Accenture whistleblowers in bitter fee fight with former lawyers

September 13, 2011

The Justice Department’s announcement Monday of a $63.7 million settlement with Accenture for allegedly taking kickbacks in connection with U.S. government IT contracts is the latest triumph for Norman Rille and Neal Roberts, a pair of former accounting executives whose False Claims Act cases against information technology contractors have so far netted the United States more than $250 million. Rille and Roberts (who is also a lawyer) have, in turn, been handsomely rewarded for blowing the whistle. Despite a fight with the feds over their bounty in Hewlett-Packard’s $55 million FCA settlement, the whistleblowers have reaped more than $10 million in fee awards through the government’s settlements with Cisco, EMC, and other contractors. The Accenture settlement should add several million to their pot; whistleblowers typically collect between 15 and 25 percent of the government’s take.

For most of the seven-year history of the Rille and Roberts FCA cases, they’ve shared their bounty with lawyers from Packard, Packard & Johnson, the California firm that first filed the whistleblowers’ suits in federal court in Arkansas. But, in April, Rille and Roberts sued the Packard firm in Los Angeles county court, claiming their lawyers had tried to recover $1.4 million in costs from the whistleblowers even though the firm already recouped those costs from defendants. “PPJ maximized its potential fee recovery, while making Plaintiffs foot the bill for virtually all costs,” the complaint said. “This unilateral fee/cost allocation transformed a potential but previously unknown conflict of interest into a current and serious conflict of interest between the lawyers and their clients. Despite this inherent and undisclosed conflict, PPJ continued to advance its unfair and unjustified effort to shift the entire burden of paying for litigation costs on plaintiffs.”

Roberts and Rille, represented by Jeffers Mangels Butler & Mitchell, then moved to replace the Packard firm in the Arkansas FCA litigation. In its response, the Packard firm said the motion was “a further calculated step” to strip the whistleblowers’ lawyers of the fees they’re entitled to. Nonetheless, the firm said it did not object to being replaced as counsel to Rille and Roberts. Packard, Packard & Johnson was terminated in the FCA suits as of June 15.

The fee dispute, however, rages on in California state court. The Packard firm has moved to compel Rille and Roberts to arbitration to clarify the terms of the 2005 fee agreement between the whistleblowers and their lawyers. A declaration by Packard partner Von Packard lays out those terms, which include a 43.5 percent contingency fee for the lawyers after costs are subtracted off the top of any recovery, according to the Packard declaration. The Packard filing, which asserted that the firm has spent more than $21 million on the FCA cases, alleged that Roberts trumped up the argument that his lawyers double-dipped on costs because Roberts has been dissatisfied with his bounty.

So far there’s been no ruling on the Packard firm’s motion to compel, nor a response from Rille and Roberts, who are represented in the fee litigation by Mayer Brown. Whatever happens, the bitter fee fight is a sad coda to litigation that has exposed rampant (alleged) misconduct among government IT contractors. The Packard firm told me it couldn’t comment beyond its filings. Neil Soltman of Mayer Brown and Ryan Mauch of Jeffer Mangels, who represent Rille and Roberts, didn’t return my calls.

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