Many times, those lawyers are out to protect the government’s interests, not the public interest.
Consider the example of North Carolina convenience store owner, Lyndon McLellan. McLellan was accused of making cash bank deposits less than $10,000 to avoid reporting requirements. The feds dropped the case but kept McLellan’s life savings of $107,000 for two more years
. Prosecutors even had the gall to warn him not to go to the media.
A couple years ago, Chicago teamed up with the feds to rid itself of the numerous little-entrepreneurial electro-platers on the South and Near West sides. After the regulations, the enforcers moved in and today, there are very few left. In just one case, federal lawyers spent $1 million to shutdown a family owned electro-plater
– settling for under $50,000. The business never recovered.
Our study illustrates the extent to which the little guys are outgunned. Here is just a small sample of our findings
- 25,060 lawyers on the rank and file federal agency payroll with a job classification of ‘general attorney’ cost taxpayers $3.3 billion last year and $26.2 billion since 2007, plus $130 million in bonuses
- The average federal lawyer ‘earned’ $132,817.06 plus bonuses in FY2014.
- The number of federal lawyers exceeds the total public payroll headcount of twelve states including Alaska (25,050); Delaware (23,249); Idaho (20,270); Maine (18,602); Maryland (16,877); Nevada (24,524); New Hampshire (14,694); North Dakota (15,742); Rhode Island (17,073); South Dakota (12,774); Vermont (13,289); and Wyoming (8,500).
- If the feds were a private-sector law firm, they would exceed the TOP 7 Largest Private Law Firms – combined (24,411): Baker & McKenzie (4,363); Yingke (4,153); DLA Piper (3,702); Dacheng (3,700); Norton Rose Fulbright (3,461); CMS Legal Service (2,522); and Jones Day (2,510).
- More than half of the lawyers are located inside the Washington, D.C. beltway.
Most Americans probably assume that Uncle Sam’s lawyers are employed at the IRS, or Department of Justice. Yet, agencies like the Environmental Protection Agency (EPA) are employing nearly as many lawyers as the IRS. The EPA employs 1,020 lawyers with payroll exceeding $1.1 billion since 2007, while the IRS employs over 1,400 lawyers. Last fall, in a piece at Forbes, I covered the EPA’s penchant for lawyers
– the agency alone would rank as the 11th largest domestic law firm.
Consider the new Consumer Financial Protection Bureau (CFPB), the brainchild of Senator Elizabeth Warren (D-MA). The CFPB employs 160 attorneys for $23 million in annual payroll costs to ‘protect the little guy.’ But, CFPB attorneys are instead using creative lawyering to harass businesses. In one case, CFPB claimed racial bias in lending by guessing which borrowers were black
based merely on last names and addresses. In another case, CFPB levied a $109 million fine
after the lender was already following explicit guidance from another federal agency’s administrative law judge.
For good reason, businesses fear an overzealous federal pursuit of justice and its guilty until proven innocent attitude. If the government is coming after you, the implication is you must have done something wrong. "To me it was death by suffocation or death by firing squad," says Michael Daugherty founder of LabMD. "I chose firing squad because I wanted people to see it."
LabMD was a thriving company testing blood, urine, and tissue samples for urologists and had 30 employees with $4 million in annual sales. Then, the Federal Trade Commission came knocking and the rest is history. Daugherty’s story was chronicled at Bloomberg
, A Leak Wounded This Company. Fighting the Feds Finished It Off and Daugherty’s book is entitled
, The Devil in the Beltway.
Unlike private-sector litigants who have to balance the cost-risk of litigation against the eventual bottom-line reward, the federal government knows no such constraints. If anything, their emphasis on win/loss stats encourages them to pursue the little guys rather than large firms that have the means to mount a vigorous defense.
American citizens and the business community have good reason to fear the feds army of 25,060 lawyers. In The Godfather, Mario Puzo had it right. Today, the heavy boot of government often comes disguised wearing a pair of wingtips delivering intrusive subpoenas devoid of due process.