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Lawyers Settle $62M Fee Allocation Dispute

July 29, 2014

A recent NLJ story, “Lawyers Settle Fight Over $62 Million in Fees,” reports that lead lawyers in the litigation over hormone replacement therapy drugs, have agreed to resolve their dispute involving $62.3 million in attorney fees for work performed for the plaintiffs’ common benefit.  U.S. District Judge Billy Roy Wilson, of the Eastern District of Arkansas, must approve the settlement, reached after a 16-hour mediation.  A total of 32 law firms will divide $62.3 million in attorney fees.

Zoe Littlepage and Rainey Booth, who won a half-dozen verdicts against Pfizer Inc. over its Prempro HRT drug, will be entitled to 35 percent of the common benefit fund, or $22.1 million.  Both lawyers, who harnessed their separate law firms in a joint venture for purposes of the HRT litigation, objected to the initial plan on how to allocate the common benefit legal fees.  Erik Walker, of Hissey Kientz in Austin, will be entitled to 11.433 percent, or $7.1 million, of the common benefit fund.

All of the lawyers have agreed to a holdback fund of $4 million, which, among other things, will pay for any further fees incurred by the retired federal judge who mediated the fee dispute and other costs.  In a later development, the common benefit fee committee voted 6-1 to pay $2 million out of the holdback fund to Walker’s law firm.  Littlepage dissented, according to Walker’s court filing on July 23.

Walker said in court papers that receiving a high portion of the holdback fund would reflect the work his firm and he did on the HRT litigation.  “I was told that [being given] the highest multiplier at the end would be my compensation for work on nearly all the early bellwether trials.  No fee interest.  Sometimes, not even reimbursement of expenses.  But a promise of the maximum at the end,” Walker wrote.

Court: Insurers Must Pay MBIA's Legal Costs

July 24, 2014

A recent Business Insurance story, “Insurers Must Pay MBIA’s Legal Costs from Restructuring: Court,” reports that Lloyd’s of London syndicate underwriters, an American International Group Inc. unit and a German insurer are obligated to pay defense and settlement costs in connection with MBIA Inc.’s 2009 restructuring under the insurer’s financial institutions professional indemnity primary and excess policy, a federal court has ruled.

The ruling by U.S. District Court in New York in MBIA Inc. v. Certain Underwriters at Lloyd’s London, Lexington Insurance Co. and Wurttembergische Versicherung A.G. says the insurer has “incurred tens of millions of dollars” to defend itself in this litigation.  The ruling by U.S. District Judge Shira A. Scheindlin, however, says it is still too early to rule on other litigation against MBIA because it involves cases that have not yet been resolved.

MBIA had purchased primary financial institutions professional indemnity policies for 2007-2008 and 2008-2009 – with a limit of $15 million and excess policies for those years – that provided another $15 million in coverage from Lloyds syndicates 2987 and 1274, AIG unit Lexington Insurance Co. and Stuttgart, Germany-based Wurtt Vers, according to the ruling.  In February 2009, MBIA separated its subsidiaries to provide municipal and state issuers frozen out of the public finance market with financial guarantee policies, while attracting capital investment to the holding company’s benefit, according to the ruling. 

In what has been labeled “transformation cases,” MBIA was subsequently named as defendant in lawsuits charging that this was improper because it deprived plaintiffs of the benefits of the financial guarantee insurance MBIA sold and lowered the insurer’s MBIA Insurance unit’s credit rating.  The cases were eventually settled or dismissed, but underwriters refused to reimburse MBIA under its policies, arguing they were only obligated to make payment after other litigation against MBIA reached final disposition. 

Judge Scheindlin disagreed.  “MBIA can seek recovery of loss from the transformation cases because unlike (other litigation) all underlying lawsuits involving identical or related wrongful acts have a final disposition.”  The judge also held that MBIA’s actions constitute professional services and are therefore covered, and that a financial guarantee exclusion is not applicable.  The court held, however, that the insurers were not obligated to reimburse MBIA in connection with other litigation filed against it because there cases are still pending.  Last year, MBIA agreed to pay $350 million to settle litigation over its restructuring.

Fee Entitlement Dispute in Apple-Samsung Litigation

July 21, 2014

A recent The Recorder story, “Apple, Samsung Clash Over Attorney Fees,” reports that a U.S. Supreme Court patent decision that had nothing to do with trade dress may have everything to do with whether Apple collects attorney fees from Samsung in the litigation over smartphone design.

Apple Inc. wants to recoup $16 million in attorney fees it incurred in the litigation that resulted in a $1 billion jury verdict before U.S. District Judge Lucy Koh of the Northern District of California in 2012.  Apple moved for fees under the Lanham Act, based on jury findings of the trade press dilution, rather than under the Patent Act, where the standard for recovering fees has been higher.

But the Supreme Court changed the standard in April, when it threw out the rigid test for finding a patent case “exceptional,” instructing trial judges to simply consider the totality of the circumstances.  The decision in Octane Fitness v. ICON Health & Fitness interpreted the Patent Act, but the Lanham Act uses identical language.

“Is that now the standard for Lanham Act fees in the Ninth Circuit?” Judge Koh asked Morrison & Foerster partner Rachel Krevans, representing Apple.  Krevans argued that the jury had found that Samsung Electronics Co. acted willfully, and under U.S. Court of Appeals for the Ninth Circuit case law, attorney fees “naturally flow” from willfulness, though she acknowledged there’s no hard-and-fast rule.

NALFA to Host The Attorney Fees Webinar Series

July 18, 2014

NALFA will be hosting The Attorney Fees Webinar Series in November 2014.  These three 90-minute CLE webinars will cover attorney fee and legal billing issues.  NALFA is currently recruiting sponsors and panelists for these programs.  Each day will cover a different topic.

With the growing body of attorney fee jurisprudence and attorney fee scholarship, attorney fees are developing into a substantive area of law.  “We’re excited to be leading the way on attorney fee and legal billing issues.  Our members are at the forefront of this new and growing practice area," said Terry Jesse, Executive Director of NALFA.

This will be the sixth program NALFA has hosted on attorney fee and legal billing.  The CLE webinars will be free for NALFA members.  For more information, visit

Study: Gender Disparity in Billing Rates

July 15, 2014

Sky Analytics, a leading corporate provider of legal spend management software for corporate legal departments, recently announced the release of the first ever gender study based on actual billings from law firms.  The gender study (pdf) casts light on stark inequalities between men and women in the legal profession.

The study analyzes law firm invoices collected by Sky Analytics from corporate legal departments with annual legal spend ranging from $1 million to $1 billion.  The data set spans over $3.4 billion in legal spend across over 40,000 attorneys and timekeepers and over 3,000 law firms in the U.S., including 73 of the AmLaw 100 firms.

“In light of the recent Pay Equality bill signed by President Obama, we decided to analyze the Sky Analytics’ database to see if we could cast light on any gender disparities in the legal market,” said Dr. Silvia Hodges Silverstein, Vice President of Strategic Market Development at Sky Analytics.  “We were surprised not only by the pay inequality, but also the staffing role biases.” 

“We set out to create the world’s deepest and most detailed legal spend database and analytics platform,” noted Jonathan Kash, Chief Data Scientist.  “This study reveals the power that is locked in invoice data which can help drive positive change in the industry.” 

Key findings of the study include:

Female partners earn an average 10% lower billable rate versus their male counterparts.  This pay inequality is especially pronounced in the Mountain and South Central regions of the U.S. where rate disparity rises to 16% and 20% respectively.

Women are billed at significantly lower rates per hour than men, no matter what size of firm.  The average female partner’s hourly rate is $47 less per hour or 10% less than her male colleague’s ($426 vs. $473) at top tier firms.  The difference is even more significant at smaller firms where female partners are billed at $64 less per hour or 12% less than males at ($498 vs. $562).

Virtually no women are billed at over $1,000 per hour compared to 2% of men in top tier firms.  While 6% of all male lawyers bill over $800, only 2% of female lawyers bill over $800.  Furthermore, 51% of men in top tier firms charge over $500 per hour, compared to 31% of women in the same tier.

The differences in pay start early.  At top tier firms, the average hourly rate of a female associate is $27 less per hour than her male colleague’s ($377 vs. $404).  At smaller firms, 30% of women charge less than $150 per hour compared to 22% of men.

Based on invoice task codes, there are specific “female” jobs and “male” jobs.  Only four jobs were “female” jobs (˃50% female): word processing (UTBMS code E103); fact investigation/fact development (L110); deposition (L330); and “other” (P280).  By comparison, 177 jobs were “male” jobs: Juror research (Me210); Discovery On-Site Inspections (L360), International Patent Prosecution (PA600), Operations (B200), and Hosting Costs (L651) are most likely to be done by a man.

Female partners bill 24 minutes per day more than male partners.  Male and female associates bill about the same number of hours per day, while female paralegals bill 121 minutes (or 22%) less than male paralegals.

“We value diversity and equality so hopefully law firms will look at their own data to make sure they’re sending the right message to clients in the marketplace.  Also, it’s important to look at staffing and making sure women are staffed on the right matters,” Dr. Silvia Hodges Silverstein told NALFA.

“This is a groundbreaking study that’ll hopefully spur economic and social change in the legal profession.  Plus, it’s good to see legal spend data used to drive positive change in the industry,” said Terry Jesse, Executive Director of NALFA.

Sky Analytics is the leader in legal spend management software.  They analyze corporate legal invoices to give companies greater transparency into their legal spend and to benchmark their rates and matters against their peers.  Their legal spend management platform is the only one that does not require a lengthy implementation or e-billing integration.  For more information, visit

Los Angeles Asks Supreme Court to Overturn Fee Award

July 10, 2014

A recent L.A. Times story, “L.A. Asks High Court to Reverse Fee Award in Homeless Case,” reports that the City of Los Angeles has asked the U.S. Supreme Court to overturn a $700,000 fee...

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NALFA Recognizes Nation's Most Influential Attorney Fee Scholarship

July 7, 2014

Attorney fee scholarship refers to empirical papers, reports and studies on attorney fees.  These mostly academic works have been heavily sited by members of the bar in their fee applications and...

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Recovering Costs, Fees in Offer-of-Settlement Situations

July 3, 2014

A recent NLJ article, “An Oft-Overlooked Path to Recovering Costs, Fees,” by Sam Casey and Aaron Furniss of Sutherland Asbill & Brennan in Atlanta, reports that often overlooked in...

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When Letting a Bill Go Unpaid Can Be Good for Business

June 30, 2014

A recent ABA Journal article, “When Letting a Bill go Unpaid Can Be Good for Business,” discusses how pursuing clients for unpaid bills can be counterproductive.  Scott Saul, a Miami...

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Texas Ordered to Pay Attorney Fees in Redistricting Case

June 26, 2014

A recent NLJ story, “Texas Fights Million-Dollar Legal Fee Award in Voting Case,” reports that a federal judge in Washington reached a “remarkable result” when she ordered...

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