excessive meeting requests interfere with top executives interfere with the company's ability to conduct everyday business, which isn't the purpose of a "compliance monitor".
If anything, the percentage of the executive's time should be limited to the percentage of their profits derived from said antitrust violation. Apple has about $30B in revenue; depending on the source, Apple at most had about $300M in revenue a year from eBook sales (probably much lower than that). So 1% of each executive's time, or about 20 minutes per week, seems about right.
Ive is an industrial designer, recently tasked with some UI work. His relevance to anything ebook related is less than zero.
Cook is in charge, so he has to show up sometimes, sign off on SOX paperwork, etc. The entirety of Apple's compliance effort is managed by someone else, but every project needs a Responsible Individual.
Not that I'm disagreeing with your main point, but the listing on that Apple page is in alphabetical order, so I'm not sure anything can be inferred from that...
Does all of that $1100/hr go to Bromwich, or is it payed to the federal government (or the company that pays Bromwich) who then pays Bromwich some percentage of that? We've had contracts at work for $80,000/yr where the contractor only saw $50,000 of that. The rest was payed to the company he worked for.
If the entire sum isn't going to Bromwich or if the court agrees with the price he's charging, I'd chalk it up to being the price you pay for anti-trust behavior. Then again, I don't know how much a company should pay for compliance monitoring after being convicted of anti-trust behavior. Either way it is a lot of money, but if it's not all going to Bromwich's pockets, it sounds like a fine being imposed for the duration of the anti-trust monitoring.
That's exactly the differentiation I tried to raise in my point. Is this a fine paid to the government who then pays the lawyer some percentage, or is all of this money going to the lawyer? One would be acceptable, the other would be less so.
If Apple were forced to pay the State $70,000 per week, I don't think this would be an issue. I do find it uncomfortable that the State is forcing Apple to transfer wealth to another private party without any (obvious) oversight.
moreover the private party's flippant attitude is really distressing. i'm no fan of Apple, but this has now become an abuse of power, whether or not the actual financial costs are reasonable.
Yes, when your job is to be a neutral arbiter of a very narrow legal compliance issue.
It is not his job to be prejudiced about the company as a whole, to conduct arbitrary investigations, or to punish the company by interfering with the work of its executive team.
His job is not to be a neutral arbiter, indeed, the very definition of his job is that he not be neutral. His job is to monitor compliance.
The easiest way to do this would be to periodically interview those responsible for implementing compliance. The alternative would be for him to audit (i.e., investigate) Apple's relevant business and operational activities, which would cause a significantly greater disruption to the business.
His job is absolutely to monitor compliance, but it is not his job to punish the company, investigate it for anything else, or to harrass the executives. If he cannot monitor for technical compliance without assuming an overreaching authority over operations, then a more competent monitor should be assigned.
His job is not to be a "neutral arbiter." The court appointed him not just to passively monitor compliance, but oversee Apple's revising its policies and employee training to address the compliance defect. This job obviously involves some level of investigation and working with and directing the executive team. It's entirely Apple's characterization to say the investigations are "arbitrary" or that he's "interfering."
A large company like Apple has policies and training in place to ensure that lower-level executives and employees don't violate the law in the course of their jobs. In the antitrust context, executives and employees responsible for purchasing or interacting with competitors must be trained to know what kinds of communications are legal, and what kinds of communications amount to collusion or price fixing.
Bromwich's job is not to passively monitor the kinds of deals Apple enters into. Instead, the court ordered Bromwich to help restructure Apple's internal antitrust policies. Like any major internal policies, they are promulgated and implemented by the high level executives. That's why those interviews are necessary.
Sure, but he needs to be able to do this without interfering with the rest of the business, very little of which has to do with ebooks or even content deals. If he can't do that, he is the wrong person for the job.
That he's "interfering" is entirely Apple's version of what's happening. All we know is that he's tried to schedule meetings with Tim Cook, etc, which is entirely appropriate in an internal investigation and can certainly be done without "interfering" with the rest of the business.
Lying would be if Apple said that Bromwich demanded daily two-hour meetings with Tim Cook when he in fact had not. Saying that Bromwich is "interfering" is merely characterization. One man's "interfering" is another man's "getting an executive to spend time on an issue he doesn't want to deal with, but which he is obligated to do so." You shouldn't take a characterization at face value, not when it's made by an interested party.
yes, but on rereading I have to concede that it may be the article that is making it seem so; haven't read the actual legal docs.
Think of it this way: Is it an abuse of power for a TSA agent to be flippant about his authority to grope you, because you have very little recourse to change that authority or get him fired?
If someone questioned why I should be paid market rate for my expertise, I'd probably have a flippant attitude as well. Especially if they should know better, like Apple should.
If you were chosen through a competitive market process, fine. But if it is a government granted monopoly, there is a conflict of interest. The state should give Apple a list of attorneys/firms and let Apple negotiate the details via a public bidding process.
If Apple was in this to save money they wouldn't have taken this to court in the first place, they got caught with their CEO and most senior executives overtly participating in price fixing.
Now Apple is quite literally spending more money in legal fees than they can possibly save to argue about "excessively" high legal fees. Apple will spend millions to try and make a point, this is just more of the same.
"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.
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."
>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.
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.
The $70k / week figure given is for the first two weeks. I'm going to jump to a conclusion and say that the first two weeks will be above average in cost due to introductory meetings, posturing on both sides, and generally bringing the process up to speed.
The $1,100 / hour is not out of line for a top law firm. It would be interesting to know what Apple is paying it's outside attorneys. The claim that the figure is "higher than Apple has ever encountered for any task" is clearly untrue. Apple has payed it's own executives much more in the past.
They say in their complaint that 1100 + 15% is higher than any lawyer has ever been paid in any Apple matter.
From the complaint: As Apple explained to Mr. Bromwich, of all known past Apple matters, “not a single partner had an effective billing rate as high as or higher than those that [Mr. Bromwich has] proposed.” ... . And Mr. Bromwich’s rates in this matter dramatically exceed what he has quoted in the past.
Two high-profile lawyers and three others for 40 billable hours per week comes to a about $350/hr on average. Assuming the the two top lawyers are billed at at around $500/hr, it's probably less than 40 billable hours/week, and the rest of the team is fairly priced.
The complaint lays out what's being paid and dvanduzer pointed out below the $1100/hr figure is just for Bromwhich, his staff is an additional $1025/hr. I don't think anyone would find that to be reasonable.
I find it perfectly reasonable. Apple broke the law, and is now required to pay for a monitor to make sure they comply. For a business as big as Apple, you don't select a garden-variety lawyer, you pick the best you can--and the best are expensive. The top bankruptcy lawyer in the country has offices down the street from mine--his hourly rate starts at $1200. One of the top immigration lawyers in the country also has offices nearby, three of their partners have hourly billing rates in excess of $1000/hour.
This is, in practice, no different from Google, et. al., paying through the nose to acquire top tech/programming talent.
You find it perfectly reasonable because 1) it's not you and 2) you have no idea if it is or not.
I find it totally unreasonable. I think the Judge needs to be investigated for deciding the case before trial and changing the scope of the investigation.
" I think the Judge needs to be investigated for deciding the case "
The judge did no such thing. This has been gone over before. Judges commonly give opinions on the current strength of a case when asked by parties. This is to encourage parties to settle. IE they will often say "you may have a tough time proving X given the evidence you've submitted so far". This is an opinion on the strength of a case as it exists at the current. Not a decision about the merits.
The judge had mountains of evidence and motions that had been gone through at that point. Heck, I think there were even motions for summary judgement pending (IE for a verdict before trial).
What happened is perfectly normal, and not "deciding a case".
You're right again. If you are the same guy who has the "Learn code the hard way", I honestly think you should
run for political office. Get your name out there. You
say, and think the way a lot of us feel, but are afraid
to speak up.
There is a lot of ambiguity in Apple's complaint. There are 5 people on the team and two billing rates. No mention of whether the staff are JDs or paralegals. Apple also complains about a 15% overhead rate when the investigative teams has to travel, live in hotels, outsource billing and possibly desk space, etc. Does the overhead rate cover all that? The billing rate? Or is the overhead rate added to billed-through expenses. Apple doesn't say, nor do they call out these unknowns.
The highest paid lawyer that I have ever met bills $1600/hr. Ted Olson is a famous former Solicitor General. He argued Bush v. Gore and the recent Proposition 8 case. He now works for a major national law firm in their DC office.
Kind of funny to think when he looks at a clock for 2 seconds, that's $1 right there. But he's highly experienced and a very good appellate litigator. You wouldn't hire him unless it was high stakes litigation and the legal fees were little compared to what you might lose in a judgment against you.
Technically, it's not. Since he would most likely, as most corporate legal does, bill in 6 minute increments, it's $160.
That being said, 15 years ago I worked in high end corporate law, and our partners charged $750/hr+. I'm hardly surprised that $1,100/hr is being charged now, especially when it includes overheads.
I don't understand why, if they are footing the bill, that they are required to hire a top tier law firm. This is a government granted monopoly to someone who was not selected via a competitive bidding process. The government should provide Apple a list of acceptable, competent attorneys who can do this work and let Apple work out the details.
>>> The government should provide Apple a list of acceptable, competent attorneys who can do this work and let Apple work out the details.
That seems like it would create an obvious conflict of interest. The attorney in question is responsible for ensuring that Apple is complying with the anti-trust ruling. If Apple could directly choose the attorney, there would be an incentive for the attorney to be lax with ensuring compliance.
True. TBH any arrangement where Apple pays the attorneys directly is weird. The government should have simply hired the attorney and billed Apple instead of having the attorney bill Apple.
You should read the complaint. The hourly rate is explicitly $1100/hr for Bromwich, and $1025/hr for his staff. Apple's legal team uses the number from the bill for two weeks in order to compare it to a judge's typical annual salary.
Most lawyers not employed by the government work more than 60 hours a week on a normal basis. When there is an active trial or court hearing to prepare for, that number usually jumps to 80 hours a week or more. For BigLaw lawyers (i.e., the largest law firms), 80 hours a week is considered a vacation; most of them work at least 12 hours a day every day, including weekends!
The unreasonable workloads and time expectations are one of the reasons that lawyers as a profession are so depressed...and why law school enrollment plummeted so far once the legal market crashed and salaries fell.
Is it worth mentioning that on top of the $1,100 hourly rate for Bromwich, and the $1,025 hourly rate for the assisting law firm, Fried Frank, he's also demanding a 15% "service charge"? From page 23:
"And Mr. Bromwich’s rates in this matter dramatically exceed what he has quoted in the past. For instance, in a proposal to monitor the New Orleans Police Department five months ago, he suggested a $495 hourly rate, without an administrative fee, which the Department of Justice termed 'relatively expensive.'"
Usually in these situations, lawyers give high rates expecting the judge to knock it down. Judges always (rightly or wrongly) think lawyers are being paid too much, and often just halve the rate or whatever. This is often true regardless of what number is given.
So if you don't want to end up being ordered by a court to work at 25% of your actual market rate, you often have to give exorbitant numbers.
I'm sorry, I don't see how anyone should be defending a lawyer's fees at that price. I look at law the way I look at open source software, (the law should be accessible to everyone, for free, if they know how to interpret it). You can hire experts in law, as you hire experts in open source software (lawyers/programmers). Now imagine, for example, two startups competing with on the same technology (say Rails (whatever)) in the same market (whatever). Now imagine one of the two startups wins a dominant market position and the other has to fold. You don't imagine the developers of the winning startup demanding some arbitrary fee from the company they beat. It would seem absurd. Yet here are people defending thousands of dollars an hour, for a human being to interpret the law, which is the same for everyone and should be accessible to anyone (even though we all know navigating the legal system is probably worse than navigating through WordPress source code). I don't see how a lawyer on the opposing team should be able to charge me an arbitrary amount.
The price Mr. Bromwich is demanding is a sideshow. The real objection Apple has is that what he demands, and the judge proposes to give him, is not within her power to grant. All that a special master is allowed to do is what the court is allowed to do, and what the parties consent to. Apple isn't consenting to anything beyond its legal obligations. It is not in the judge's power to interview witnesses alone, without their counsel present if desired. Apple's main complaint is that Bromwich is trying to act as a prosecutor, rather than as a representative of, or substitute for, the judge
So, Apple has to pay Bromwhich $1,265/hr ($1,100/hr + 15%) to oversee the antitrust compliance and then, additional $1025/hr to the outside counsel who would consult Bromwhich on the relevant Antitrust law.
All this because Bromwhich admits that he has NO antitrust experience. So, why was he chosen in the first place?!?!
Say I show up at your firm, get hired as a senior C++ developer. Then on the first day I show up, and tell you: "You know how you are paying me $X/hour to do this job. Yeah... You know, I don't actually know how to do this job, but John here does. He's going to be working "with" me. So, in addition to $X/hour for me, you'll need to pay John here $X/hour as well. Yeah..., so will get started now, right?"
> "it doesn’t matter if you think my fees are reasonable, because you don’t get to negotiate them: You just pay them"
Nice. Spoken like a true lawyer.
How did legal fees get so high anyway? Do lawyers perform a task more skillfull than (say) software engineers? It seems under $350/h a lawyer won't move a finger. Software engineers do not (typically) make $350/h.
Also it looks like high lawyer fees are at least partially a US phenomenon.
Honestly, I don't think Apple so much as broke the law as they lost out on some lobbying/regulating play where Amazon got the DoJ to investigate for agency models, as opposed to Apple getting the DoJ to investigate Amazon for predatory pricing.
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