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Category: Fee Dispute

NALFA Welcomes Phillip Neiman, Esq., FCIArb

July 27, 2020

The National Association of Legal Fee Analysis (NALFA) is pleased to announce that Phillip Neiman, Esq., FCIArb has been named a Fellow of the association.

Mr. Neiman, a full-time neutral with JAMS in San Francisco, specializes in the resolution of complex business and commercial disputes.  He devotes much of his practice to securities and investment-related cases, including shareholder, partnership and M&A disputes, and has substantial experience in a range of other areas, including employment, insurance, IP, real property, professional liability, personal injury and privacy tort cases, as well as fintech and cannabis sector disputes.

Prior to establishing his ADR practice in 2004, Mr. Neiman spent a decade as CEO and General Counsel of a FINRA-registered investment bank.

Mr. Neiman has extensive experience resolving attorney fee disputes, both as an arbitrator ruling on contested fee petitions and as a mediator overseeing settlement negotiations with a fee component.  He has addressed a range of complex issues in contractual and statutory fee award cases, including lodestar adjustments, prevailing party determinations in partial success and disproportionate damages cases, multiparty apportionment, privilege claims related to billing records, Daubert challenges and assertions of bad faith litigation practices, among others.   

Mr. Neiman is a Fellow of the Chartered Institute of Arbitrators.

For more on Phillip Neiman, visit https://www.jamsadr.com/Neiman/

AIG Unit Can Recover Attorney Fees in Coverage Litigation

July 21, 2020

A recent Law 360 story by Mike LaSusa, “AIG Unit Nabs $212K in Atty Fees After Coverage Row” reports that AIG unit National Union can collect nearly $212,000 in attorney fees after fending off a medical services company's coverage claims stemming from a pair of employee harassment complaints, with a Florida federal judge shooting down several objections to the final fee figure.  U.S. District Judge Roy B. Dalton Jr. accepted a magistrate judge's recommendation to order TMH Medical Services LLC to pay $211,720.50 in attorney fees to National Union Fire Insurance Co. of Pittsburgh, Pa. — a slight reduction from National Union's request for $223,143.50 in fees.

Judge Dalton swept aside TMH's argument that National Union couldn't collect fees for litigation that happened after July 17, 2019, when the judge issued an order saying National Union would be entitled to attorney fees while leaving the amount undetermined.  TMH had argued that Florida law doesn't allow litigants to collect attorney fees racked up while fighting over the amount of attorney fees owed.  But Judge Dalton said his order last year didn't specify an amount and didn't end the battle over whether National Union was entitled to fees.

Judge Dalton noted that TMH had asked the court to reconsider its decision.  The judge rejected that request on March 20, meaning that date — not July 2019 — marked the end of litigation over entitlement to fees and start of the litigation over the final amount, he said.  The judge also wasn't convinced by TMH's arguments that the rates offered by National Union were unreasonable.  He said the rates of $285 per hour for of counsel and $355 for partners seemed reasonable, citing similar cases in which attorneys were paid as much as $550 per hour.

Law Firms Dispute Over Attorney Fees Ends After Years of Litigation

July 8, 2020

A recent Daily Business Review story by Michael Mora, “Mintz Truppman Loses 70% of Fees Sought in Litigation Against Cozen O’Connor” reports that it’s bad news for Mintz Truppman in a case that pitted two law firms against each other over attorney fees, and played out over years in several Florida courtrooms.  Timothy H. Crutchfield, a partner and representative for Mintz Truppman in North Miami, sought about $828,000 in attorney fees from the opposing parties, Lexington Insurance Co. and Cozen O’Connor.  But Florida’s Third District Court of Appeal affirmed the federal district court ruling that found Mintz Truppman was only entitled to about 29 percent of that amount, or about $240,000.

According to Charles C. Kline, a partner for Cozen O’Connor in Miami—representative for that firm, Lexington Insurance and Cozen O’Conner West Palm Beach member John David Dickenson—said the most critical takeaway for lawyers is to respect the court’s jurisdiction.  “You need to present all the arguments you have to get the right judgment,” Kline said.  “Don’t sit on your rights.  Don’t fail to object to evidence.  Don’t think you can go to another court to redo what the first court did, because that is just contrary to our principles of collateral estoppel.”

The Third DCA stated damages for the additional fees sought by Mintz Truppman for representing Daphne Query “have already been adjudicated by the federal court.” It granted Cozen, which has several offices in the U.S., including Washington, D.C., and Dallas, Texas, and Lexington’s petitions for prohibition, but dismissed their petitions for certiorari as moot.

The case stems from a broken pipe dispute that caused substantial water damage to Query’s Miami-Dade home in 2014.  Lexington insured the home, according to the Third DCA opinion.  Two years later, Query’s property damage claim was settled at mediation.  The parties also agreed that Query was entitled to attorney fees but were unable to agree on the amount.

When mediation to resolve the fee dispute failed, Query filed a motion for attorney fees in federal court, seeking a contingency risk multiplier of two based upon the total hours incurred by Mintz Tupperman and its co-counsel and the hourly rate for each of the four attorneys who worked on the matter.  That number came to just over $828,000.  Lexington countered that the amount owed should be no more than $70,000 to $85,000.

A federal magistrate judge in February 2017 determined Query was entitled to total lodestar attorney fees of nearly $240,000 after reviewing “all relevant submissions,” according to the Third DCA’s opinion.  Query failed to object and the federal district court judge accepted the magistrate judge’s report and recommendation.  One month later, the federal district court entered final judgment.

Meanwhile, in November 2016, Mintz filed an action in the Miami-Dade Circuit Court seeking a determination under state law on the amount of fees to which it was entitled.  The Third DCA eventually ruled that the lower court lacked subject matter jurisdiction and granted Cozen and Lexington’s petitions seeking prohibition.  Crutchfield, the representative for Mintz Truppman, expressed frustration with the Third DCA for focusing on “one issue,” namely attorney fees, instead of the underlying cause of the action.  Crutchfield also characterized the Third DCA’s language as “concerning.”

“It seems to imply that the court can petition for prohibition.  It looked at what was believed to be behind the complaint instead of looking at the actual allegations line by line in the different counts and determining whether or not there is subject matter jurisdiction,” Crutchfield said.  “That statement is concerning in a much broader implication than just this case.”

Napster Knocks “Widely Inflated’ Fee Request in Copyright Case

June 29, 2020

A recent Law 360 story by Mike LaSusa, “Napster Knocks ‘Widely Inflated’ Fee Bid By Songwriters’ Atty” reports that the company behind Napster has urged a California federal judge to reject a "wildly inflated" request for $6.1 million in attorney fees lodged by songwriters as part of a settlement aiming to end claims that Napster failed to pay millions in so-called mechanical royalties.  Rhapsody International Inc., which rebranded its streaming service with the famous Napster name in 2016, said in a filing that the songwriters' attorneys at Michelman & Robinson LLP had "dragged out" the litigation to enhance their fees.

The parties agreed on the outlines of a settlement as early as May 2017, Rhapsody said, alleging the songwriters' lawyers "concocted issues" over the following months to prolong the litigation and keep their fees piling up.  "This has been to the detriment of their class, for whom relief has been delayed," Rhapsody said.  "The evidence shows that it was plaintiffs, not Rhapsody, who refused to bring the settlement to a close — a tactic that would have been self-defeating for the financially strapped Rhapsody."

In addition, Rhapsody said Michelman & Robinson's billing record was "replete with questionable time entries."  The company also urged the judge to reject a request for $103,067.52 in expenses because "many claimed costs appear to be unreasonable if not questionable."  Moreover, Rhapsody filed a motion seeking to exclude testimony by an expert the songwriters brought in to back up their fee request.  The company said the expert appears to have been "brought in late in the game, did not have adequate knowledge to form opinions, and merely reverse-engineered an opinion to support plaintiffs' fee demand."

The songwriters had asked the court earlier this month to approve $6.1 million in attorney fees, from a deal the court has preliminarily approved.  David Lowery and other songwriters claimed in their bid that the suit sought to resolve "cutting edge" issues related to the Copyright Act.  But Rhapsody countered that the songwriters' lawyers "never litigated any issues of novelty or complexity" and mostly "engaged in settlement efforts and discovery disputes."

The songwriters also valued the settlement at $20.4 million, but Rhapsody said that wasn't accurate.  The company said instead that the claims in the case total a paltry $50,032, calling the $6.1 million fee request "wildly inflated" in light of that small monetary amount.  The class action was one of several filed against streaming services like Spotify, Apple Music and Tidal over mechanical royalties, which go to songwriters when a song is reproduced.  Such litigation was one of the driving factors behind federal legislation that simplified how those royalties are paid.

Third Circuit Urged to Revive Pelvic Mesh Fee Dispute Case

June 26, 2020

A recent Law 360 story by Kevin Penton, “3rd Circuit Urged to Revive Pelvic Mesh Atty Fee Suit” reports that the Third Circuit should correct a mistake by a New Jersey federal court that allowed Texas law to be used to bless the collection of excessive attorney fees in pelvic mesh litigation against Johnson & Johnson and its Ethicon unit, two women have asserted.  According to a brief, the appellate court should recognize that if the underlying cases were filed in New Jersey, the attorneys should not be allowed to turn around and use Texas law to administer the settlements just so they could collect a higher percentage of the payouts, plaintiffs Debbie Gore and Doris Lance-Smith said.

"This manipulation of the process cannot be allowed by this court, as it would set a dangerous precedent that would allow contingency fee attorneys to file cases in New Jersey, then retreat to other jurisdictions in order to have the settlements 'administered' and 'approved' so that they can circumvent the New Jersey court rules and charge the clients excessive fees and expenses," the brief reads.  U.S. District Judge Madeline Cox Arleo in March nixed a proposed class action against Potts Law Firm, Nagel Rice LLP and other firms, saying Texas law governed the claims and permitted the fees.

The judge noted that "the complex settlement process, which plaintiffs consented to after ample opportunity for objection, was reached by negotiations between Ethicon and Texas law firms and was administered by the Texas state court and a Texas special master."  "Indeed, no New Jersey law firms or lawyers were even listed as receiving contingency-based attorneys' fees as part of plaintiffs' settlements," the judge said.  "As such, the state with the most significant relationship to the substantive claims at issue is Texas."

Gore, a Texas resident, and Lance-Smith, an Alabama resident, both retained Texas firms to pursue claims that they suffered injuries from allegedly defective pelvic mesh products, according to court documents.  While Gore and Lance-Smith each filed a master short-form complaint in New Jersey state court in 2014 as part of the litigation, Judge Arleo noted in March that "no litigation activities occurred" in the Garden State beyond those filings.

Fee arrangements in the case allowed the women's lawyers to receive 40% of their settlements, as Texas law has no particular cap on contingent fees, according to court documents.  Under a relevant New Jersey rule, an attorney can collect a fee of 33.33% of the first $750,000 recovered and then smaller percentages for subsequent amounts.  Those fees must be based on the "net sum recovered" after deducting expenses.