The U.S. Treasury risks paying too much in legal fees related to bailouts because it isn’t adequately reviewing bills from law firms, a government watchdog said.
The Treasury office managing the Troubled Asset Relief Program needs to “improve controls over the review and payment of legal fee bills,” according to a report today from the Office of the Special Inspector General for TARP. “Current contracts and fee-bill review practices create an unacceptable risk that Treasury, and therefore the American taxpayer, is overpaying for legal services.”
The special inspector general’s office, or SIGTARP, said it “found weaknesses” in the Treasury’s contract with law firm Venable LLP. The contract didn’t include sufficient detail on how Venable should prepare bills or how to describe tasks within each bill.
The Treasury “has already taken steps” to implement recommendations SIGTARP made to improve the review and payment of legal fees, Timothy Massad, acting assistant secretary for financial stability, said in a letter released with today’s report. The department “has implemented strong and effective processes in regard to all its contracts, including those for legal services,” he wrote.
“Venable fully cooperated with SIGTARP’s review,” the law firm said in an e-mailed statement yesterday. “We have not had the opportunity to read the full report. However, we are confident that Treasury received fair value for the services that we provided.”
The special inspector general’s office said it analyzed contracts with five law firms that had received $27 million in legal fees from the Treasury as of the end of last year.