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NALFA Bankruptcy Fee Examiners File Amicus Brief in Asarco Case

December 17, 2014

Bankruptcy fee examiners that included NALFA members Nancy Rapoport and Robert Fishman filed an Amicus Brief (pdf) with the U.S. Supreme Court in Baker Botts v. Asarco.  At issue in the case is whether the Bankruptcy Code grants bankruptcy judges discretion to award compensation for defending a fee application.  The amicus brief states:

This Court’s decision here should avoid any per se rule—either generally permitting or generally prohibiting—the compensability of defense fees.  Implicitly or explicitly, moreover, the Court should note the practical dimension of the review, resolution, and approval process for professional fees in Chapter 11 proceedings.  The facts of this case are, in so many ways, exceptional.  With or without a fee committee or a fee examiner, the consensual resolution of fee disagreements is the norm.  Any per se rule would discourage that resolution.  A system without restraint on the award of defense fees could encourage meritless fee requests and license to defend them beyond reason or necessity.  A system that made defense fees virtually unobtainable could encourage meritless objections.

NALFA also reported on this case in “U.S. Supreme Court to Hear Historic Fee Enhancement Case” and “Fifth Circuit Upholds 20 Percent Fee Enhancement in Historic Case

NALFA Welcomes Qualified Bankruptcy Fee Examiner Robert Fishman

December 16, 2014

NALFA welcomes Robert M. Fishman to our membership.  NALFA certifies Robert Fishman as a qualified bankruptcy fee examiner.  Mr. Fishman is a partner at Shaw Fishman Glantz & Towbin LLC in Chicago.  Mr. Fishman is the firm’s co-chair of the Bankruptcy, Reorganization and Creditor Rights practice.  Mr. Fishman was recently featured in Crain’s Chicago Business story, “Meet the Bill Gatekeeper in Detroit’s Bankruptcy.”  The article states:

Fishman says he fell into bankruptcy practice “by accident” after a stint at the Illinois attorney general’s office.  The mix of dealmaking, litigation and client variety proved a good match for his temperament.  After 18 years in private practice, he left 155-lawyer Ross & Hardies, which later merged with McGuireWoods.  He joined a small real estate firm at two firms, and established a bankruptcy practice there.  He wanted more control over his work, he says.

Fishman has built a national profile on his work with the Alexandria, Va.-based American Bankruptcy Institute, where he was president from 1997 to 1998, and his involvement in the United Airlines, Kmart and Peregrine Financial Group.

The fee examiner role is the most prominent he has held in a big case. Fishman says, “the kind of opportunity I just felt I couldn’t say no to,” although not because of the money.  Rather, Fishman sees the assignment as an important credential for business development.  He speculates that more municipalities may file bankruptcy.  If that happens, he says, “I’ll be in a very good position to be considered for that.”

Use a NALFA Fee Dispute Clause in Your Fee Agreement

December 15, 2014

The following language can fit into any retainer agreement or engagement letter, and permission is given for its use:

  1. ATTORNEY-CLIENT FEE DISPUTE
    In the event either of us seeks a mediation of a fee dispute in connection with the underlying matter, we agree that the dispute(s) shall be resolved and/or settled by the National Association of Legal Fee Analysis’ (NALFA) Attorney Fee Dispute Mediation Program, under the Rules in effect at that time, including our mutual obligations of cooperation and disclosure.

Sixth Circuit: Counsel Failed to Present Evidence to Justify 25% Contingency Fee

December 12, 2014

The U.S. Court of Appeals for the Sixth Circuit in Lasley v. Commissioner, affirmed a district court’s order awarding reduced attorneys’ fees under the Social Security Act.  The attorney failed to demonstrate that the 25 percent contingency fee agreed to by his client, a prevailing disability benefits applicant, was reasonable and not a “windfall,” as characterized by the Commissioner.  Considering the number of hours worked by the attorney and the comparative simplicity of the case, the court acted within its discretion in awarding a significantly lesser amount than the 25 percent contingency fee permitted by statute.

Pursuant to the Social Security Act, a district court may award reasonable attorneys’ fees when judgment has been rendered in favor of a claimant.  The statute permits an award of fees not in excess of 25 percent of the total of past due benefits to which the claimant is entitled.  Further, case law has interpreted that contingency fees are permitted.  Prevailing counsel bears the burden of showing that the fees sought are reasonable. 

Here, the district court agreed with the Commissioner, who opposed the prevailing attorney’s request for a 25 percent contingency fee, characterizing it a “windfall.”  The court rejected the 25 percent fee as unreasonably high and awarded a reduced sum.  On appeal, prevailing counsel argued that the court should have approved his request for the full 25 percent contingency fee as it was accepted by his client and also is permitted by statute.

The court acknowledged the contingency fee agreement and the 25 percent ceiling, yet it determined that the effective hourly rate resulting from the 25 percent fee, $733.80 grossly exceeded the standard Social Security fee requests in the region.  Moreover, the court found that the relative simplicity and brevity of the representation, 35.5 hours, were factors that weighed in favor of reducing the fee award. 

The attorney failed to present any evidence of a contrary standard rate or refute the district court’s finding regarding the relative complexity of the case as compared to other Social Security litigation.  The court thus acted within its discretion in finding that counsel failed to carry the burden of demonstrating the contingency fee’s reasonableness.  Therefore the district court’s reduced fee award was affirmed.

Litigation: The New Cost of Doing Business

December 11, 2014

A new study, “Global Risk 2014-2015: Building the Transparent Bank” by Boston Consulting Group reports that since the financial crisis, both sides of the Atlantic have paid out a total of $178 billion in litigation costs.  These litigation costs have grown four years in a row, the consulting firm says in its report.  “Litigation is the new cost of doing business,” the firm’s analysts wrote.

Banks in the U.S. and E.U. paid out $60 billion to settle legal claims during in just the first nine months of this year.  That was up from $46 billion in 2013, $44 billion in 2012 and $22 billion in 2011, the report said.

According to the report, in order to ensure that all existing and new regulations and internal policies are strictly followed, banks should establish a comprehensive control framework based on the three-lines-of-defense (3LOD) model, which consists of business support, independent controls, and internal audit.  In order to derive a state-of-the-art 3LOD model, banks have to fundamentally upgrade their control frameworks:

Banks need to establish a comprehensive up-to-date risk inventory reflecting all regulatory, business conduct, and stakeholder requirements and clearly allocate responsibilities within the first and second lines of defense.

Furthermore, the second line is responsible for defining a global control framework, specifying how best to adapt global standards to local needs and how to achieve a well-balance, effective control intensity.

On the basis of this global framework, the first line of defense can build specific controls, driving the full integration into the bank’s operating model.

Law Firms Outsource to Collect Unpaid Fees

December 10, 2014

A recent New York Law Journal story, “Firms Turn to Specialists to Boost Collections,” reports that as pressure mounts on law firms to boost revenue, several firms have upgraded procedures...

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Big Legal Departments Foresee Legal Spend Cuts in 2015

December 9, 2014

A recent Law 360 story, “Biggest Cos. Foresee Legal Cuts in 2015,” reports that two-fifths of legal departments at companies with revenue exceeding $10 billion said they expect their legal...

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Texas Fourth Court of Appeals: Juries Can Determine Reasonable Attorney Fees

December 8, 2014

A recent Texas Lawyer story, “Fourth Court Creates Split on Attorney Fee Question,” reports that splitting from two intermediate appellate courts, San Antonio’s Fourth Court of...

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Percentage Method Upheld in Class Action Fee Award in California

December 5, 2014

A recent Law 360 story, “Calif. Panel OKs $6M Fee Award in Robert Half Settlement,” reports that a California appeals court affirmed a $6.3 million fee award in staffing firm Robert Half...

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Institutional Investors Unite Against Delaware's Fee-Shifting Ruling

December 3, 2014

A recent Pensions & Investments blog post, “Institutional Investors Team Up Against Delaware Court Ruling on Legal Fees,” reports that the Delaware Supreme Court decision that lets...

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