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NALFA: Some Class Counsel Turn to Fee Experts When Seeking Fees

February 27, 2017

Attorney fees are often a bone of contention in class actions.  In fact, upon settlement, the only disputes usually to surface center around the attorney fees.  Upon settlement approval, class counsel file somewhat self-interested fee requests with the court.  Here, even when prepared with the proper standard of care, these fee requests appear bias and self-serving.  Indeed, these self-seeking requests for fees are a source of frustration for the courts and often contested by professional fee objectors.  These internal dynamics can drag class action litigation on for years.  Recently, some class counsel have even grudgingly low-balled their fee requests to avoid this confrontation and delay in payment (see Race to the Bottom: Class Action Lawyers are Low-Balling Fee Requests).  This self-reduction in fees is short-sighted and sets a bad precedent for future class action cases.

In order to break this stalemate, some class counsel are turning to attorney fee experts.  Attorney fee experts are fully qualified expert witnesses who provide expert declarations on the reasonableness of attorney fees and expenses in underlying actions.  They are skilled litigators with subject matter expertise and are highly qualified on a range of fee and billing issues like hourly rates, billing practices, fee award factors, litigation management, and lawyering just to name a few.  A qualified, outside fee expert provides a fee-seeking attorney with an independent, unbiased, and objective analysis of the attorney fees and expenses in the underlying class action.  Fee experts can manage the entire fee application process, provide an expert report/opinion, or advise and consult on fee matters.  Some fee experts include law professors and former judges.

Hiring a qualified fee expert during the settlement phase shows the court and would-be professional fee objectors that you are taking the setting of attorney fees in a constructive and impartial manner.  Retaining a fee expert shifts the focus from an internal and rather self-assured fee analysis to an outside, objective, and peer review-driven fee analysis.  By relying on a qualified fee expert, class counsel can defuse the existing tensions within the class action and speed up the recovery of attorney fees.  What is more, courts are more likely to rule in favor of a fee analysis provided by a qualified and disinterested expert, rather than someone with a financial stake in the outcome.

Fee Allocation Issues in $12M False Claim Act Settlement

February 24, 2017

A recent Law 360 story by Carolina Bolado, “Doctors’ Counsel Ask Courts to Divide Fees in $12M FCA Deal,” reports that Aronovitz Law asked a Florida federal court to help divide the attorneys' fees among counsel for whistleblowers whose suit against a Miami-area hospital for submitting false claims to federal health care programs for medically unnecessary cardiac procedures netted a $12 million settlement.

Aronovitz told the court that the firm and its co-counsel, Aronfeld Trial Lawyers PA, could not agree on how to divide the attorneys' fee award for their work representing Dr. James A. Burks and Dr. James D. Davenport in their False Claims Act suit against South Miami Hospital and Dr. John R. Dylewski over procedures he performed when he worked at the Baptist Health-owned hospital.  The firm said the court would have to resolve disputed issues of fact before the fee award could be divided among counsel in the case.

“Those disputed issues of fact cannot be adequately presented to the court for resolution without first conducting some limited discovery, and the record is not sufficiently clear to allow the court to resolve the dispute without such discovery or an evidentiary hearing,” Aronovitz said in the filing.

The firms represented Burks and Davenport, a vascular surgeon and a cardiologist, respectively, who worked at the hospital and claimed to have personal knowledge of Dylewski and the hospital performing a number of unnecessary cardiac procedures for the sole purpose of increasing the amount of reimbursements paid to the hospital and its doctors by Medicare and other federally funded programs.

They said that since at least 2007, thousands of mostly elderly patients treated by Dylewski with the consent of Baptist and South Miami Hospital have been subjected to "invasive, improper, unjustified, medically unnecessary, repetitive, high risk and costly” medical procedures undertaken to allegedly treat abnormal heart rhythms.

Davenport said he witnessed the Medicare fraud and improper surgical practices when he worked with Dylewski from 2006 to 2007 and while later serving as a doctor for Baptist Health and South Miami Hospital.  Burks said he witnessed “repeated and continuing instances” of improper medical and billing practices.

The hospital agreed in December to pay $12 million to settle the allegations.  Dylewski, who no longer works at the hospital, was not a party to the settlement.  Burks and Davenport will receive about $2.75 million in the deal.

The case is United States of America et al. v. Dylewski et al., case number 1:14-cv-22079, in the U.S. District Court for the Southern District of Florida.

NFL Concussion Settlement Kicks Off $112.5M Fee Dispute

February 23, 2017

A recent Delaware Law Weekly story, by P.J. D’Annunzio, “Stage Set for $112.5M Fee Fight in NFL Concussion Case,” reports that, although the NFL concussion litigation has ended in a $1 billion settlement, a new dispute has kicked off as the players' attorneys rush to score a piece of the $112.5 million pot of legal fees.

Earlier this month, Christopher Seeger and Sol Weiss, the lead attorneys for the players, filed a request in federal court to award them the multimillion attorney fee amount along with giving Seeger the authority to pay the other lawyers involved in the case.  This prompted objections from a faction of lawyers representing roughly 30 players who asked the court to effectively stop a mad dash to the "$112.5 million table."

In a motion for a case management order filed this week, the objectors' lawyers said Seeger and Weiss were not the first to the courthouse seeking fees, but the two argued their request should go first.  "And, no wonder," the objectors motion said.  "Co-class counsel has just recently submitted an application seeking the full amount of $112.5 million."

The motion added that the objectors' lawyers had no notice that the lead attorneys would file their request for the full $112.5 million.  "If co-class counsel has unilaterally decided which attorneys are 'entitled' to an award of fees, the decision has not been communicated to this court or to the counsel involved," the motion said.

Lance Lubel, the attorney who filed the objectors' motion, said in an email that the attorney fee situation was similar in the case of the 2010 BP Horizon oil spill in that it had a clear sailing provision, but those lawyers waited four to five years until claims were paid out before asking for attorney fees.  "I don't think it will take five years for this settlement's value to the retired players to be better understood but 60 days seems a bit too fast," Lubel said.

While not directly addressing the objection relating to Seeger having autonomy over the attorney compensation process, Seeger said in a statement, "The ultimate amount the NFL parties must pay in attorneys' fees will have no impact on the monetary awards paid or baseline assessment examinations given because the NFL parties have already guaranteed these benefits, in full, to eligible claimants."

The settlement was approved by the presiding judge and upheld by an appeals court last year.  With the U.S. Supreme Court taking a pass on review of the case, the settlement was cemented.  The agreement provides payment for retired players diagnosed with amyotrophic lateral sclerosis; chronic traumatic encephalopathy (CTE), which can only be diagnosed by an autopsy; Alzheimer's disease; Parkinson's disease; and dementia.  In addition to monetary compensation, the NFL agreed to provide brain injury testing to players and provide payments to fund the education of concussion and sports-related brain injuries.

Insurer Fights Fee Discovery in Texas

February 22, 2017

A recent Law 360 story by Michelle Casady, “Texas High Court Told to Nix Attys’ Fee Discovery Ruling,” reports that National Lloyd's Insurance Co. urged the Texas Supreme Court to upend a lower court ruling compelling discovery of its attorneys’ fee information in litigation with property owners who allege the insurer underpaid their damage claims, contending that information is privileged.

The justices heard arguments on whether National should be able to keep that fee information under wraps — a fight that stems from four property insurance cases in which the property owners argued they had been shortchanged on claims following two hailstorms in Hidalgo County, Texas, in March and April 2012.

Scot Doyen, arguing on behalf of the insurer, told the court that siding with the property owners would “add layers of complexity to an area of the law that is otherwise clear and workable,” that the information sought is privileged and that the “relational nature” of fee consideration renders its fees irrelevant.  Such fees hinge on "the relationship between the party and the lawyer, not the relationship between the party and the other party,” he told the court.  “It is relational to that specific lawyer to client relationship," Doyen said.

Arguing on behalf of the insured property owners, Jennifer Bruch Hogan rejected the notion that an opposing counsel's fee information, including hourly rates and total hours billed, is “patently irrelevant,” though she said the tasks themselves may be privileged information subject to redaction.

“The second point I want to make is that the defendants have voluntarily designated their lead trial lawyer as a testifying expert, and not as a testifying expert on their own attorneys' fees, but as a testifying expert who can challenge the plaintiffs' attorneys' fees as unreasonable and unnecessary,” she also told the court, adding that the arrangement had put the case in "an unusual posture." 

In its petition for writ of mandamus filed with the state high court in August 2015, National argued that a defendant's fees are irrelevant, and that there are other methods in place — including the lodestar method and Arthur Andersen factors — that can be used without compelling a party to turn over rate and fee information it argues is privileged.

National's petition said the Thirteenth Court of Appeals decision caused a split among state appellate courts over whether a plaintiff can discover a defendant's attorneys' fee information, which it said is reflective of a split in other state and federal courts as well.  It said that the state high court has never adjudicated the issue and the Thirteenth Court erroneously relied on Chief Justice Nathan Hecht's concurring opinion in the 2012 case El Apple I v. Olivas in justifying its holding that the fee information is both relevant and discoverable.

As part of the underlying legal battle, the property owners were seeking damages and attorneys' fees on their breach of contract and Texas Insurance Code claims, according to court documents.  The cases were consolidated with thousands of others in a multidistrict litigation in Texas, and special master Roberto Ramirez was appointed to resolve any disputes.  In March 2015, according to the petition, the property owners in this case moved for additional discovery on attorneys’ fee information, including rates, invoices, payments and audits.  The insurers objected.

In April 2015, the special master permitted the additional discovery, which resulted in requests for the information being served to National Lloyds, Wardlaw Claims Service Inc. and Ideal Adjusting Inc., which objected to the requests.  After a hearing, the special master overruled each objection, according to the petition, and an appeal to the Thirteenth Court of Appeals followed.

The case is In re: National Lloyds Insurance Co et al., case number 15-0591, in the Supreme Court of the State of Texas.

Attorneys Challenge Low Fee Award Before Ninth Circuit

February 21, 2017

A recent Law 360 story by Dorothy Atkins, “Kraft Buyers’ ‘Greedy’ Attys Fight Low Fee Award at 9th Circ,” reports that attorneys who extracted a confidential settlement from Kraft Foods over mislabeling claims defended their $1.8 million fee request before the Ninth Circuit, saying the $11,000 award by a district judge who called them “greedy” didn’t come close to compensating them for hundreds of hours spent on the case.

Gregory S. Weston of The Weston Law Firm, who represented buyers of Kraft Foods Inc. snack products, argued that U.S. District Judge George H. Wu didn’t explain exactly how he determined that counsel was owed for only 200 hours of work, or how he arrived at the $11,000 figure.  Weston said the consumers prevailed in the case’s pleading stage, which he said involved three-years of litigating six different hearings and required much more than 200 hours of work.  “There’s no way that gets done in 200 hours,” he said.

Judge Wu rejected the $1.8 million fee request in June 2014, calling the consumers’ attorneys “greedy.”  At the time, the consumers had reached a confidential settlement with Kraft that ended the suit, which had been filed by lead plaintiffs Evangeline Red and Rachel Witt in 2010.  They alleged the company violated false advertising provisions of the Lanham Act by making misleading claims that several Kraft products were nutritious when they actually contained trans fats.

Weston said that state law requires courts to compile submitted hours carefully to determine attorneys’ fees, but that Judge Wu appeared to use an “arbitrary” and nonspecific method to determine the fees owed.  There’s also “no indication” Judge Wu actually reviewed counsel’s hours, or used an initial lodestar calculation or a negative multiplier to calculate the fees, he said.

But the three-judge panel pressed Weston on his argument, asking him why he believes he’s entitled to higher fees when it’s not apparent the consumers were the prevailing party in the case.  U.S. Circuit Judge Richard C. Tallman said that keeping the lawsuit alive for as long as the consumers did didn’t make them the prevailing party, especially, he said, when they basically lost on their theory of the case.

Weston disputed that view, arguing that the consumers, having won an injunction against Kraft, didn’t lose on their theory of the case at all.  Additionally, he said, even if the case’s merits didn’t go to trial, the consumers prevailed on six motions, including two motions to dismiss.  The only thing the consumers didn’t succeed at was achieving monetary relief for the class, he said.

And regardless, Weston said, case law has established that only awarding fees to parties who are successful on their theories would end up undercompensating attorneys, and it wouldn’t recognize the “inevitable exploratory nature of litigation.”

Meanwhile, Kraft attorney Dean N. Panos of Jenner & Block LLP said Judge Wu applied the correct, pragmatic approach to “trimming the fat” by broadly determining that the consumers’ “outrageous” fee request was too high and awarding a lower fee.  Panos argued that there’s no precise formula to calculate fees, and the court is not required to conduct an hour-by-hour analysis of time spent on a case.  Judge Wu had presided over three years of litigation and therefore he was in the best position to determine how much counsel should be paid, Panos said.

The case is Evangeline Red v. Kraft Foods Inc., case number 15-55760, in the U.S. Court of Appeals for the Ninth Circuit.