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Article: Five Lessons for Recovering Attorney Fees in Texas

February 24, 2020

A recent BizLitNews article by Amanda Taylor, “Recovering Attorney’s Fees in Texas: Five Lessons,” reports on attorney fee recovery in Texas.  This article was posted with permission.  The article reads:

Obtaining an award of attorneys’ fees might be the final step in a long-waged litigation battle but to do so successfully requires careful planning and diligence from the outset of a case.  The Texas Supreme Court recently clarified the evidence required to obtain and affirm such an award.  Rohrmoos Venture v. UTSW DVA Healthcare, LLP, 578 S.W.3d 469 (Tex. 2019).  The Texas Supreme Court also recently confirmed that these evidentiary standards apply equally when fees are sought to be recovered as a sanction.  Nath v. Texas Children’s Hosp., 576 S.W.3d 707, 710 (Tex. 2019).  To best serve a client’s interests of recovering attorneys’ fees in Texas, whether as a prevailing party or as a sanction, lawyers should adhere to five lessons from Rohrmoos.

Lesson One:  Confirm a legal entitlement to recover fees.  “In Texas, as in the federal courts, each party must pay its own way in attorney’s fees … unless a statute or contract provides otherwise.”  Rohrmoos Venture, 578 S.W.3d at 484.  Certain claims, such as a breach of contract claim brought under Chapter 38 of the Texas Civil Practices and Remedies Code, entitle a prevailing party to recover attorneys’ fees.  Other claims, such as a common law fraud claim, do not afford such a remedy.  In establishing your initial case strategy, it is important to consider which claims will and will not allow for recovery of fees, and advise your client about the pros and cons of pursuing each claim accordingly.  Also, be aware of fee-shifting procedural tools (such a motion to dismiss under the Texas Citizens Participation Act) and various Texas statutes and rules that allow for recovery of fees as a sanction (such as Civil Practice and Remedies Code Chapters 9-10, and Texas Rule of Civil Procedure 215).

Lesson Two: Keep accurate, contemporaneous billing records.  Although billing records are not absolutely required to prove the amount of reasonable and necessary fees, it is “strongly encouraged” to submit such proof in support of attorneys’ fees.  Rohrmoos Venture, 578 S.W.3d at 502.  It is much easier to review, summarize, and testify about the work performed (often years later) if you have been diligent in your billing practices throughout.  Time should be kept in a manner that demonstrates the “(1) particular services performed, (2) who performed those services, (3) approximately when those services were performed, (4) the reasonable amount of time required to perform the services, and (5) the reasonable hourly rate for each person performing the services.”  Id.  It is also advisable to keep time in a manner that is specific enough to cover the topic but without legalese and without so much detail that heavy redactions become necessary.  Fact finders prefer to read invoices in plain English without the interruption of hidden text.

Lesson Three:  Your fee agreement does not control the amount awarded.  “[A] client’s agreement to a certain fee arrangement or obligation to pay a particular amount does not necessarily establish that fee as reasonable or necessary.”  Id. at 488.  Translation: even if you have agreed to handle the matter for a flat fee or contingency fee, you still must demonstrate that the amount of fees sought for recovery are reasonable and necessary based on the work performed and the time incurred.  Regardless of the fee arrangement with your client, keeping accurate and contemporaneous billing records is important.

Lesson Four: Remember to timely designate fee experts.   “Historically, claimants have proven reasonableness and necessity of attorney’s fees through an expert’s testimony—often the very attorney seeking the award.”  Id. at 490.  “[C]onclusory testimony devoid of any real substance will not support a fee award.”  Id. at 501.  Because expert testimony will be required, the attorney must remember to designate herself and any other attorney who will offer an opinion about the reasonableness and necessity of the fee amount(s) as an expert witness in compliance with the scheduling order or discovery control plan governing the case.

Lesson Five: Understand the “Texas two-step” calculation method.  At step one, calculate the “base” or “lodestar” amount by multiplying the “reasonable hours worked” by a “reasonable hourly rate.”  Id. at 498.  This is an “objective calculation” that yields a “presumptively reasonable” amount.  Id. at 497-98, 502.  The determination of what is a reasonable market rate and what is a reasonable amount of time will typically include consideration of the following factors: (1) the time and labor required, (2) the novelty and difficulty of the questions involved, (3) the skill required to perform the legal service properly, (4) the fee customarily charged in the locality for similar legal services, (5) the amount involved, (6) the experience, reputation, and ability of the lawyer or lawyers performing the services, (7) whether the fee is fixed or contingent and the uncertainty of collection, and (8) the results obtained.  Id. at 500.  At step two, “adjust[] the base calculation up or down based on relevant considerations … [that were not] subsumed in the first step.”  Id.  “If a fee claimant seeks an enhancement, it must produce specific evidence showing that a higher amount is necessary to achieve a reasonable fee award.”  Id. at 501.  Remember that only “rare circumstances” justify such an adjustment.  Id. at 502.

Following these five lessons from the outset of a case will be beneficial to the expert testifying about the amount of fees at the end of a case.  More importantly, it will benefit your client’s best interest in obtaining a monetary award and being able to have that award affirmed on appeal.

Amanda G. Taylor is a Board-Certified Civil Appellate attorney who practices from the Austin, TX office of Butler Snow LLP.  Her practice is focused on shaping successful case strategy for litigation clients from the outset of litigation through the end of an appeal.  She also frequently represents clients in matters regarding the Texas Citizens Participation Act (Texas’ anti-SLAPP statute).

Claims of ‘Excessive’ Hourly Rates in NFL Concussion Settlement

February 21, 2020

A recent Law 360 story by Ryan Boysen, “Seeger Weiss for ‘Excessive’ Fee in Concussion Deal,” reports that a handful of law firms have again objected to Seeger Weiss LLP’s latest $1.2 million fee request in the NFL concussion settlement, accusing the sole remaining class counsel firm of “burning through” a multimillion-dollar compensation fund at an alarming rate with “excessive” hourly fees.  The objection by Lubel Voyles LLP, Kline & Specter PC and Washington & Associates PLLC reiterated previous accusations that Seeger Weiss is on track to deplete the last of the $125 million common benefit fund within three years or so, at which point its fees will come out of the pockets of the retired NFL players the settlement is meant to help.

“The prospect that these debilitated, former NFL players would bear the burden of administrative fees and expenses” stings even more, Lubel Voyles said, because that outcome “was opposed by the majority of the previously appointed co-lead class counsel” and Harvard Law professor William B. Rubenstein, who advised Judge Brody on how the firms involved in the settlement should be paid.

When Judge Brody approved the common benefit fund she also instituted a 5% holdback that's applied to all retired players who receive monetary awards from the deal, a pot that's valued at roughly $32 million so far, according to Lubel Voyles.  If the money in the CBF is exhausted, that holdback fund would likely be tapped to pay Seeger Weiss’ future fees for overseeing the 65-year settlement.

“This settlement was sold to [the players] (and the court), in part, based on repeated representations that the NFL was — independent of its injury-related settlement obligations — separately compensating class counsel [like Seeger Weiss] for its fees and expense,” Lubel Voyles said.  The filing is the latest move in a pattern that's taken on an almost ritualistic quality since U.S. District Judge Anita B. Brody approved the settlement’s initial $85 million fee request in 2018.

Seeger Weiss took home $52 million of that first award, reflecting its role as the dominant force on the plaintiffs' side of the docket in the sprawling multidistrict litigation that led to the uncapped 2015 settlement.  The remaining funds were split between nearly two dozen other firms and individuals, many of whom are now demanding a bigger cut in a bitter Third Circuit appeal.  That episode underscored the resentment many firms still harbor towards Seeger Weiss over what they see as the imperious tactics the firm has used to establish and maintain control of the settlement.

In May 2019, Judge Brody dismissed five other law firms that had, on paper at least, enjoyed the same class counsel status as Seeger Weiss, making it the only firm entitled to the remaining money in the common benefit fund, which at that time stood at about $13 million.  While Lubel Voyles is involved in the Third Circuit appeal, the firm and its allies have also taken things a step further by objecting to every single fee request Seeger Weiss has filed since the initial $85 million award.

Since that first pot of money was dispensed in May 2018, Seeger Weiss has filed four subsequent fee requests, one for $8 million, one for $2.7 million, one for $1.7 million and the fourth and most recent request for $1.2 million earlier this month.  At least two of those requests have already been approved, after Judge Brody overruled Lubel Voyles’ objections.  Seeger Weiss has blasted Lubel Voyles on each occasion, calling the firm a dead-ender that's wasting everyone's time on repeatedly rejected arguments.  In all of those objections, including Lubel Voyles has accused Seeger Weiss of billing at an “excessive” hourly rate of more than $600 an hour.  Lubel Voyles said that’s partly because so much of the work is billed by partners, when it could easily be done by paralegals, or even other firms.

“Our firm and many others … have developed ‘the same breadth of familiarity with the settlement program” as Seeger Weiss, Lubel Voyles said, adding that it “stands ready, willing and able to assist [Seeger Weiss] in the oversight and maintenance of the settlement at rates substantially below those request[ed] in the fourth [fee request]."  Lubel Voyles has also repeatedly called out Seeger Weiss for not providing more information in its billing requests, like time sheets or expense records.  But the meat of Lubel Voyles problem with Seeger Weiss’ fee requests boils down to the accusation that the firm isn’t even trying to avoid tapping into the 5% holdback fund, even though it was created only as a “last resort.”

Article: The Need For Attorney Fee Expertise

February 20, 2020

A recent AI article by John D. O’Connor, “The Need For Attorney Fee Expertise (pdf),” reports on the need for attorney fee expertise to prove reasonable attorney fees and proper billing practices in underlying litigation.  This article was posted with permission.  The article reads:

Most corporate clients today have access to excellent litigation counsel in each particular area of concern.  However, as attorney fee disputes are increasingly becoming a by-product of the main litigation event, few clients and few otherwise excellent litigators truly understand when and how to use attorney fee experts.

Although the “American Rule” provides that each litigating party bears its own fees, there are exceptions to this rule.  Successful class actions; employment and governmental discrimination cases; eminent domain suits; RICO claims; and other cases result in legally-sanctioned attorney fees claims.  Promissory notes, guarantees, real estate purchase agreements, and corporate acquisition contracts often contain attorney fee clauses.  High-stakes insurance coverage litigation usually features a battle over fees incurred in the underlying case(s).  It is common for a case with a small monetary award to result in an extremely high request for fees.

Typically in fees proceedings, the party with a claim to fees files a motion detailing the amount it requests, accompanied at a minimum by a Declaration of the main litigating attorney attaching a statement of his billings, detailing hours and rates for which payment is sought.  The main billing attorney will normally justify the requested billing rate, which can be his actual rate or a rate claimed to be prevailing in the community for one of similar skill and experience. The motion, usually accompanied by a brief summarizing the law of fees in that type of case, includes the statutory or contractual authority for same.

When the responding party files its submission, the contours of the ultimate dispute take shape.  It is common for the respondent to challenge the billing rates as unduly high; the number of lawyers assigned as excessive; the hours spent as inefficient; the number and length of conferences and meetings as unnecessary; the billing form as improperly “blocked” and “vague” in description; many of the tasks billed as being unwisely or improvidently chosen; certain work as not related to prevailing claims; and generally excessive fees for the type of litigation involved.  Often this opposition is accompanied by a request for limited discovery regarding fees.

As objections are detailed in various cases, the challenging lawyer is usually able to write an impressive brief in support.  These objections can be made without an expert witness, except as to prevailing billing rates, which the responding lawyer is qualified to opine.  The responding party will have made a serious mistake, however, if it did not bolster its objections with a detailed opinion of an experienced fee expert.  Often, the reviewing Court has witnessed the work of the petitioning lawyers and formed a positive opinion of them. Indeed, the reviewing Court in the underlying case would often have ruled in favor of the petitioner and against the respondent.  Even if not, the respondent must labor against the human assumption that established, competent lawyers have billed in accordance with community standards.

However, surprisingly, it is common for responding parties to put forth objections without an expert.  We have seen cases where fees sought into eight figures, where no expert has been retained, with unenviable results. Most experts have the capability of presenting a computer analysis isolating hours and tasks, which can claim to isolate amounts of “block” entries, incompensable “clerical” time, and other practices.  Such a presentation, though, is often superficial, and may not impress a reviewing Court seeking a principled basis upon which to reduce fees for the prevailing party.

Whatever the case, any attack on the requested fees should call for a rebuttal by a qualified attorney fee expert on behalf of the petitioner.  However, this guideline is frequently observed in the breach.  Even if the Court had been inclined to a favorable opinion of the petitioning firm, even a superficial attack on the petitioning lawyers’ fees can be facially effective, and thus the petitioner would need to blunt effectively any such attack.

A qualified expert can help by suggesting needed discovery from the responding party of information regarding that party’s billings which supports the petitioner’s request.  More importantly, an expert employed correctly will go beyond the glittering generalities put forth in these disputes.  They would show why a particular billing rate is justified with specific reference to specific firms doing nearly identical work or why a particular task was necessarily and properly time-consuming.

Most reviewing Courts are experienced at resolving factual disputes based on a presentation of specific compelling facts.  A wise litigation party, in short, should employ an expert to do just that. 

John D. O’Connor is a NALFA member and the Principal of O’Connor & Associates in San Francisco.  For more on John D. O’Connor, visit www.joclaw.com.

Judge: Vague Billing Entries in Boston Scientific FCA Suit

February 19, 2020

A recent Law 360 story by Bill Wichert, “’Vague’ Fee Entries Targeted in Boston Scientific FCA Suit,” reports that a New Jersey federal judge said whistleblowers’ lawyers should get about $2 million less than the roughly $7.6 million in attorney fees and costs they want from Boston Scientific after settling a False Claims Act suit, citing vague billing entries for hundreds of hours spent “reviewing documents.”  In a report and recommendation made available, U.S. Magistrate Judge Steven C. Mannion called for awarding about $5.5 million in fees and costs — most of which would go to Susman Godfrey LLP — saying the firm should be paid for slightly fewer attorney hours that it billed due to such “vague and excessive entries.”

Judge Mannion found that “Susman Godfrey generally spent its time on reasonable activities, and generally spent a reasonable amount of time on each activity,” but said he is “particularly concerned by the vagueness of certain entries.”  For instance, the judge cited “172 entries with the exact description ‘Reviewing documents’ and no more, amounting to 918.5 hours of time.”  “Although such vague billing is occasionally acceptable for junior associates performing initial document review, such descriptions are nowhere near detailed enough for the court to review the reasonableness of the hours for partners and senior associates,” Judge Mannion said.

The judge concluded it is “not reasonable” for four particular senior attorneys at Susman Godfrey “to be performing the type of initial document review that does not warrant further description, but these four attorneys alone account for 140 such entries —totaling 788.7 hours and not including the numerous equally vague variations such as ‘reviewing discovery.’”  Instead of detailing “all of the various vague and excessive entries” among the roughly 3,500 entries, Judge Mannion proposed cutting the 8,105.7 hours requested for Susman Godfrey attorneys by 850 hours, saying that reduction is “a good analogue of the size of the problem.”

Judge Mannion also suggested reducing the hourly rate for work by Susman Godfrey paralegals.  The firm requested a “blended rate” of $618 per hour for work by both attorneys and paralegals.  The judge said similar rates have been approved in recent years in New Jersey federal court and that $618 an hour is a reasonable rate for the attorneys’ work but not for the paralegals'.  Instead, the judge recommended setting the rate for the paralegals’ work at $150 an hour, which was the rate billed for work performed by a local associate from a different firm.

Susman Godfrey and Grant W. McGuire of McManimon Scotland & Baumann LLC submitted the request in June for about $6.7 million in attorney fees and roughly $908,000 in costs, after reaching a $2.5 million settlement with Boston Scientific on behalf of former company employees Wendy A. Bahnsen and Caroline H. Fuentes.  The case, which was originally filed in 2011, dealt with allegations that the medical device maker illegally paid doctors to promote off-label uses of its Precision Plus spinal cord stimulation system and of billing Medicare and Medicaid for such uses.  Bahnsen and Fuentes originally sought more than $70 million in damages, court documents state.

After reducing the hours for Susman Godfrey attorneys and the hourly rate for paralegals, Judge Mannion calculated a fee award of about $5.1 million.  But the judge then suggested reducing the amount even further after accepting Boston Scientific’s argument that the fees should be cut since the settlement was much less than what the ex-workers initially sought, according to his opinion.

“Fees in excess of $5M may have been reasonable had relator’s attorneys achieved a result anywhere near the original demand in this suit of roughly $70M.  But, in light of that original demand, the court cannot call the $2.5M actually obtained exceptional,” the judge said.  “The fact that Boston Scientific has previously argued that it should not have had to pay that much is unavailing.”  As a result, Judge Mannion proposed cutting the fee award to roughly $4.6 million.  He did not disturb the proposed costs of about $908,000.

NCAA Seeks Pause on $33M Fee Award in Antitrust Class Action

February 18, 2020

A recent Law 360 story by Mike LaSusa, “NCAA Wants Timeout on $33M Bill in Student-Athlete Row,” reports that the NCAA has asked a California federal court to hold off enforcing a magistrate judge’s recommendation that the college athletic association pay $33 million in attorney fees and costs to student-athletes who won an injunction barring the NCAA from restricting their education-related compensation.  College football and basketball players who've challenged the NCAA's amateurism rules asked the court last week to enforce the magistrate judge's recommendation, pointing out that the NCAA hadn’t objected to it.

But the NCAA told the court that another ruling is expected soon in the case, which is on appeal at the Ninth Circuit, meaning “the question of whether plaintiffs are the ‘prevailing party’ entitled to recover their attorneys’ fees and costs remains unsettled.”  “It would therefore be premature to enter a final judgment adopting the magistrate judge’s recommendation and requiring defendants to pay plaintiffs’ requested attorneys’ fees and costs prior to the Ninth Circuit’s resolution of the parties’ appeals,” the NCAA said.

U.S. Magistrate Judge Nathanael Cousins’ Dec. 23 recommendation called for the NCAA to pay the student-athletes $31.8 million in attorney fees and $1.4 million in costs, but declined to provide the attorneys with the full $45 million they requested.  Judge Cousins applied minor reductions to the student-athletes’ baseline bid for fees and costs and declined to apply their ask for another $15 million based on a 1.5 multiplier, requested in light of "the exceptional nature of the outcome."  Still, he said, while the students’ victory was “historic,” they didn’t get everything they asked for.