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Category: Fee Expert / Member

Law Firm Billing Tips For Good Client Relations

December 1, 2020

A recent Law 360 story by Aebra Coe, “Law Firm Billing Tips For Avoiding An Irate Client,” reports that a recent lawsuit filed against K&L Gates LLP by a client unhappy with a legal bill highlights some common pitfalls that law firms face when it comes to billing practices, but there are ways to avoid a similar situation, experts say.  The lawsuit against K&L Gates, which was filed in August by Chicora Life Center LC, accuses the firm of using several tactics to increase its bill for representing the bankrupt medical center in a Chapter 11 proceeding over a lease termination dispute.

Some of the alleged billing practices are not entirely uncommon among law firms, according to two experts who declined to comment directly on the lawsuit but provided their thoughts on client billing more generally.  The alleged practices include "block billing," where a lawyer "blocks" together a number of tasks over a set amount of hours; "hoarding," when an overqualified lawyer with a high billing rate retains work rather than passing it on to someone with a lower billing rate; and "multibilling," which occurs when multiple attorneys are tasked with performing the same work.

"All of those things mentioned have been going on for years and years.  This is not at all new," said James Wilbur, an expert on law firm billing at consulting firm Altman Weil Inc.  Regardless of how the K&L Gates suit shakes out in court, other law firms are likely looking for ways to avoid being in a similar position.  While such situations are not entirely preventable because clients can sometimes file bad-faith suits, there are steps firms can take to ensure clients are as happy as possible with a bill at the conclusion of a matter, Wilbur said.

He suggested firms rely on three things to accomplish this: technology, training and collaboration.  E-billing software can often catch double billing and block billing, he said, as well as phrases that might irk a client, like "reviewed phone notes," that may not indicate that the time spent added any value to the matter.

And that leads to training, which should be conducted at all levels on a regular basis so that any attorney or paralegal who puts together a bill is aware of best practices and is skilled in conveying the value brought to the client via the time the individual spent working, he said.  Senior attorneys billing for work that could be done by someone more junior is another beast, Wilbur said, and one that law firm management must work to dissuade by encouraging collaboration and the sharing of work.

Clients have many different rules when it comes to fees, but "no surprises" is a big one, said Toby Brown, chief practice management officer at Perkins Coie LLP.  "The bottom-line answer is more transparency.  And more real-time updates about what's going on," Brown said.  "The lawyers are uncomfortable talking about these things, and so they don't talk about them head-on."

He said lawyers and clients can often get wrapped up in the legal issues at hand, with fee issues taking a back seat.  For example, if the volume of discovery in a major case increases substantially, a conversation on cost might not always occur, but it should, he said.  Real-time sharing of information on the cost of a matter is vital, Brown said.  He said his firm has worked to incorporate the help of its project management team to flag when the scope of a matter has changed so that the attorney on the matter is aware a conversation is needed.

The firm has also implemented technology that goes beyond basic e-billing software to allow attorneys to better monitor their budget on a matter, he said.  Ultimately, according to Wilbur, having a strong relationship with a client to begin with will go a long way.

"Even in a firm that's highly ethical and has training around these issues, mistakes are going to happen. Something is going to creep through," he said.  "The first thing is you have to have a good enough relationship with the client so they know they can text or email you, pick up the phone and point out a problem in the bill, and you will deal with it without arguing."

When contacted by Law360 for comment about its case, K&L Gates described Chicora's claims as "a transparent attempt to re-litigate issues that were raised and rejected years ago through final orders in a concluded bankruptcy."  A third-party fee examiner, it said, expressly found that the fees requested by the firm were reasonable and should be recoverable, and then the bankruptcy court adopted that determination.  "We are confident the present claims also will be rejected," the firm said.

Federal Circuit Asked in Toss Fee Award to Apple, Cisco

October 15, 2020

A recent Law 360 story by Britain Eakin, “Fed. Circ. Asked To Nix Alsup’s Fee Award to Apple, Cisco,” reports that saying its infringement suit against Apple and Cisco was reasonable, a tech company told the Federal Circuit that U.S. District Judge William Alsup wrongly determined the case was exceptional and abused his discretion by awarding them $4.2 million in fees.  In a brief, Straight Path IP Group LLC said the district court departed from an agreed-upon claim construction in granting summary judgment of non-infringement to Apple and Cisco.  It argued that as a result, Federal Circuit precedent requires it to reverse Judge Alsup's finding of exceptionality, which is required for a prevailing party in a patent dispute to get fees.

"Where a plaintiff asserts infringement under a claim construction and the district court subsequently clarifies or modifies that construction in granting summary judgment of non-infringement, this court holds that the case is not exceptional, and that a district court abuses its discretion by granting a motion for attorney's fees," Straight Path said.  In determining whether a case is exceptional, a district court considers things like whether a suit was frivolous or if a party's case was unreasonable.

Straight Path contended that it provided plenty of evidence that its case was reasonable, including a declaration from former U.S. Chief Circuit Judge Paul Michel.  The former judge testified at the district court that Straight Path had "asserted an objectively reasonable view of infringement" under the agreed-upon claim construction, which he said was supported by evidence.  While Judge Alsup called Straight Path's litigation position "a slick maneuver," the company argued in its brief that "Chief Judge Michel's view far more accurately characterized this case."

"Whether ultimately correct or not, Straight Path respectfully submits that if Chief Judge Michel concluded that the litigating position was reasonable, that is strong evidence that the litigating position was reasonable," the brief said.  Straight Path said the appeals court need not probe why Judge Alsup deemed the case an exceptional one "in such brash tones."  "It is enough to recognize that the district court's determination of exceptionality runs afoul of the limits this court has placed on the district court's discretion, and must therefore be reversed," Straight Path said.

The fee dispute between the parties has been a lively one, sparking fireworks in the courtroom during a May 7 hearing when Judge Alsup scolded Apple and Cisco for initially requesting $10 million in fees after beating the suit nearly three years ago.  The judge said the tech giants "played games," used "abusive" tactics and were motivated by "greed, G-R-E-E-D."

He required them to resubmit their fee bids and appointed a special master to determine a reasonable amount of fees and costs. On May 19, the court awarded Cisco $1.9 million — half of its initial request — while Apple netted $2.3 million of its initial $3.9 million ask.  In its brief, Straight Path — now known as SPIP Litigation Group LLC — noted that the claim construction the parties had agreed to was signed off on by the Federal Circuit when Straight Path successfully appealed Patent Trial and Appeal Board decisions invalidating various claims in the patents, which Cisco and others challenged after Straight Path initially sued in 2014.

Article: 3 Tips for Working with Bankruptcy Fee Examiners

October 2, 2020

A recent Law 360 article by Robert M. Fishman, “3 Tips For Working With Bankruptcy Fee Examiners” provides practice tips for working with outside bankruptcy fee examiners.  This article was posted with permission.  The article reads:

The appointment of a fee examiner and the fee examination process in any given bankruptcy case seem to generate a variety of questions.

Will a fee examiner process be better for the case — read: me — than having the judge address the reasonableness and appropriateness of fees?  Will there now be three parties — the fee examiner, the court and the U.S. Trustee — scrutinizing my fees as well as criticizing my staffing, timing and approach to the case?  What will the nature and approach of the fee examiner be in my particular case?  Will the appointment of a fee examiner speed up the review and payment process?

Fee examiners are most often appointed in larger cases.  In such cases, the ability of the court to make the time to review, analyze and rule on fee applications may be a concern.  This is especially true if that court is one in which a large number of substantial cases are currently pending.

The number of parties that will be submitting fee applications to the court also plays a role in the consideration of whether a fee examiner is appropriate in a particular case.  Multiple law firms, financial advisers and other professionals for the debtor and one or more committees, creates a substantial burden on the court in terms of reviewing and ruling on fee applications.

A request for the appointment of a fee examiner can either come from the parties in the case or directly from the court.  Some courts routinely appoint a fee examiner in large, complex cases, while others do so only upon the request of one or more parties in interest.

The selection of the particular fee examiner can originate from any of three places.  Once a court decides to appoint a fee examiner, the court may: (1) select its own fee examiner; (2) appoint one that has been suggested, or agreed to, by the principle parties in the case; or (3) defer to the Office of the U.S. Trustee for the selection.  Courts are often happy to utilize a qualified fee examiner that has been agreed to by the main parties in the case.

In light of the current number of pending large cases, particularly in a few, specific jurisdictions, the burden of the fee review and allowance process is going to be substantial.  Further, I anticipate that the upcoming months may see an even greater number of small, medium and large cases filed, which will place an even greater strain on the system's ability to efficiently and timely process fee applications for numerous professional firms.

As a result, I believe that both courts and the affected parties will look to the appointment of fee examiners to ease that burden and provide a more timely and efficient practice for processing fee applications.  In evaluating candidates for fee examiner appointments, the following questions may be pertinent.

Is the candidate:

An experienced practitioner with actual bankruptcy case experience or an analyst who identifies typical problematic situations and focuses on them;

A reasonable, big picture type of examiner or a more granular, item-by-item examiner;

One that believes that he has been appointed to:

Cut fees (to a specific or general degree), or

Determine if the applicable rules have been followed and the services and expenses are actual, reasonable and necessary in the context of the particular case; or

One who generally gives deference to the billing partner involved or is more apt to substitute his/her own judgment for that of the billing partner as to how to staff cases or how much time it should take to write a brief?  As an attorney discussing fee application issues with fee examiners, I have discovered that examiners have a wide range of approaches and attitudes.

In my role as a fee examiner discussing fee application issues with countless professionals, I have found that they also exhibit a broad range of approaches and attitudes.  My experience both as an attorney submitting numerous fee applications subject to review by fee examiners, and as an appointed fee examiner in both large and medium-sized cases has led me to a view on the preferred type of fee examiner and how best to work with them.

Understanding where your fee examiner fits into the above criteria is essential to both having a realistic expectation of how you will be dealt with and knowing how best to interact with the fee examiner.   So, what lessons have I learned? Here are what I have found to be the three most important guidelines for a successful relationship with a fee examiner.

Every Case has Ground Rules

They include the Bankruptcy Code, the applicable local rules and the cases interpreting the same.  Importantly, the ground rules also include the process that the fee examiner intends to utilize — and most likely have the court bless — to govern the timing, organization and review of the fee applications.

One of the best pieces of advice I can give an applicant is to present the fee application in the way requested by the fee examiner.  Independent creativity is often not rewarded.  Most fee examiners have a method to their madness.

Choose the Right Person to Prepare the Fee Application.

The fee application or invoice must be prepared — or at least thoroughly reviewed — by someone who understands the case and is able to explain the issues handled by the firm and the staffing decisions that were made in support of providing the necessary services.  Many issues that fee examiners raise come from an inability to truly understand what has taken place and why things were handled in the manner in which they occurred.

Most fee examiners are willing to be at least somewhat deferential to the billing partner when presented with a cogent and rational explanation of what happened and why.  This approach tends to be even more effective when the explanation is part of the original application rather than offered only in response to concerns raised by the fee examiner.

It Doesn't Pay to Fight with a Fee Examiner

First of all, most fee examiners aren't out to get anyone.  They are merely trying to apply the rules in an even-handed way to provide for the allowance of reasonable compensation for actual and necessary services.  Every fee application or invoice has potential issues, such as too many professionals working on a project, too much time spent working on an issue or overqualified professionals providing basic services.

Also, a firm cannot be compensated for fighting fee objections in court, where raised by a fee examiner of a party in interest.  Be rational and open minded.  Fee examiners want to reach agreements and resolve differences of opinions by consent.  They will almost always compromise on the amount of reductions necessary to address any point they are raising.

The right fee examiner can be a valuable asset in a case.  They are likely to allow for a more timely resolution of interim fees.  A fee examiner who is also an experienced practitioner will likely speak the same language as the applicant and have a good feel for what it takes to perform the services for which the applicant seeks payment.  In short, a good and experienced fee examiner should really be your ally in making the process move quickly and efficiently, and in obtaining a fair and reasonable outcome for everyone.

Robert M. Fishman is a NALFA member and a member at Cozen O’Connor in Chicago.  He served as the fee examiner in the city of Detroit Chapter 9 case.

Class Counsel Seek Their $69M Share in Capacitor MDL

September 17, 2020

A recent Law 360 story by Julia Arciga, “Class Attys Seek $69M Slice of Capacitor MDL Deals,” reports that counsel for a group of capacitor buyers who secured settlements worth over $232 million in sweeping multidistrict litigation over alleged price-fixing by manufacturers asked a California federal court to grant them over $78 million in attorneys fees and costs.  Attorneys from Joseph Saveri Law Firm Inc. asked the Northern District of California to greenlight an award of roughly $69.6 million in attorneys fees and $9.1 million in costs.

The attorneys are seeking the award after they were able to land settlements totaling $232,050,000 for buyers that purchased capacitors directly from AVX Corp., ELNA Co., Holy Stone Enterprise Co. Ltd., KEMET Corp., Panasonic Corp., Shinyei Technology Co., Shizuki Electric Co. and Taitsu Corp.  The lawyers said a special fee master thoroughly audited the materials they submitted to the court to support their proposed award in July and found the class counsel's requested fees and cost reimbursements were reasonable.

More specifically, the filing claimed the special fee master's report, submitted to the court earlier this month, said the lawyers' requested fees were backed up by detailed time entries.  The special fee master also found the proposed cost reimbursement was actually less than the total amount of expenses the attorneys incurred, according to the buyers' attorneys.  The attorneys also noted that their clients, the direct capacitor buyers, didn't object to the special fee master's conclusions.

NALFA Quoted in Portland Business Journal

August 5, 2020

NALFA and NALFA member and attorney fee expert John D. O'Connor of O'Connor & Associates in San Francisco were quoted in Portland Business Journal.  The news article, by Elizabeth Hayes, “Former Portland Insurer’s Law Firm Asks for $184M in Legal Fees” reports on Quinn Emanuel’s attorney fee request in the health insurers Obamacare reimbursement case.  Below is a copy of the article:

Health Republic went out of business after it took a $20 million hit when the government didn't pay it in full under the risk corridors program.  In February 2016, when Lake Oswego-based Health Republic Insurance was winding down its operations, it made an audacious move.  The small Consumer Operated and Oriented Plan, which had just 15,000 customers, took on the federal government.

Health Republic filed the first of what would become multiple lawsuits brought by insurers across the U.S. over the federal “risk corridors” program.  The cases sought to require the government’s to make good on its promise to compensate health plans that lost money on Affordable Care Act plans.

The shortchanging cost Health Republic $20 million and dealt a fatal blow to the company and dozens of other insurers.  Portland-based Moda Health took an even bigger hit than Health Republic, at $250 million, and followed Health Republic’s lawsuit with one of its own. Moda's suit worked its way to the U.S. Supreme Court, which in April ruled that the government owed U.S. insurers $12 billion.

Now Health Republic’s law firm, Chicago-based Quinn Emanuel Urquhart & Sullivan LLP, is seeking $184 million in attorney fees for the 183 clients it represented in the two class action suits it filed.  Both are related to the risk corridors but didn’t go to the Supreme Court.  The firm argues, however, that it filed a first-of-its-kind lawsuit. It “did not remain idle" while the other, non-class action cases, moved forward, but submitted multiple amicus briefs focusing on the “negative economic and societal impact that would result if the government failed to honor its commitments.”  Justice Sonia Sotomayor used that reasoning in her majority opinion, saying “the government should honor its obligations.

Quinn Emanuel, which specializes in complex litigation, represented Health Republic and the other insurers in the class actions on a contingency basis, meaning it would receive a fee only if they win the cases.  Quinn Emanuel’s “stellar performance” resulted not only nearly $4 billion for its insurer clients, but 100 percent industrywide recovery, the firm argues in its 40-page motion for attorney’s fees filed last week in the U.S. Court of Federal Claims.

It is asking for 5 percent of the judgments in its two class actions, which it argues would be “one of the lowest percentage rates ever awarded to class counsel, even in cases with multi-billion-dollar recoveries, such as this.”

If approved, the amount would still be one of the largest fee requests for a single law firm in U.S history, according to the National Association of Legal Fee Analysis.  There have been much larger fee awards, including those in the Enron lawsuit, but they are generally split between multiple firms.  John O’Connor, a San Francisco attorney and attorney fee expert, said it’s hard to say if the court will approve Quinn Emanuel’s request.  The percentage is low, but the total amount would represent an unusually high multiple of the firm’s average hourly rate of around $1,000.

The firm put in about 10,000 hours, translating to an hourly average rate of $18,500, if the award is granted.  “You can’t say it’s totally ridiculous,” O’Connor said. “Nor can you say it’s a slam dunk that they should get it. The thing they have going for them is it’s such a small slice of the pie.”  Quinn Emanuel emphasizes in its brief that it and Health Republic took on a “substantial risk” in suing the government.  Stephen Swedlow, a Quinn Emanuel partner, did not respond to a request for comment.

In an ironic twist given the eventual outcome, Moda CEO Robert Gootee apparently agreed.  When former Health Republic CEO Dawn Bonder told Gootee she was going to file the lawsuit, he responded that she was “making a ‘bold’ choice and that he would not even consider doing so on behalf of Moda, as he thought the lawsuit had no chance of success,” according to Quinn Emanuel’s recent brief.

Moda spokesman Jonathan Nicholas declined to comment on the conversation.  “Moda did not have any contingency fee arrangement with our law firm,” he said. “Robert insisted from the very outset that a core, fundamental right was at issue here, and he determined that our company would go all in — and all alone – in an effort to see that our judicial system, at its highest level, could indeed right a wrong!”

NALFA Welcomes Jim Warren

July 23, 2020

NALFA welcomes Jim Warren to our membership.  Jim Warren of Carroll Warren & Parker PLLC in Jackson, Miss. is a fully qualified attorney fee expert.  Jim has an active litigation practice...

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