of reasonable scenarios for $1000/hr to be a reasonable fee. Anyone who makes north of 3 million dollars a year probably makes more than $1000/hr.
$1000/hr is on the high-end for a lawyer, but would be on the low end for something like a professional speaker (or athlete, coach, CEO, hedge fund manager, or many other jobs).
Since Apple is the one complaining here, let's look at what they would consider fair pay. Tim Cook got $4.2M in pay last year (which at a very respectable 2,500 hours billed for an attorney would be $1,680 an hour). Sounds exorbitant in Apple's words, but it's mere pocket change to the 1 million shares of AAPL he got in 2011 for getting the CEO gig--currently worth a cool $556m. If you want to average across the full 10 year vesting period at the same 2,500 hours a year it still comes out to an awesome $22,240 an hour. That's not completely fair because it doesn't include the $50M or so he'll make during the 10 year period and it's possible AAPL will fail and his shares will devalue greatly. It's also possible they will at least stick with the S&P 500 and his shares will be worth a good bit more.
tl;dr yes, lots of people are worth $1000/hr and actually a whole whole lot more. Apple is fighting just because they can, which is actually the entire reason they took this all the way to a trial (and lost!). If they wanted to save money they would have settled when caught red handed. Instead they ran up a huge legal bill and will now spend more money than they could possibly save by trying to fight an "unfair" bill. It's all plain and simple arrogance.
Apple is behaving just like any really large firm protecting a stream of profits. In my second year of law one day the professor brought several bottles of rum to the class. Why ? Well he had won a case against the incumbent telco. This was great news and very special because he started the case in his 2nd year of law studies.
He was 62 years old at the time, having argued the case on and off for 41 years.
For this particular firm, this case was not an exception. They paid him hundreds of thousands of dollars (resulting in great rum), but he claims that there were other factors that made this a good deal for them. He wasn't willing to settle, so they couldn't do that, and a court loss might have lead to regulatory action if it had happened sooner, or it might have led to effective rule changes due to precedent. So they put everything they had behind delaying the case, so it would be nothing more than some cute curiosa in the newspapers. And meanwhile their profits from treating people like this keep accumulating (it had to do with what a company is allowed to do to extract payment, but that's only part of it).
Apple is probably likewise using a delaying tactic here. Not that I even find it even remotely plausible that this lawyer was selected based on merit, but apple doesn't care about that. They may use it as an argument to get another judge, but that would just be to get another judge, not because they care.
Apple has used it's famous negotiation tactics while controlling a significant portion of the market. This is probably illegal, but pays them handsome profits. They're probably trying to make those profits last.
I'm late to the party on this thread, but I want to point out that, to my lay eyes, the words "uncommon" and "unreasonable" have distinctly different meanings -- that is to say, something can be utterly familiar and commonplace while being completely senseless and out of proportion at the same time.
What makes you think the rates are "extortionate?" I don't really know if they are or not, but I'm wondering if you have some information that supports your position?
His entire argument is: "Because it's being done does not make it reasonable. There is no world in which $1000/hr is a reasonable fee for any human being to do any work."
Internal investigations are a lucrative practice area. When a company hires a firm to do an internal investigation, something has gone sideways, and companies are willing to pay top dollar to fix things.
Look at it this way. Another way this situation could have gone down is that Apple could have conducted an internal investigation of its antitrust practices before the DOJ's action against them, in order to show that they were proactively and voluntarily addressing the problems. If Apple had hired a private firm to do the investigation, $1,000+/hour would not be an extraordinary fee for the lead partner on the matter.
"Together, Bromwich and Nigro will oversee Apple’s internal antitrust compliance policies and employee training on them for the next two years."
$1,100 an hour is not an unusually high fee for internal investigations work, nor does $70,000 per week seem unusually high for an ongoing compliance investigation and policy restructuring of an organization as large as Apple. This sort of work usually involves getting down into the weeds and looking at how even fairly low-level employees go about their jobs. The going rate for this sort of work tends to be pretty high, because companies who hire law firm to do an internal investigation tend to be in a pretty tight spot.