Doc 271 - Thomas Counteraffidavit rebutting Doc 267-2 - Example legal fees audit by Stuart, Maue,...

UNITED STATES DISTRICT COURTNORTHERN DISTRICT OF TEXAS

FORT WORTH DIVISION

HARRIS METHODIST FORT § FILED ELECTRONICALLYWORTH, §

Plaintiff, § on February 18, 2008§

v. §§

SALES SUPPORT SERVICES, INC. §EMPLOYEE HEALTH CARE §PLAN and SALES SUPPORT §SERVICES, INC. § Defendants and §

Third-Party Plaintiffs §§ CIVIL ACTION NO. 4:01-CV-0567-Y

v. §§

TRANSAMERICA LIFE §INSURANCE AND ANNUITY §COMPANY, STANDARD §SECURITY LIFE INSURANCE §COMPANY OF NEW YORK and §BERKLEY RISK MANAGERS, §

Third-Party Defendants. §

Counteraffidavit of Michael S. Thomas, CPA, ABVRegarding Declaration of Michael J. Brychel [DN 267-2]

Lisa A. ManzielManziel Law OfficesSBN: 12957595E-Mail: [email protected] Meadow Road, Suite 100Dallas, TX 75231Telephone: 214-369-5500Facsimile: 214-369-5553

ATTORNEY FOR PLAINTIFFHARRIS METHODIST FORT WORTH

Case 4:01-cv-00567 Document 271 Filed 02/18/2008 of 52

CERTIFICATE OF SERVICE

I hereby certify that this document is being filed electronically pursuant to the Court'sOrder Assigning Case to Electronic Case Filing, Docket Number 173, and Northern DistrictMiscellaneous Order 61, Rule 3, Fed.R.Civ.P. Rules 5(b)(2)(D) and 6 (a) and (e) and thatMr. Richard E. Aubin, Mr. Robert M. Candee and Mr. Andrew C. Whitaker will be notifiedthrough the Court's CM/ECF system of the filing of this document on the date of filing,Monday, February 18, 2008.

s/ Lisa A. Manziel Lisa A. Manziel


Counteraffidavit regarding Declaration of Michael J. Brychel - Page 1

COUNTERAFFIDAVIT OF MICHAEL S. THOMAS, CPA, ABV

On this day came before me Michael S. Thomas who stated the following on his oath:

My name is Michael S. Thomas.

1. Qualifications of Counteraffiant

I was awarded a Bachelor of Science in Accounting from Louisiana State University

degree in 1989 and I have been licensed as a Certified Public Accountant in Texas since

1991. I have ten years auditing experience and nine years forensic accounting experience

including litigation-related audits. I hold an Accredited in Business Valuation (ABV)

certification from the American Institute of Certified Public Accountants, which is similar

to board certification in a legal specialization in the legal profession and requires proficiency

in business valuation demonstrated through experience and a written exam. I have served

as an expert witness regarding Litigation Support in state and federal courts in the northeast

Texas area since 1999 and I am currently involved in that capacity in five cases pending in

courts in northeast Texas. I am familiar with common litigation activities and documents

such as pleadings, motions, briefs, discovery, and depositions.

2. Reference format herein

In this Counteraffidavit, unless otherwise noted all references in the formats "p. 1,

¶ 2" or "Brychel p. 1, ¶ 2" refer to DN 267-2 and paragraph references marked "¶" use only

the lowest level subsection designator appearing on the page, i.e., "p. 3, ¶ c)", not "p. 3, ¶ f)

1) c)"

For Adobe PDF pages in landscape format (11 x 8.5 inches), the ECF system

sometimes does not add page numbers at the top. This occurred with Exhibit A of Manziel's



affidavit, DN 256. In those instances, I refer to "Exhibit A, exhibit page 3", which is in bold

type in the lower left corner of the page.

3. Brychel's report would be given no weight by a trained auditor.

Because of obvious lack of appropriate education and training, obvious severe bias,

fundamental and substantial methodological errors and substantial omissions discussed

below, Brychel's report and supporting "analysis" would not be accepted as a valid audit by

someone experienced and properly trained in accounting and auditing and the "audit" would

be given no weight.

In this regard I would caution the trier of fact on attorney fee issues that although the

numerous exhibits could possibly appear impressive to someone with no particular

background in accounting, from an auditing perspective in general those provide information

that is either useless, irrelevant, or can definitely be misleading.

Regarding a tendency to mislead, indeed, the "independent" (and therefore one would

tend to assume, unbiased) "audit" mischaracterizes time summaries submitted by Plaintiff's

counsel as time records and the audit suffers from numerous methodological errors and

appears liberally laced with phrases intended to convey the idea that the summaries are a

baseless fabrication. On the contrary however, to me as an experienced accountant/auditor,

DN 256 Exhibit A, Manziel's time listing, obviously constitutes a distillation and summaries

of information in a format such as would commonly be presented to senior managers

interested in "the big picture" rather than voluminous documentation of minutia, i.e., "how

many total billable hours were spent researching and preparing the motion and brief", as

opposed to "how many six-minute increments did the attorney work on the brief on March 14

and how many on the motion?"


1 For instance, DN 256 page 56 of Exhibit A lists 22.00 attorney hours and 5.25 assistant hours for"6/12/2007 through 1/11/2008 - Preparation of Motion and Brief for Attorney Fees and Affidavit and Exhibitin support thereof". It is outright impossible that anyone could (i) prepare a 12-page Affidavit, (ii) input,review and format a 58-page subdivided spreadsheet Exhibit A, (iii) download, review and pull excerpts froma 40-page SEC corporate filing (DN 256, Exhibit B), (iv) research and draft a 5-page motion, and(vi) research and draft a 19-page brief—i.e., research, draft, format, print and proofread almost a hundredpages of custom complex information—in less than 28 hours. That comes out to less than 17 minutes perpage to perform all related research, data conversion, drafting and finalization. I assume the 28 hoursadditionally includes the David Holliday affidavit I did not examine, and that would further reduce the"preparation minutes per page" time.


One area where I do agree somewhat with Brychel's conclusions is total hours spent

on large sub-projects such as briefs. However, I reached a conclusion directly opposite from

the impression his report gives: rather than overbilling, it is quite obvious that a number of

the briefs and/or motions could not possibly have been completed in the small amounts of

time Manziel indicated. For the instant audit, no competent auditor would fail to make an

easy preliminary "preparation minutes per page" rough calculation on a few of the high-hours

sub-projects as part of designing an audit.1

Brychel's failure to even mention that on major sub-projects the hours Manziel claims

are substantially below a realistic "preparation minutes per page" rate shows either gross

incompetence, extreme bias, deliberate intent to mislead, or some combination thereof and

establishes that his report is not reliable; for this reason alone it would not be considered

reliable or credible or be given weight by anyone familiar with accounting and auditing

principles. (I note, conversely, that because attorneys often mark down clock hours to a

lower number of "billable hours", a trained accountant/auditor would not consider billing less

than actual time to be false or misleading except possibly on a pilot project, which is not the

situation here.)



4. Nature of an audit.

An "audit" is not a sheet of paper with numbers or a report stating conclusions. An

"audit" is a process. The first step is to examine the activity that will be audited and the work

product of that activity. The next step is to determine the type of analysis needed. Then the

auditor must determine the type of data that will be needed to conduct the analysis. Then that

data must be gathered and preliminarily reviewed. At that point the auditor designs an

appropriate audit process that can draw useful and reliable conclusions from the accumulated

data. A "one size fits all" audit process cannot be used, even if it is "our standard method".

Then the auditor must run the process on a subset of the data large enough to be

representative of the whole. Statistical sampling, regression analysis and related analytical

techniques are used to determine the necessary minimum size of the sample and comparison

reference data. Formal training is absolutely essential—one cannot reliably "pick up complex

statistical analytical techniques and methodology on the job". Once the auditor has

determined that the designed audit process can produce reliable and meaningful conclusions,

the process is then applied to the full corpus of the data being audited. If the data corpus is

extremely large, e.g., hundreds of thousands or even millions of individual time entries, then

the final analysis is done not on the entire corpus but on one or more representative subsets

and it is assumed that the conclusions will apply to the entire corpus. Here too, determining

which data items to include in these subsets is done using mathematical statistical modeling

techniques.

5. Recognized auditing standards

Auditing practices are governed by recognized standards; persons who purport to

conduct audits are not free to use arbitrarily selected techniques and methodology, perhaps


2 "I employed - to the extent possible considering the nature of the fee data - the standard legal feeauditing methodology developed and utilized by Stuart Maue in reviewing and auditing billing for legal fees."Brychel p. 3, ¶ 7


even "home grown" methodology.2 Like "common law", there is a set of Generally Accepted

Accounting Principles ("GAAP") and Generally Accepted Auditing Standards ("GAAS").

I note with some concern that although Brychel talks about "standard" methodology and

"auditing", not once does he mention accounting standards either in a general way, e.g.,

"standard accounting methodology" or by mentioning the specific recognized standards

GAAP and GAAS, e.g., Brychel p.3, ¶ 7: "This methodology is based on generally accepted

principles regarding …" As an accountant, I would have severe reservations about the

reliability of any purported "audit" from someone who doesn't want to mention the existence

of industry-promulgated standards that apparently were not followed.

6. Common audit errors

A number of methodological errors commonly appear in audits, some of which I find

in Brychel's report.

One must first examine and consider the overall analytical approach that was used.

Analysis of any type of data basically proceeds from one of two viewpoints, "data-driven

thinking" or "theory-driven thinking". The data-driven approach is, "Let's look at the data

and see where it leads us." It is my understanding that this is the approach courts normally

use.

Theory-driven thinking is the exact opposite: "I know what is the correct answer, now

let's find data to support it." Theory-driven thinking typically accepts uncritically any

information tending to support the examiner's a priori conclusions and harshly criticizes even

the most immaterial information that might cast doubt on those conclusions. If data strongly


3 For example, the average net worth of Bill Gates and any three random individuals exceeds onebillion dollars per person.


contradicts the examiner's a priori conclusions, the examiner either declares the data

"obviously in error" without providing specifics and then ignores it, mischaracterizes the

data, misrepresents the significance of the data, or simply fails to mention the data, hoping

the absence will go unnoticed. "Straw-man" arguments are particularly common when the

theory-driven approach is used.

Errors introduced by a theory-driven approach can be particularly problematic as the

data corpus and the report increase in size and complexity, as it is easier to get "lost in a

crowd".

Audits can suffer from other methodological errors such as voluminous exhibits that

repeatedly present the same data with slightly different "analyses", which is the case with the

Brychel exhibits. Seeing a single "problem" item in five different "analyses" can leave the

subconscious impression five unrelated problem items exist. Particularly with modern

computer-generated data tables, a plethora of neatly-formatted numbers can convey the false

impression that a detailed analysis was conducted.

Other methodological errors are that audits can mischaracterize or fail to disclose:

(1) the specific nature and/or sources of the sample data; (2) the specific nature and sources

of reference data; (3) the size of the sample and reference populations; (4) the "product mix"

of the sample and reference populations; (e.g., what percentage of each were pleadings,

briefs, letters); (5) how the reference data was compiled and its reliability determined;

(6) whether and how statistically-aberrant items in the reference data were identified and

handled;3 (7) data sampling error rates; (8) the geographical regions from which reference



data was compiled and whether there are statistically-significant variations by region; (9) the

age of reference data and the older/more recent "age mix"; (10) which independent

organization(s) examined and confirmed reliability of the examiner's comparison reference

data, calculations and methodology in general (the Enron/Arthur Anderson "Who is auditing

the auditors?" issue); and (11) whether definitions and concepts used by the auditor for a

particular audit are appropriate and consistent with the sample and reference data and the

situation (e.g., Brychel's undefined "sophisticated" consumer of legal services p. 3, ¶ 7).

Another common indicator of the theory-driven approach mentioned above is these

types of failures to provide specifics. Instead, the examiner makes only broad unsubstantiated

conclusory statements and the end user is provided no way to determine whether they are

correct.

7. Preparation for this review

To prepare this review I examined the Plaintiff's attorney fees motion DN 254, brief

DN 255 and affidavit DN 256, Brychel's report DN 267-2, Plaintiff's summary judgment

motions and briefs (first motion DN 83 and brief DN 84, second motion DN 178, brief

DN 179 and appendix DN 198), Plaintiff's brief requesting reconsideration DN 228, and

Defendants' second motion for summary judgment DN 186. I did not review those

documents to analyze the legal issues in detail but rather to obtain an understanding of the

depth of the material contained in briefs and similar documents in this case, the amount of

supporting references, etc. I also spoke with Lisa Manziel and Joseph Reinckens about how

various documents were prepared and I reviewed certain parts of the Stuart Maue website,

pages from which are attached hereto as Exhibit A, incorporated herein.


4 Lest the Court misunderstand, although one may not practice law, medicine, etc., without anappropriate license, that is not the case with accounting, even auditing. A CPA license is only required toprovide an opinion on certain types of financial audits. But the fact that no license is required still does notautomatically endow an opinion with credibility and weight.


8. Brychel's lack of accounting qualifications

Brychel states that he is an attorney but he states no information as to his

qualifications as an auditor. It is well-known that auditing and law are distinct fields and that

qualifications in one field simply do not equate to qualifications in the other. Auditing is an

accounting activity. Brychel's law degree does not qualify him to perform accounting

activities or to render an accounting opinion any more than it would qualify him to perform

surgery, render a medical opinion, a psychiatric opinion, or an engineering failure analysis

opinion—even if he worked for several years as an attorney for a hospital, a mental health

facility, or an engineering firm. Some things simply can't be learned through "on-the-job

training". That is why people spend tens of thousands of dollars going to school to earn a

degree in accounting, so they will be qualified to perform accounting activities and render

accounting and auditing opinions.4 Certainly, over time an intelligent, well-educated person

who regularly interacts with accountants can pick up enough terminology and accountants'

mannerisms that persons not trained in accounting can get the impression he is appropriately

trained and qualified. But if having a law degree and learning some accounting jargon

qualified a person to be an accountant, attorneys would routinely handle their own operating

and trust accounts rather than hire bookkeepers.

One of the things the Stuart Maue webpages show is that Stuart Maue does not require

any accounting background at all for attorneys that it hires as auditors, as can be seen at

Exhibit A, pp. 8-9. In evaluating the credibility of Brychel's report, one must consider that



Brychel offers the accounting opinion of a person with no training in accounting on the

grounds that an employer gave him a job title indicating that he is an auditor when in fact,

he is not qualified to perform auditing tasks or to render an accounting/auditing opinion. I

found nothing in Brychel's report indicating he has any accounting training.

9. Brychel's lack of understanding about auditing

Brychel's report appears to be self-contradictory and shows a lack of fundamental

understanding of the duties of an auditor. He says for example, at Brychel p. 2, ¶ 4, "... I

have worked with law firms to refine their billing practices; ... I have been consulted by

corporations, insurance companies, governmental bodies and other sophisticated consumers

of legal services regarding legal fee analysis and legal billing practices." Yet he then says,

"My primary duty as a legal fee auditor is the identification and quantification of fees for

legal services which are unsupported or appear unreasonable." No, any auditor's primary

duty is to determine whether the records accurately reflect the situation as they state it to be.

10. In charge - Brychel p. 3, ¶ 6

Brychel p. 3, ¶ 6 states, "I was in charge of the review of the Manziel Affidavit and

the attached time records." However, it appears he never states that he himself performed

any part of the purported audit, in which case the entire report may be made not on personal

knowledge. As noted, the time summaries are not "time records". Perhaps the reason

Brychel didn't mention that is because he didn't know it—he simply signed off on something

actually prepared by someone else.

11. Who actually prepared the "audit"?

Of course, this raises the question of who actually prepared the "audit". One of the

things that I found particularly disturbing about the Stuart Maue website is that no one at all



is identified. Although the site contains lots of advertising self-hype, it is impossible to tell

the actual qualifications of anyone performing the "audits" or even simply their names, job

titles and specific duties–one is left completely in the dark. Are they degreed accountants?

"Accounting technicians" who, like Brychel, have no accounting training? Are they even

Stuart Maue employees, or is the work outsourced to whichever independent contractors

happen to be available? And even if they do have accounting training, how would

accounting training qualify them to understand what was involved in the preparation of legal

documents in this case? I could find nothing in Brychel's report that answered any of these

questions. If indeed there was a "team", there is no indication of their qualifications other

than that the person in charge is not an accountant. The report may in fact be simply a lay

opinion on accounting issues. For this reason, a trained accountant or auditor would not

consider it reliable.

12. Methodological problems with the audit

Brychel's report evidences a number of methodological problems that make the overall

report unreliable. It appears he employed the theory-driven approach; it is obvious that

Brychel did not approach the audit from an unbiased perspective, which itself is a significant

methodological error, and in fact he started with a substantial negative bias. Many of

Brychel's conclusions are based on unsupported speculation. Much of that speculation

obviously assumes incompetence or improper motives by Manziel's firm with no accounting

basis for such assumptions. Brychel p. 2, ¶ 4 states that his, "primary duty as a legal fee

auditor is the identification and quantification of fees for legal services which are

unsupported or appear unreasonable." Throughout, Brychel points out alleged problems in

the form of a purported "audit" and yet repeatedly fails to point out any serious specifics.


5 Brychel p. 6, ¶ c) "Impossible Long Billing Days" and "Other Extraordinarily Long Days",regarding Brychel Exhibits B and C of the same names.

6 Brychel p. 9, "Manziel charges extraordinarily small tasks separately - and each at theunnecessarily large increment of 0.25 hours - thereby artificially inflating the actual time recorded."

7 Brychel p. 9, "on April 21, 2005, Manziel sent a brief … email to Andrew Whitaker regardingchanges to a motion. For this she charged fifteen minutes … Manziel copied Richard Aubin on this email.For that "cc" Manziel charged another fifteen minutes." (italics by Brychel)

However, Brychel's Exhibit F, DN 267-2, p. 59, shows Manziel charged, "LAM email to Whitakerre: Joint Motion to Waive Oral Argument; requesting Whitaker to advise ASAP" but the next entry is "LAMemail to Aubin re: Joint Motion to Waive Oral Argument; Change to be made" (cont'd …)


As pointed out elsewhere herein, it is obvious from some of Brychel's statements and

conclusions that for the most part he did not review major documents. Yet at Brychel p. 3

¶ 7 he states that he employed "the standard legal fee auditing methodology developed and

utilized by Stuart Maue …." Failure to review readily available major documents is a

fundamental methodological error that makes the entire "audit" inherently unreliable. It

demonstrates that either the auditor does not know how to design and conduct a proper audit

using industry-accepted auditing criteria or he intentionally disregarded accepted methods

or he approached the audit process with severe bias that essentially guaranteed unreliable

results.

Many "objections" of Brychel ¶ 10 through ¶ 12, are either nitpicking or state the

obvious., e.g., any large volume of data entries will contain scrivener's errors. Brychel p. 4,

¶ a).

One recognized auditing rule is that section labels, titles, and wording in reports

should not be misleading.5 Another is that an auditor should not assume improper motives

or activity without a reasonable basis.6 A third is that the auditor should not make or imply

accusations without reasonable basis. 7 A fourth is that accusatory statements need specific


(cont'd) (original all uppercase, italics added) Based on the distinct descriptions there appears to be no validreason to assume this was the cc: to Aubin instead of a different email.

8 Brychel p. 5 ¶ b) "Such duplication is already strongly suggested by the information in the petition…" (italics added)


evidence, not vague generalities.8 While it is true that an auditor should approach the

subject with "professional skepticism", this does not mean a strongly negative bias is

appropriate or acceptable—this is not a fraud audit. In-house collaboration does not

automatically raise suspicion of duplication of effort, particularly in fields such as law where

collaboration is the norm. Yet Brychel laces his audit with express unsubstantiated

accusations, e.g., Brychel p. 5, ¶ b) "duplication is already strongly suggested"; Brychel p.

12, ¶ a) "Numerous identical tasks are attributed to both an attorney and an assistant." (italics

by Brychel); Brychel p. 14, ¶ c) "Manziel explicitly charged for two attorneys to perform

the same task."

13. No explanation of methodology - Brychel p. 3, ¶ 7

Brychel p. 3, ¶ 7 states that he employed, "the standard legal and auditing

methodology developed and utilized by Stuart Maue in reviewing and auditing billing for

legal fees. This methodology is based on generally accepted principles regarding attorneys

fee billing as reflected in case authorities, ethical rules and opinions, scholarly articles, and

billing guidelines propagated by sophisticated consumers of legal services." However, he

wholly fails to describe such methodology. He does not identify any particular "generally

accepted principles", any purportedly authoritative cases, ethical rules or opinions, any

articles, or even generally describe the "billing guidelines propagated by sophisticated

consumers of legal services". He does not provide any facts or information from which I

could determine what he considers to be a "sophisticated consumer" of legal services or what



other types of legal services consumers he believes exist. I found nothing indicating how his

purported "sophisticated consumers" relate to this case, although he certainly seems to

intimate that these straw-man "sophisticated consumers" would agree with him.

14. Limits of Brychel's opinion - Brychel p. 4, ¶ 9

At Brychel p. 4, ¶ 9, Brychel himself states, "I do not opine upon the ultimate

reasonableness of the fee sought." In essence, he merely acts as a surrogate for Defendants'

attorney Aubin, pointing in all directions with mainly "smoke and mirrors" types of general

"suspicions".

15. Records not contemporaneous - Brychel p. 4, ¶ a)

Brychel p. 4, ¶ a) objects, "the time records appear to have been compiled in hindsight

using a docket or calendar as a guide." What Brychel mischaracterizes as "time records" is

indeed a task-based summary compiled and prepared to track fairly closely the docket sheet,

for the Court's convenience. If Manziel had used Brychel's suggested approach, the Court

would have to sift through weeks of individual entries of an hour here and an hour there,

fifteen minutes on another day, etc., just to figure out how much time was spent on one

particular motion or brief. Furthermore, as noted above, it is a lot easier for irregularities to

get "lost in the crowd" if voluminous detail is provided and Plaintiff's listing constitutes a

distillation and summaries of information in a format such as would commonly be presented

to senior managers interested in "the big picture".

16. Timekeeper not identified - Brychel p. 5, ¶ b)

Brychel p. 5, ¶ b) complains, "time records … do not identify the timekeeper."

Brychel himself then identifies the primary timekeepers—either Manziel, Reinckens, or one

legal assistant. He then complains about potential duplication of effort and even says, "Such



duplication is already strongly suggested by the information in the petition …." (italics

added) Yet he does not point to any information at all, much less "strongly suggestive"

information. He is again wasting everyone's time with unwarranted totally speculative

assumptions that do not in any way assist the trier of fact.

17. Dates not stated - Brychel p. 5, ¶ c)

Brychel p. 5, ¶ c) complains about, "Impossible Long Billing Days" and "Other

Extraordinarily Long Days". Brychel points out, "86.00 hours recorded for September 13,

2004, for attorney time for "Research and preparation of filed Harris' appellate brief" or the

202.15 hours recorded on February 21, 2006 for multiple tasks . . .", and indicates it, "is not

clear from the petition" whether all the work was performed on one day or over a period.

Even with just a cursory examination it is patently obvious some of the documents

could not have been prepared in a single day, e.g., Harris' second summary judgment motion

DN 178 has 77 footnotes in 19 pages and Harris' second summary judgment brief DN 179

has 55 footnotes in 27 pages, both with dozens of references to specific pages in various

documents. Any accountant or auditor would realize that and understand that the hours

shown are not for a single day's work but for a task's work. Understanding this, anyone with

even rudimentary training and competence in designing audits would not waste time

compiling and would not present the grossly misleading Brychel Exhibit B and Brychel

Exhibit C or use the misleading titles, "Impossible Long Billing Days" and "Other

Extraordinarily Long Days", which give the false impression of substantial unreliability

where in fact, none exists.



18. Descriptions not sufficiently specific - Brychel p. 6, ¶ d)

I do not claim to be an expert on "lodestar analysis". It is my understanding that for

a lodestar analysis the court first multiplies reasonable hours expended/claimed by an hourly

rate to arrive at the base "lodestar amount". In a second step, the court then may adjust the

dollar amount up or down depending on a number of factors described in the Johnson case

discussed in the attorney fee brief.

However, it seems Brychel is yet again portraying his personal biases as industry

standards and trying to give the impression of problems when none exist. Brychel p. 6, ¶ d)

states "In a lodestar analysis, specific task descriptions are critical [emphasis added] to

provide the fee paying party or finder of fact with information that allows the determination

that different timekeepers performed work related to the case, unique from the work of other

timekeepers, and in a reasonable amount of time. ... Tasks should be specific enough to allow

a reviewer to determine: ... that timekeepers did not duplicate each other's efforts." (p.7)

The level of timekeeping detail Brychel describes as "critical" simply isn't done in the

legal profession. Contrary to his assertions, typical time entries would read "Worked on

petition", or "research and draft petition", they would not identify particular paragraphs or

issues addressed.

Furthermore, in this case it is completely irrelevant which attorney timekeeper

performed attorney services or which legal assistant timekeeper performed assistant services

because Plaintiff and Defendants have stipulated to a single hourly rate of $250 for attorney

time and a single hourly rate of $75 for legal assistant time [DN 253] and Manziel listed

attorney hours and assistant hours separately.


9 See page 3. Additional examples:

1) first summary judgment motion DN 83, 82.50 attorney hours +25.50 assistant hours = 108 hours, dividedby 20 pages = 5.4 hours per page. There are 33 Appendix cites just on pages 5-6. See Exhibit C.

2) first summary judgment brief and Appendix 79.50 attorney hours + 25.50 assistant hours = 105 hoursdivided by 42 pages in the brief = 2.5 hours per brief page and zero hours to prepare the entire Appendix.


Brychel keeps talking about "unique" work but never defines that and never shows

an example of timekeepers "duplicating each other's efforts". This is not about painting the

same chair twice or two people each noticing the same deposition. Collaboration is the norm

in legal work.

Brychel complains because he cannot tell whether "Manziel timekeepers performed

… tasks in even a minimally efficient manner." As discussed above, total times Manziel

claims for various sub-projects are unrealistically low based on "preparation minutes per

page" rough estimates.9

19. Verb lacking - Brychel p. 7 ¶ 10 d) final paragraph

Brychel p. 7, ¶ 10 d) final paragraph states, "many entries do not include a verb and

as such the actual activity performed cannot be determined." I discussed this with Manziel.

The entries basically involve various documents in the third-party action. Manziel indicated

that with the types of "no verb" documents involved in general, the only possible actions

could be "review", "draft", "prepare" or "answer/respond to" and that the amount of time

would clearly indicate whether the activity was "review" or "draft/prepare/answer".

Anything from another party to another party would be "review" and would have a relatively

low time amount, generally less than two hours. Anything between Plaintiff and Defendant

with a low amount would be "review" and anything with a higher amount would be

"draft/prepare/answer".



Although it would be better to include a verb, this is the kind of material auditors deal

with every day and a properly designed audit could easily make this distinction through

analysis and procedures designed in the audit.

20. Quarter hours rather than tenths - Brychel p. 7, ¶ a)

Brychel p. 7, ¶ a) talks about the fact that Manziel billed many tasks in quarter-hour

increments instead of tenth-hour (six-minute) increments.

Judging from information on the Stuart Maue website, it appears that Stuart Maue

primarily deals with extremely large legal bills in extremely high-dollar litigation. This is the

only information available to me for evaluation, since Brychel did not identify any client or

any case or any court in his report, he just gave general descriptions. The Stuart Maue

website indicates that Stuart Maue routinely audits legal bills in the $10 million, $50+

million, and even higher range, for multi-national mega-corporations. Details and billing

methods that might be perfectly appropriate in such extremely high dollar situations are not

realistic in cases involving much lower amounts.

Although Brychel may feel more comfortable with tenth-hour increments because it

is more convenient for him, it is unreasonable to demand that at the end of long litigation a

law firm must totally retroactively revamp its billing practices to suit the personal tastes of

a third-party auditing firm and unreasonable to imply that a law firm's failure to do so is

somehow improper and its client should be penalized.

Furthermore, judging from the overall tenor of Brychel's report, if Manziel did redo

her billing in tenth-hour increments, Brychel would then claim that the records—to use his

words (Brychel p. 4, ¶ 10)—"lack common and minimal indicia of reliability and accuracy"

because the tenth-hours were not contemporaneously recorded in such units.



21. Emails entries - Brychel p. 8-10

Brychel p. 8-10 is a diatribe full of distortional phrases that significantly exaggerate

the situation merely because Brychel prefers a different unit of measurement: "extremely

brief", "For these fifteen words", "a pattern of charges", "extraordinarily small tasks",

"unnecessarily large increment", "artificially inflating", "exaggeration of time", "tiny tasks",

"inflated time increment", "no more than a few seconds", "time between [Manziel's] email

and [Aubin's] response", "scenario repeats", "entirely inappropriate", "extraordinarily brief

tasks". All that in less than three double-spaced pages!

Regarding specific complaints, emails are not telegrams, charged by the word or by

reading time. A charge for email, and a lot of other quarter-hour activities, includes: (i)

retrieving the file, (ii) reviewing file notes, (iii) checking recent emails, and for new emails,

(iv) determining what needs to be done, (v) deciding how to proceed at the moment, e.g.,

send an email, make one or more phone calls, instruct a legal assistant or secretary to perform

some activity and/or other activities, (vi) drafting or reading the email/letter, etc.,

(vii) sending the email/letter, (viii) printing out a file copy, (ix) updating file notes,

(x) perhaps forwarding a copy to a legal assistant or staff attorney, and (xi) putting the file

back. All of those are legitimate activities involved with "sent (or read) email" or "sent

letter", and the cluster of activities cannot be performed in six minutes, regardless of how few

words the email may contain.

Brychel p. 9, final paragraph, points out that the total time between when Manziel sent

an email and received a reply was supposedly 15 minutes. This is yet again grasping at

straws trying to portray nothing as a significant problem. First, the amount of time between

transmission and reply has no bearing on how long it took to prepare for and draft an email.



Second, even if a reply was sent 15 minutes later that does not mean it was received and read

immediately.

Brychel p. 8, first paragraph, mentions "Sample emails provided to me." He doesn't

even claim he has seen all the emails Aubin has. He has no way to know whether the few

samples actually represent a true picture of email transactions in this case. Once again, this

is a major failure in the design of the audit. Without the full population of emails Aubin has

it would be very difficult for an auditor to draw reliable conclusions about the emails.

Brychel p. 8-9, EXHIBIT E says, "it is generally encouraged that several brief

telephone conferences and/or email exchange be combined in a single entry where they

cumulatively total 0.10 hours." Does Brychel truly comprehend that "0.10 hours" is six

minutes? Several telephone conferences? Within one six minute period? And … "it is

generally encouraged" … by whom? Audits and such are supposed to assist the trier of fact,

not simply make vague general statements. Brychel has not shown that billing in different

increments would substantially reduce the overall average time on emails, etc. It might

actually increase billed time, e.g., instead of rounding 18 minutes of work down to 0.25 hours

it might have result in a charge of 0.30 hours.

Regarding Exhibit E, "All 362 Email Tasks" and Exhibit P also discussed below, I

note two things particularly worth mentioning, particularly considering Brychel's objections

to quarter-hour billing. First, quite a few emails are billed at 0.25 hours total but are between

Manziel and Reinckens. They commonly are described as "LAM Rev. Email from

Reinckens [details omitted]". There is no corresponding "Reinckens email to LAM" time

entry. Thus, the single entry represents both one attorney's time to prepare the entry and the

other's to read it—just over 0.10 hours each.


10 Brychel p. 8 says one email was charged at 2.50 hours. However, at his Exhibit E DN 267-2 p. 38,next to last entry, the description reads "LAM email to and conference with client re: curriculum vitae;synopsis of case" (Exhibit all uppercase, italics added)


Second, I note that only nine of the 362 email entries exceed 0.50 hours and the

maximum time for any email is one hour.10 Judging from the descriptions it appears some

of those emails involved multi-lawyer negotiation of wording on reports, etc., and other

delicate and typically time-consuming activities.

Although Brychel rails against the "evils" of quarter-hour increments, he provides no

information regarding how common quarter-hour billing is in various areas of the legal

industry compared to tenth-hour, especially in plaintiffs' firms or firms that normally work

on a contingent-fee basis. In fact, Brychel doesn't even say whether Stuart Maue bills in six-

minute increments. Brychel p. 3, ¶ 5 says "Stuart Maue is compensated for its time on an

hourly rate …." Does that mean he himself bills in one-hour increments?

22. Truncated entries - Brychel p. 11, ¶ b)

Brychel p. 11, ¶ b) objects, "Entries are truncated. Numerous entries … are simply

incomplete." Harris submitted task-based time summaries such as senior managers would

expect, printed from a database. Databases normally limit the length of individual fields.

A qualified auditor does not need the full title of each document to determine its basic nature,

i.e., plaintiff's pleading, third-party defendant's interrogatory answers, etc. Also, copies of

all pleadings, discovery, etc., were provided to all parties, so if Brychel could not determine

the nature and content of a document, he could have simply asked Aubin, the attorney who

requisitioned the audit. In fact, most of the truncated entries still contain far more detail than

is common in attorney billing descriptions, which tend to be along the lines "Letter to defense

counsel re Herman deposition". Again, a independent auditor attempting to assist the trier



of fact would try to determine if the missing information is pertinent and if so, find out what

the truncated information added to the entry. It appears that once Brychel finds something

to question, he stops his audit procedures and immediately concludes, without substantiation,

that the time entry represents a questionable fee.

23. Assistant tasks at attorney rates - Brychel p. 11, ¶ c)

Brychel p. 11, ¶ c) objects to two legal assistant activities being charged at attorney

rates, the first on May 2, 2003. Presumably this refers to the entry on Manziel Exhibit A at

the top of exhibit page number 30, which shows "0.25 Atty Hrs" and reads, "LA email to

LAM re: s/w Aubin re: Motion for Summary Judgment; Aubin requesting settlement". I

disagree that this is mischarged. There is no corresponding entry "Review of email from

LA". In the format used, it appears Manziel has charged 0.25 attorney hours to review the

email and did not charge the time it took the legal assistant to prepare and send the email.

On the other hand, I agree with Brychel that the February 16, 2006 entry is incorrect.

The entry, on Exhibit A exhibit page number 45, reads, "LA email to LAM re: Crosson

response to Sales 2nd Motion for Summary Judgment". Unlike the May 2, 2003 entry, this

entry is followed by, "LAM rev. email from LA re: Crosson response to Sales 2nd Motion

for Summary Judgment." I have discussed this with Manziel, who agrees the time entry was

put in the wrong column. That would reduce the total by $43.75, from $523,837.50 to

$523,793.75.

24. Same task by attorney and assistant - Brychel p. 12, ¶ a)

Brychel p. 12, ¶ a) complains, "Numerous identical tasks (italics by Brychel) are

attributed to both an attorney and an assistant. There is nothing in the fee petition to suggest

that the attorney and assistant provided unique contributions. … This format … suggests



likely duplication." (italics added)

The format does not suggest "likely" duplication. That is another unwarranted theory-

driven biased assumption and again indicates Brychel's "audit" is unreliable. There is

nothing to suggest that the attorney and assistant did not provide unique contributions.

Collaboration is routine in these situations.

25. Failure to remove redundant, unnecessary or excessive charges - Brychel p.12, ¶ b)

Brychel p.12, ¶ b) again tries to mischaracterize routine billing practices as either

grossly incompetent or fraudulent massive overbilling, repeatedly misrepresenting facts or

presenting information out of context. Brychel claims to be presenting an audit. He should

not be advocating a position, especially one based exclusively on speculation, personal

preferences, bias, and conclusions based on insufficient examination or flawed methodology.

26. Intrafirm communication - Brychel p. 12, ¶ 1)

Brychel p. 12, ¶ 1) complains about "routine intrafirm communication, thereby

inherently doubling the cost of the communication." This is a ridiculous objection. If a

company holds a "routine" training session for 30 people, of course all 30 people get paid,

not just one. It is routine for attorneys and assistants to communicate regarding the case. In

fact, it is vital that all those working on any particular case understand the ins and outs of the

case and the work that the other parties are doing, to avoid duplication of work product.

27. Intrafirm emails - Brychel p. 13, ¶ EXHIBIT P

In the same vein, Brychel p. 13, ¶ EXHIBIT P complains of, "numerous other

instances (75) where … Manziel charges to review email from attorney Reinckens." Two

attorneys are each spending time working on the client's case. They must communicate with

each other regarding what is going on, even if the communication is by email. There is


11 0.25 hours times the $250 hourly rate stipulated in DN 253


certainly nothing unusual about that. If an attorney retains me to perform accounting work

for his client and part of that work involves discussions with the attorney, the attorney bills

the client for his time and I bill the client for my time. As discussed in the previous

paragraph, communication is vital to prosecuting a case and it is appropriate to charge your

time for those communications.

28. Add hours due to multiple parties - Brychel p. 13, ¶ 2)

Brychel p. 13, ¶ 2) continues Brychel's unsupported speculation: "Manziel may use

the fact that …"; "Manziel may be doubling …" (italics added). Brychel's "example, on

August 18, 2002" is no example at all. Not only does he not attach the email to Whitaker, he

doesn't even attach the email to Aubin—the attorney who requested the audit. Brychel

simply assumes from two general task descriptions that a 19-year member in good standing

of the Texas Bar is trying to cheat his client out of $62.50 11 by double-billing on an

email—the same Bar member who in the fee application to the Court listed for a number of

major "sub-projects" times that are unrealistically low based on "preparation minutes per

page" calculations as shown by the examples discussed at page 3 and footnote 9 on page 16.

Brychel again offers the Court nothing but speculation and a recommendation that the

Court waste its time to conduct "an examination of the emails".

29. "Routine administrative tasks" - Brychel p. 14 ¶ 3)

Brychel p. 14 ¶ 3) objects "Manziel's affidavit explicitly seeks compensation for the

clerical and administrative tasks of "opening a file"."



The first billed item on Manziel Affidavit [DN 256] Exhibit A, Exhibit page 1 is:

Date Doc # Atty Hrs Asst Hrs Description of Legal Services06/29/01 001 14.00 5.50 Research and preparation of Harris' Original Complaint

This shows again Brychel's "rush to judgment" theory-driven approach of assuming

impropriety and then simply assuming data exists to support the conclusion.

It also shows his failure to follow basic auditing procedures such as "look at the data".

30. Formatting - Brychel p. 14 ¶ 3)

Brychel p. 14 ¶ 3) complains about "internal discussions regarding '"formatting"

pleadings". This is discussed below at p. 17, ¶ 6) regarding "recycling". Manziel and

Reinckens have told me the extensive formatting changes were an advocacy decision, not a

discussion about margins, etc.

31. Clear Duplication of Effort - Brychel p. 14, ¶ c)

What Brychel p. 14, ¶ c) calls "two attorneys [performing] the same task" is simple

collaboration—a common practice in the legal profession; two people painting different

rooms in the same house is not "duplication of effort".

32. Charges Unrelated - Brychel p. 14, ¶ d)

Brychel p. 14, ¶ d) again makes unwarranted and erroneous assumptions because of

his biased theory-driven approach. Manziel submitted a sworn affidavit stating under penalty

of perjury that the time entries related to the case. Just because the individual entries do not

expressly include the name of the case is no reason to, in essence, accuse Manziel of billing

fraud and perjury. Adding the word "necessarily" does not change the accusations: "These

tasks do not appear necessarily related to the current civil action." (italics added) These

types of baseless assumptions and accusations again show why an experienced



accountant/auditor would consider Brychel's audit inherently unreliable.

33. Professional Training - Brychel p. 14 ¶ e)

Brychel p. 14 ¶ e) does raise what could appear to be a legitimate objection—why

reviewing an order would take four hours, and "Manziel appears to doubt her own

timekeeping", including the comment "*** FOUR hours ??? ***". Reinckens informed me

that while preparing the time summary sheets he added the notation as a "note to self" that

he inadvertently forgot to remove. After adding the note he examined order DN 173, the

Electronic Case Filing order. The order required each attorney to complete a multi-part

tutorial and for attorneys of record to file a certification. The total process takes about two

hours per person—hence four attorney and two legal assistant hours.

Brychel describes this as "Professional training and research that allows an attorney

to maintain basic competence . . .". (italics added) Manziel informs me that this is the only

case she has ever had that requires electronic filing, that electronic filing is still not common

in Texas and that the vast majority of Texas attorneys (she estimates over 95 percent) have

never had any need to learn or use the Northern District's or any other Electronic Case Filing

system. Accordingly, as an accountant and auditor I would consider time spent for a single

case to be properly billable to the client rather than "to maintain basic competence". This is

another example of Brychel applying criteria not appropriate to the circumstances due to

inadequate audit design. It also demonstrates his severe bias and eagerness to "rush to

judgment". Instead of determining what complying with the order actually required, he again

simply estimated reading time.



34."Form" pleadings - Brychel p. 15, ¶ 1)

Brychel p. 15, ¶ 1) objects about "extraordinary amounts of time" for "form

pleadings". I discussed this with Manziel who indicated that the time was not simply to type

up and mail the 1-2 page notice but also the scheduling and other logistics.

35. Herman Deposition - Brychel p. 16, ¶ 2)

Brychel p. 16, ¶ 2) objects that 'Manziel records time of 13.50 hours for "Deposition

of Karen Herman"' at DN 256 Manziel Exhibit A, exhibit page 23. Exhibit "B" hereto is the

cover page of Ms. Herman's deposition, which indicates that the deposition concluded at 9:38

p.m. With travel time and other typical pre- and post-deposition activities, 13.50 hours is not

unreasonable. Again, Brychel could have simply asked Aubin how long the deposition took,

instead of making assumptions not supported by the documents.

36. Letter to Aubin - Brychel p. 16, ¶ 3)

In connection with Brychel p. 15, ¶ f), Brychel p. 16, ¶ 3) complains, "a legal assist

charged 30 minutes and … Manziel charged three hours and 30 minutes for "LAM Letter to

Aubin requesting deposition dates; topics of deposition."

Again, with the task time summary approach Manziel employed, time spent reviewing

the file, determining topics, checking personal availability, drafting the letter, etc., is all

lumped together, in which case the total time is probably not unreasonable.

37. Mediator Fax - Brychel p. 16, ¶ 4)

Brychel p. 16, ¶ 4) complains, "On one instance … a Manziel legal assistant charged

2.50 hours for what is described as a fax to the mediator. It is not entirely clear whether it

is the mere act of faxing … or whether preparation of the document was also included."

(italics added)



Simply looking at surrounding entries shows no separate entry for preparation.

Brychel is again trying to justify a theory-driven a priori conclusion instead of investigating

the full facts.

38. Other Parties' work - Brychel p. 17, ¶ 5)

Brychel p. 17, ¶ 5) complains, "Manziel appears to charge frequently and in large time

amounts to review the work product of other parties that may not relate to representation of

her client. While a limited review of third-party pleadings may have been warranted …"

(italics added).

Brychel again talks only in vague general terms; not once does he identify any

particular amount as excessive; not once does he say what he believes would be a reasonable

amount.

I note that most of the entries have quite low time amounts (0.25-1 hr) except for

reviewing briefs and discovery responses. Regarding briefs, Manziel informs me that a

number of activities were occurring simultaneously or in rapid succession, such as cross-

motions for summary judgment with responsive and reply briefs due shortly thereafter, so

she spent more time reviewing the third-parties' arguments, etc., hoping to find information

useful for responses or replies, and that in some cases she did find and use information.

39. Recycling same work product - Brychel p. 17, ¶ 6)

Brychel p. 17, ¶ 6) complains about "recycling the same work" and notations that 'the

2006 motions required "no changes"', stating, "A comparison of the actual work product

should resolve whether and to what extent Manziel attempts to charge multiple times …."

I was able to perform such a comparison in under ten minutes. The first summary

judgment motion DN 83 has 15 footnotes, but the 2006 update DN 178 has 77 footnotes.



The first brief DN 84 has 5 footnotes in 36 pages; DN 179 has 55 footnotes over 27 pages.

There are extensive "formatting" differences. In the first motion/brief all the references are

in-line; in the second, references and large blocks of explanatory side comments were moved

to footnotes, making the narrative substantially easier to follow. Manziel confirmed to me

that the changes were done for improved advocacy. Also, all cites to the Appendix in the

first motion/brief, more than 200, had to be converted to DN references and re-checked in

the second set.

Before, in essence, accusing Manziel of substantial double billing, Brychel should

have done what any competent auditor would do before making serious accusations—spend

a few minutes examining the documents, as he himself suggests.

40. MSJ Appendix - Brychel p. 18, ¶ 7)

Brychel p. 18, ¶ 7) complains, "The appendix [Harris second summary judgment

DN 198] consists of a three page affidavit and photocopies of four documents. On its face,

37.00 hours for the compilation and organization of these documents appears unreasonable."

(italics added) Despite the entry's phrasing "compile and organize", when one examines the

Appendix it is obvious Manziel did not simply "compile and organize" Broadhurst's affidavit,

but researched and prepared the affidavit and its exhibits after extensive one-on-one

discussions with Broadhurst—the manager of a major state agency according to the affidavit.

The Appendix is titled Appendix in Support of Plaintiff Harris Methodist Ft. Worth's

Response to Sales Support's (Second) Motion for Summary Judgment as to Harris. Sales

Support's Motion [DN 186] was filed January 31, 2006. Broadhurst's affidavit was signed

February 17, 2006, establishing that it was something newly prepared. The affidavit includes

substantial fact detail, corrects prior statements of Medicaid personnel, and states official



positions of a state agency rather than just recounting events. Reinckens has indicated to me

that he originally tried to update Vasquez' second affidavit but Medicaid management refused

to let Vasquez sign it because they felt the manager should sign affidavits. Reinckens had

to conduct a number of detailed telephone discussions with Broadhurst and had to negotiate

what wording Broadhurst would agree to sign in his official capacity. Also, because

Broadhurst is not an attorney, Broadhurst ran each draft through Medicaid's legal counsel,

which added to the time required. The affidavit indicates that the relevant Medicaid

regulations have changed several times and Reinckens indicated to me that it took extensive

tracing by him through several versions in the Texas Register to finally identify and obtain

the applicable version for Broadhurst.

Taking into account that "compiling" included legal research plus negotiating and

drafting the Broadhurst affidavit, I would not consider 37 hours unreasonable.

41. Summary #1 - Brychel p. 18, ¶ 13

The basic premise of this paragraph is that Manziel submitted clock-hour records,

which is clearly not the case, as indicated by the task-based format; because the basic

premise is erroneous, conclusions based on it are unreliable.

42. Summary #2 - Brychel p. 19, ¶ 14

Brychel concludes at Brychel p. 20, "In sum, it is my opinion that the Affidavit,

standing alone, fails to establish that the fee sought is reasonable in any respect or even to

permit a reviewer to determine what a reasonable fee would be." (italics added)

However, I note that Plaintiff's Brief states at DN 255 p. 7:

"Evidence offered in support of Plaintiff's motion includes all pleadings,motions, responses and briefs previously filed in the case, including thoseportions of the appeal before the Fifth Circuit that are on file with the Court,



all appendixes and other evidence previously filed by any party, and theaffidavits and other evidence filed in support of or in opposition to the instantMotion and responses and replies."

As the Court is not being asked to decide solely on the basis of "the Affidavit,

standing alone", Brychel's conclusion appears hypothetical and inapposite.

43. Incorporated Exhibits - Brychel p. 19, ¶ 15

Regarding the incorporated exhibits, I would caution the Court in general that

presentation of data in this manner can cause certain erroneous subconscious impressions:

Because the same item is being presented repeatedly in different charts, seeing a

single questionable item on five different charts can leave the subconscious impression of

five separate questionable items.

Plaintiff and Defendant stipulated regarding hourly rates. However, displaying hours

as dollar amounts triggers a subconscious valuation that will almost always be negative at

the hourly rates professionals charge today, i.e., "$125 to review a two-page document???"

Although displaying hours as dollars is not technically a misrepresentation, it does tend to

trigger subconscious responses that are unfair under the circumstances. This is particularly

true regarding time spent on routine "review email", "review order" and similar tasks.

A plethora of neatly-formatted numbers can convey the false impression that a

detailed analysis was conducted.

Table-type charts with lots of detail tend to give the subconscious impression that the

data as presented and the conclusions are valid, important, relevant and useful, whether true

or not.



Comments on Individual Brychel Exhibits A-V

Exhibit A - "Entries with Date Ranges/Multiple Dates": (3 pp.) This is pointless, as

Harris submitted task-based billable-time summaries, not voluminous clock-hour records.

Exhibit B - "Impossible Long Billing Days": (7 pp.) This is an outright misrepresentation,

as Harris submitted task-based billable-time summaries, not clock-hour records.

Exhibit C - "Other Extraordinarily Long Days": (3 pp.) This is an outright

misrepresentation, as Harris submitted task-based billable-time summaries, not clock-hour

records.

Exhibit D - "Email of April 30, 2007": (1 pp.) Brychel states that he was only provided

"samples" Brychel p. 8. It is reasonable to assume that as an admitted advocate Aubin, who

requested the report, did not provide randomly selected samples and as someone who lacks

training in accounting or auditing he did not have the knowledge necessary to properly select

a sample representative of the entire population of the emails available to him. If an auditor

is working with non-representative data, the audit results cannot be reliable and trustworthy.

Exhibit E - "All 362 Email Tasks": (23 pp.) Most emails have relatively low times, and

considering the full range of activities typically involved when an attorney or legal assistant

prepares and sends or reads an email, the times do not appear unreasonable. For intrafirm

emails, a single time entry generally covers both the sender's and receiver's activities, largely

negating Brychel's objection to billing in quarter-hour increments.

The Court should note that listing Entry Hours and Combined Hours in parallel

columns ("INFORMATIONAL") can give the subconscious impression that all time amounts

are double, particularly when Manziel's listing shows Atty Hrs and Asst Hrs in similar

parallel columns.



Exhibit F - "Tasks for April 21, 2005 Emails": (3 pp.)

Exhibit G - "Emails of April 21, 2005": (2 pp.)

Exhibit H - "Tasks for October 26, 2006 Emails": (3 pp.)

Exhibit I - "Emails of October 26, 2006": (2 pp.)

Exhibit J - "Tasks for October 27, 2006 Emails": (3 pp.)

Exhibit K - "Emails of October 27, 2006": (2 pp.) In Exhibit pairs F/G, H/I and J/K

Brychel picks one set of emails from the sample he was provided and provides no indication

regarding what related activities occurred before sending or after receiving the emails, nor

any indication the emails are representative of the entire corpus of emails.

Exhibit L - "Review of Orders - Unit Billing 0.15": (5 pp.) This Exhibit is another

example of generating charts with marginally useful information primarily to convey the

impression that the conclusions in the report are well-researched, valid, important, relevant

and useful.

Exhibit M - "Truncated Entries": (7 pp.) As noted, Harris submitted task-based time

summaries such as senior managers would expect, printed from a database, databases

normally limit the length of individual fields, Aubin had copies of all the documents and

most of the truncated entries still contain far more detail than is common in attorney billing

descriptions. According to Reinckens the "description" field is limited to 130 characters and

there are 914 records; Exhibit M shows 63 records (6.9 percent) as truncated.

Exhibit N - "Attorney & Assistant Both Bill": (18 pp.) This is pointless, as Harris

submitted task-based billable-time summaries. Per Reinckens, of the 914 records, 896

include attorney time, 154 include assistant time, 760 are attorney time only and 18 are

assistant time only. Listing attorney and assistant time as separate entries would simply have



added 136 entries with no additional information over the combined format that was used.

Exhibit O - "Back and Forth Communication - Duplication": (3 pp.) This is an

excellent example of Brychel's nitpicking and over-use of "computerized analysis"—fourteen

entries totaling 3.5 hours over three years. The "analysis" says nothing about what activities

were conducted by the sender or receiver related to the emails. This is the type of "an

examination of the emails" Brychel urges the Court to conduct at Brychel p. 13 (top) and

p. 13, ¶ 2).

Exhibit P - "Attorney Review of Other Attorney Tasks": (7 pp.) This is actually a

rehash of Brychel's complaints about emails, "dressed up in a new coat of paint"—every

entry involves review of an email. As noted above, presenting the same data from different

"perspectives" can give the false impression that there are major problems.

Exhibit Q - "Two Attorneys Bill for the Same Task": (3 pp.) This again involves two

attorneys collaborating; the activities involved negotiating proposed wording in joint status

reports, proposed orders, etc. As the Attorney in Charge, Manziel had to read the emails and

approve changes and as a person drafting or modifying wording, Reinckens had to read the

emails.

Exhibit R - "DN 173 Order Assigning Case to Electronic Case Filing": (4 pp.) Brychel

only considered time to read the order, not the time necessary to comply with it.

Exhibit S - "Excessive Time for Notices": (3 pp.) The chart title is misleading, as times

billed are not merely to prepare a basic 1-2 page Notice of Deposition, but also to do all the

preliminary work such as reviewing the pleadings, discovery responses, etc., to determine

what items to list in the duces tecum.



Exhibit T - "Pleadings and Discovery Appear to Relate to 3rd Party Claims": (12 pp.)

Many of the entries indicate a minimum billing time. Those that are longer generally involve

reviewing discovery responses, pleadings or briefs. Manziel has indicated to me she was

looking for arguments, evidence and background information such as people "behind the

scenes" who might know how the Twins' claims were handled and that she did find and use

some of those in prosecuting Harris' claims.

Exhibit U - "Tasks for 37 Hours to Compile & Organize Appendix for MSJ

Response": (3 pp.) Broadhurst's affidavit required substantial research, drafting and

negotiation, not just "compiling".

Exhibit V - "DN 198 Appendix in Support of Harris' Second MSJ": (16 pp.) Discussed

above.

Conclusion

As discussed throughout this report, my review of Brychel’s report identified many

auditing deficiencies. First, his audit is designed with the assumption that time charges were

unreliable and inaccurate. An auditor should be independent and not have any preconceived

ideas about what the facts will support. Just because Brychel states he is independent does

not make him so. The AICPA’s ethical standards require that an auditor not only be

independent in fact, but also in appearance. The fact that Brychel and his firm’s primary

source of work is "legal cost management" shows that he has a bias toward reducing legal

fees and he is not independent in fact or appearance.

Second, many of Brychel’s conclusions are based on the assumption that the

task-based time summaries supplied by Harris were in fact Manziel’s time records. Since

this assumption is incorrect, all of Brychel’s conclusions based on this assumption should be


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provide immediate feedback to the firms regarding format or computational errors.

Stuart Maue’s legal auditors will review and evaluate each fee and expense entry for compliance with the

client’s billing guidelines. The auditors review and evaluate each task description for compliance with the

applicable billing guidelines adopted by the client, using the LIBRA-Connex application. Once their analysis is

completed, a report is developed that contains detailed exhibits of any noncompliant fee and expense entries

for each monthly invoice submitted. When approved by the client, Stuart Maue will transmit a copy of the

final report to the client and firms. The client can use this report to generate payment of undisputed amounts

to the firms. If the client’s billing guidelines allow the firms a specified period of time for review and comment

of the findings, the firm may provide additional details to appeal the findings. Where adequate justification for

an adjustment is made, Stuart Maue will adjust its database and appeal report and the client will generate

payment for any additional undisputed amounts.

At the request of the client, Stuart Maue has the ability to establish an electronic payment process through an

Automated Clearing House program set up through a national banking facility. Once Stuart Maue has been

given the approval to pay the firms, they will send a report to the banking facility detailing the amount to be

paid to each firm. The funds would then be electronically transferred to each firm.




2



Stuart Maue designs its service offerings with the client in mind. On occasion, the client prefers to manage

outside counsel and monitor compliance with billing guidelines in-house. In these instances, Stuart Maue’s

e-billing application, LIBRA-Connex™ is the ideal solution for clients. Built on the Stuart Maue legal bill review

methodology, LIBRA-Connex™ is a robust software application designed to automate the legal bill review

function. It provides an automated review of billing submissions for compliance with the client’s billing

guidelines and clearly identifies any items needing further review or clarification. Additionally, clients can

monitor law firm performance against established budgets in order to ensure improved efficiency and better

control costs.

Stuart Maue is also available to train the client and the client’s employees on the use of the LIBRA- Connex™

application or assist the client with any further bill review.




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LEGAL FEE AUDITING OVERVIEW

Legal fee auditing is the review and analysis of the professional billing of legal fees and expenses. It generally

involves a complete review and analysis of all billings to an individual matter or group of files. The legal fee

audit can be performed on either an ongoing or completed matter, depending on the circumstances. Through

this process, a company can benefit financially by identifying legal billing problems and inconsistencies that

can threaten the bottom line.

The objective of a retrospective legal fee audit is to review such items as:

The mathematical accuracy of fees and expense portions of the firm’s prior billing statements

Identify and quantify the billing entries, activities, and fees that appear excessive, duplicative, inadequatelydocumented or otherwise questioned

Identify expense items billed by the law firm that are generally considered law firm overhead or do notappear to directly relate to the matter





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CAREERS

Stuart Maue is interested in receiving resumes from experienced accountants and licensed attorneys for legal

fee auditor positions. Please feel free to submit your resume below. Resumes of qualified applicants will be

kept on file for future positions.

Attorney / Auditor

Qualifications:

Member in good standing of at least one state bar

Five or more years experience working as an attorney

Litigation and/or bankruptcy experience preferred

Responsibilities:

Review and analyze legal bills and associated expense documentation

Identify instances of noncompliance with generally accepted billing standards and/or client guidelines

Prepare written reports delineating identified instances of noncompliance

Requirements:

Analytical orientation with ability to focus on detail

Ability to communicate clearly, orally, and in writing

Active team participant in multidisciplined groups




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Diverse computer skills, especially with Microsoft programs

We offer a competitive salary, excellent benefits, and a stimulating environment!

Equal Opportunity Employer

Contact: Director of Human Resources

Previous Page



1

CAREERS

Stuart Maue is interested in receiving resumes from experienced accountants and licensed attorneys for legal

fee auditor positions. Please feel free to submit your resume below. Resumes of qualified applicants will be

kept on file for future positions.

Accountants / Auditors

Qualifications:

Graduation from college or university with major or emphasis in accounting

Graduate school degree, C.F.E., C.M.A., C.P.A., or similar designation a plus

Experience working as an accountant in business, industry, or government

Responsibilities:

Review and analyze legal bills and associated expense documentation

Identify instances of noncompliance with generally accepted billing standards and/or client guidelines

Prepare written reports delineating identified instances of noncompliance

Requirements:

Analytical orientation with ability to focus on detail

Ability to communicate clearly, orally, and in writing

Active team participant in multidisciplined groups




2



Diverse computer skills, especially with Microsoft programs

We offer a competitive salary, excellent benefits, and a stimulating environment!

Equal Opportunity Employer

Contact: Director of Human Resources

Previous Page



U N I T E D S T A T E S D I S T R I C T C O U R T *

NORTHERN D I S T R I C T O F T E X A S FORT WORTH D I V I S I O N

H A R R I S M E T H O D I S T F T . WORTH ) P l a i n t i f f

Exhibit "B" V S . i 1 S A L E S S U P P O R T S E R V I C E S , I N C . ) C I V I L A C T I O N N O . E M P L O Y E E HEALTH CARE PLAN ) 4 : O l - C V - 0 5 6 7 - Y a n d S A L E S S U P P O R T S E R V I C E S , ) I N C , )

D e f e n d a n t a n d T h i r d - P a r t y P l a i t i f f s )

v s . T R A N S A M E R I C A L I F E I N S U R A N C E ) . AND A N N U I T Y COMPANY, 1 S T A N D A R D S E C U R I T Y L I F E I N S U R A N C E COMPANY O F NEW YORK a n d B E R K L E Y R I S K ) MANAGERS, )

T h i r d - P a r t y D e f e n d a n t s )

1 - ORAL D E P O S I T I O N O F

KAREN. A . HERMAN

ORAL D E P O S I T I O N O F KAREN A . HERMAN, p r o d u c e d a s a w i t n e s s a t t h e i n s t a n c e of t h e P l a i n t i f f a n d d u l y

~ O L I L , w a s t a k a ~n t h e above s t y l e d a n d n u m b e y e d c a u s e o n D e c e m b e r 30 , 2 0 0 2 , f r o m 1 0 : 5 1 a.m. t o 9 : 3 8 p . m . , b e f o r e G a y l o r d S t u r g e s s , C e r t i f i e d S h o r t h a n d R e p o r t e r N o . 7 4 4 i n a n d f o r t h e S t a t e of T e x a s , r e p o r t e d b y S t e n o g r a p h i c m e t h o d a t t h e O f f i c e s of T h e U n i t e d S t a t e s C o u r t h o u s e , F t . W o r t h , R o o m 505, F i f t h F l o o r , F o r t W o r t h , T e x a s , a n d Meri t C o u r t R e p o r t e r s , 6 0 0 O i l & G a s B u i l d i n g , 3 0 9 W . 7 t h S t r e e t , F o r t Wor th , T e x a s , p u r s u a n t t o t h e T e x a s R u l e s o f C i v i l P r o c e d u r e , N o t i c e ( a n d t h e p r o v i s i o n s s t a t e d o n t h e r e c o r d ) .

J o b N o . 0 2 1 2 3 O G A S ( G S - 2 3 2 6 - m k ) CERTIFIED

COPY


Rick

Exhibit B

Case 4:01-cv-00567 Document 83 Filed 03/06/2003 Page 5 of 21

Thomas Affidavit Exhibit C - Page 1 of 2

6 cites

5 cites

3 cites

3 cites

1 cite

17 CITES ON PAGE


Case 4:01-cv-00567 Document 83 Filed 03/06/2003 Page 6 of 21

Thomas Affidavit Exhibit C - Page 2 of 2

5 cites

4 cites

1 cite

1 cite

1 cite

2 cites

2 cites

16 CITES ON PAGE


Doc 271 - Thomas Counteraffidavit rebutting Doc 267-2 - Example legal fees audit by Stuart, Maue,...

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