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PA Court Awards Attorney Fees for Time Spent Seeking Attorney Fees

August 29, 2019

A recent Legal Intelligencer story by Zack Needles, “Pa. Courts OKs Attorney Fees for Time Spent Seeking Attorney Fees,” reports that attorneys can petition to recover fees under the Unfair Trade Practices and Consumer Protection Law (UTPCPL) for time they spent preparing and litigating fee petitions—but only within reason, the Pennsylvania Superior Court has ruled in a case that could prove instructive for litigators across the state.

In Richards v. Ameriprise Financial, a case involving claims under the UTPCPL against Ameriprise Financial over alleged misrepresentations made by one of its financial advisers, a three-judge panel of the appeals court ruled that fee awards for hours spent pursuing fee awards can be proper.  However, the panel added, the $200,363 an Allegheny County trial judge awarded to plaintiffs counsel, Kenneth Behrend of Behrend & Ernsberger in Pittsburgh, for preparing and litigating two fee petitions was excessive.

Judge Mary Jane Bowes, writing for the panel, noted there was a “dearth of Pennsylvania authority addressing the propriety of a fee award for hours spent preparing and litigating fee petitions.”  She added, however, that “federal courts generally permit such fees, but the hours assigned to that task must be reasonable.”

“We find that an award of reasonable attorney fees under the UTPCPL for preparing fee petitions is consistent with the legislature’s aim of encouraging experienced attorneys to litigate such cases, even where the damages are small,” Bowes said in the precedential Aug. 21 opinion, but added, “Nonetheless, we agree with Ameriprise that Mr. Behrend spent an inordinate number of hours preparing the second and third fee petitions.”

While the panel said there was evidence in the record to support Behrend’s requested hourly rate of $600, Bowes, joined by Judge Jacqueline Shogan and Senior Judge Eugene Strassburger III, said the panel found it to be “presumptively unreasonable” that a seasoned UTPCPL litigator like Behrend would need to spend 85 hours researching entitlement to attorney fees under the statute and conducting bill review.

“Mr. Behrend admittedly has expertise and vast experience in UTPCPL litigation and in preparing fee petitions,” Bowes said.  “Indeed, the attorney affidavits he offered in support of his increased hourly rate, as well as his own affidavit in support of his fees in the underlying litigation, were recycled from a 2013 fee petition previously submitted in Boehm [v. Riversource Life Insurance Co.].”

Ameriprise also objected to four specific entries in the fee petitions, including an entry for 11 hours of research and drafting on the subject of “restitution and treble damages,” which was not at issue in that appeal.  The trial court, however, did not specifically address Ameriprise’s arguments regarding those four line items, which rankled the appellate court.

“It is our expectation that a trial court assessing the reasonableness of attorney fees will thoroughly scrutinize the specific line items that are challenged, generally evaluate the reasonableness of the expenditure of time for the services listed in the fee petition, make adjustments when they are warranted, and explain its reasons for the award,” Bowes said.  ”The broad-brush approach taken by the trial court impedes our ability to perform proper appellate review.  Thus, we vacate the orders awarding attorney fees based on the second and third fee petitions, and remand for reconsideration of those fees in light of the foregoing.”

The panel also reversed the trial court’s decision to award $12,000 in attorney fees to the plaintiffs for time spent drafting an unopposed petition to publish the Superior Court’s memorandum opinion on the case’s first trip up to the appeals court in 2017.

“The publication of this court’s memorandum opinion in Richards I did not enhance the likelihood that plaintiffs would ultimately prevail or advance the litigation or benefit them in any way,” Bowes said.  “Moreover, the record establishes that plaintiffs’ counsel almost exclusively litigates UTPCPL insurance cases, and may have had at one time as many as 29 cases involving similar facts against Ameriprise.  Publication of our memorandum decision in Richards I rendered it precedential, a benefit to plaintiffs’ counsel and other clients involved in ongoing and future UTPCPL cases, but not plaintiffs herein.”

Ultimately, the appellate court remanded the case to the trial court “for an overall reduction in the hours/fees attendant to preparation of the fee petitions themselves, a circumspect assessment of the accuracy and reasonableness of the complained-of line items, and the entry of a new attorney fee award consistent with this opinion.”  The appellate panel did uphold the trial court’s award of treble damages to the plaintiff in the amount of $102,019, but tossed out an additional $34,006 in “‘restitution’” damages.

“Herein, the trial court found no liability for negligent and fraudulent misrepresentation,” Bowes said. “Damages were awarded solely for violation of the catchall provision of the UTPCPL. Having ascertained that plaintiffs sustained actual damages of $34,006.44 under the UTPCPL, the trial court had the discretion to award damages up to three times that amount, i.e., a maximum of $102,019.32.  By awarding $34,006.44 plus $102,019.32, the trial court erroneously awarded quadruple damages and exceeded its discretion under the UTPCPL.”

Reached for comment on the decision, Behrend said the ruling provided some much-needed guidance on how fee petitions are supposed to be prepared.  He also pointed out that the court’s ruling clarified that fee petitions for work done on appeal can be filed with the trial court, rather than the Superior Court.

The panel found that Pa.R.A.P. 2744 provides only that an appellate court “‘may award’” attorney fees and delay damages as “‘further costs damages … if it determines that an appeal is frivolous or taken solely for delay or that the conduct of the participant against whom costs are to be imposed is dilatory, obdurate or vexatious.’”  “Plaintiffs made no claim that Ameriprise’s first appeal was frivolous or taken solely for purposes of delay,” Bowes said.  “Rather, they based their entitlement to appellate attorney fees solely upon the UTPCPL.”

Judge: Special Fee Master’s Attorney Fee Analysis 'Flawed' in Syngenta MDL

August 28, 2019

A recent Law.com story by Amanda Bronstad, “’Structural and Procedural Flaws’ Foul Up Fees in Syngenta Settlement,” reports that judges in three states have divvied up more than $440 million in attorney fees so far in the litigation over Syngenta’s genetically modified corn, but their orders have prompted multiple appeals and an unusual rebuke from the bench. 

U.S. District Judge John Lungstrum of the District of Kansas, who is overseeing the multidistrict litigation against Syngenta, granted $503 million in common benefit fees last year as part of a $1.5 billion class action settlement.  He divided the fees into four pools, three of which focused on cases in specific venues: Kansas, Minnesota and Illinois.  Lungstrum allocated nearly $247 million in fees to 59 firms handling the multidistrict litigation in Kansas but allowed judges in Minnesota and Illinois to decide which firms got how much in their own venues.

On Aug. 19, Chief U.S. District Judge Nancy Rosenstengel of the Southern District of Illinois, doled out more than $78 million for law firms in the Illinois cases but criticized the report and recommendation of special master Daniel Stack, whom she appointed in the case, as having “structural and procedural flaws.”

“Because the report and recommendation placed claimant numbers, expenses, and client acquisition costs at an equal footing with the hours actually expended in pursuit of the plaintiffs’ cause, the methodology does not accurately display the firms’ common benefit value,” she wrote.  “The methodology also carries the risk of blindly and disproportionately rewarding attorneys for marketing efforts, rather than work performed advocating for the benefit of the plaintiffs.”

She then slashed $23.4 million to Houston’s Clark, Love & Hutson and two other firms, Chicago’s Meyers & Flowers and Phipps Anderson Deacon, a San Antonio firm now called Phipps Deacon Purnell.  Stack had awarded those firms $61.6 million, or about 79% of the total fees in Illinois—an amount Rosenstengel called “grossly excessive.”

Rosenstengel’s criticism of Stack, a retired judge on the Madison County, Illinois, Circuit Court, got the attention of Cleveland-based Anderson Law Offices, which is appealing an allocation of $550 million in common benefit fees in the transvaginal mesh litigation.  Stack served as special master in that case, in which Clark Love, whose managing partner, Clayton Clark, served on the fee and cost committee, is set to receive more than $45 million in fees.

Rosenstengel’s order had “strikingly similar circumstances” to the mesh case, according to a filing by Anderson Law Offices before the U.S. Court of Appeals for the Fourth Circuit, and “presents a compelling example of how common benefit fee allocations should be closely scrutinized by the district courts, which plainly has yet to be conducted in this case.”

The Syngenta settlement, approved Dec. 7, resolved lawsuits alleging it sold genetically modified corn seed that China refused to import, causing about 600,000 farmers and other producers to lose billions of dollars.  Objectors represented by two lawyers, George Cochran of the Law Offices of George W. Cochran in Streetsboro, Ohio, and Robert Clore of Corpus Christi, Texas-based Bandas Law Firm, have appealed the settlement’s approval, including the $503 million in fees.  That award, which is one-third of the class action settlement fund, is far more than the average of 5% to 15% in deals involving more than $1 billion, they wrote.

“The unprecedented fees deprived the injured farmers of hundreds of millions of dollars that should have addressed their losses,” they wrote.  “Without a sizeable reduction in fees, approval of the settlement itself was error.”  In a response filed last month, lead plaintiffs counsel defended the settlement and the fees, noting that they advanced $31 million to fund the litigation.  “This was no ordinary class action but one with multiple forums that went to class trial—twice—and the size of the fund was directly related to the work of plaintiffs’ counsel, who imposed ‘unprecedented’ liability on the defendants,” they wrote.

In approving the common benefit fees, Lungstrum largely adopted the report and recommendation of special master Ellen Reisman of Reisman Karron Greene in Washington, D.C.  On March 20, Lungstrum allocated fees to specific firms in the Kansas cases, agreeing with the recommendations of co-lead counsel in the multidistrict litigation and rejecting two objections that questioned whether firms responsible for doling out the fees, including to themselves, had conflicts of interest.

Co-lead counsel were Stueve and Don Downing of Gray, Ritter & Graham in St. Louis; Scott Powell of Hare, Wynn, Newell & Newton in Birmingham, Alabama; and William Chaney of Dallas-based Gray Reed & McGraw.  Their four firms, plus Seeger Weiss, collectively received almost $215 million in fees.  On May 30, Hennepin County District Court Judge Laurie Miller divvied up nearly $118.3 million in fees to 188 law firms.  She also relied on co-lead counsel, which included Gustafson Gluek, Bassford Remele and Watts Guerra, which collectively stand to receive $87 million.

Watts Guerra is among the firms that have appealed the allocation orders to the U.S. Court of Appeals for the Tenth Circuit.  Watts Guerra initially sought $150 million in common benefit fees for itself and hundreds of other law firms that represented 57,000 farmers.  Mikal Watts, of Watts Guerra, to which Miller awarded $39.7 million in fees, declined to comment.

The Tenth Circuit abated the fee appeals pending Lungstrum’s final judgment following an allocation of $60.4 million in remaining fees to attorneys with individual clients, referred to in court documents as the “IRPA,” or individually retained private attorneys.  At issue in Rosenstengel’s order this month was Stack’s reliance on using a percentage, along with his “personal experience and observations,” rather than billing records of the law firms.  She also found that, although the Clark/Phipps group submitted 141,663 common benefit hours, more than any other firm, a “large portion” of the time was logged by anonymous employees and lacked records.

She instead awarded $24.2 million in additional fees to nine firms led by Heninger, Garrison & Davis, based in Birmingham, Alabama, which were “at the forefront of the Illinois Syngenta litigation.”  Stack had given those firms, called “The Garrison Group,” less than $9.7 million, or 12.4%, of the fees.

NALFA Conducts Hourly Rate Survey of Class Counsel in Dallas

August 26, 2019

NALFA conducts hourly rate surveys for law firms, corporate legal departments, and government agencies.  Our surveys provide the most accurate and current hourly rates within a given geography and practice area.  We can design hourly rate surveys for specific cases.  Our hourly rate surveys assist state and federal courts in awarding attorney fees in large, complex litigation throughout the U.S. 

NALFA recently conducted an hourly rate survey of plaintiffs’ counsel in the Dallas-Fort Worth area.  This hourly rate survey was conduct for a Dallas area law firm seeking attorney fees in a product liability class action.  The last hourly rate survey of this type was conducted by the Dallas Bar Association in 2015.

This survey was conducted via email from May 5th-19th.  The survey results are private.  Only the client, survey participants, and members of the NALFA network received the results and findings.  The survey results show the current average hourly rate range for plaintiffs’ associate, senior associate, partner, and senior partner in class action litigation in the Dallas-Fort Worth area.  Participants of this survey can see how their hourly rates compare to those of their litigation peers.

For more on NALFA’s Custom Hourly Rate Surveys, visit http://www.thenalfa.org/hourly-rate-surveys/.

Law Firm Bills Soar Quickly in Big Bankruptcy

August 22, 2019

A recent Law.com story by Samantha Stokes, “Law Firm Bills in Big Bankruptcy Cases Growing Rapidly,” reports that there was no summer slowdown for law firms advising on large corporate bankruptcies: the season has brought a bonanza of law firm fee applications and approvals.  Several Am Law 200 firms stand to gain up to tens of millions of dollars from some of the most active Chapter 11 bankruptcies this summer, including Sears Holding Corp. and PG&E Corp.

In the Sears case, U.S. Bankruptcy Judge Robert Drain of the Southern District of New York on June 28 approved fee requests for 16 advisers—including six law firms—that totaled about $130 million in all for work mostly from mid-October through February.

Of the $130 million fee package, Weil, Gotshal & Manges alone billed and was awarded more than $40 million, as well as nearly $1.6 million in expenses.  According to the firm’s fee application, that amount included billing from 154 attorneys and 39 others.  The highest hourly rates—$1,600—belonged to Weil partners Kenneth Heitner, Greg Danilow, Ellen Odoner, W. Michael Bond, Stuart Goldring and Paul Wessel.  The lawyer that netted the most for the firm in the fee award, about $1.4 million, was partner Ray Schrock, co-chair of the firm’s business finance and restructuring department.

In addition, Drain awarded Akin Gump Strauss Hauer & Feld, counsel to the committee of unsecured creditors, $20.3 million in fees and $1.3 million in expenses, and Paul, Weiss, Rifkind, Wharton & Garrison, conflict counsel for debtors and counsel for the restructuring subcommittee, $14.38 million in fees and about $289,000 in expenses.  Delaware law firm Young Conaway Stargatt & Taylor, conflicts counsel, was awarded $239,471 in fees, while McAndrews, Held & Malloy, IP counsel for Sears, was awarded $628,967.  Wachtell, Lipton, Rosen & Katz, which previously served as special counsel for Sears but withdrew from the case in March, was awarded about $873,185.  Sears is to begin repaying what it owes, according to the order, although fee applications will still be reviewed by an independent, court-ordered fee examiner.

Across the country, PG&E has already paod more than $84 million to four firms in the months leading to its January 2019 bankruptcy, including Cravath, Swaine & Moore; Weil; Jenner & Block; and Keller & Benvenutti.  In the last two months, several law firms have filed fee applications for compensation after PG&E’s Chapter 11 filing in the Northern District of California.

Last month, Weil, representing the debtors, applied for fees to the tune of more than $9 million, in addition to more than $335,000 in expenses; Munger, Tolles & Olson, representing debtors on certain matters, applied for $6.65 million in fees and $99,000 in expenses; and Keller & Benvenutti billed for $1.1 million in fees and more than $32,000 in expenses.

Also in July, Baker & Hostetler, counsel to the committee of tort claimants, asked the court for $7.19 million in fees; Simpson Thacher & Bartlett, counsel to PG&E Corp.’s and Pacific Gas and Electric Co.’s boards, as well as certain current and former independent directors, applied for $1.9 million in fees; and Milbank, counsel to the committee of unsecured creditors, submitted a fee application for $7.28 million.

In August, Jenner, special corporate defense and energy counsel to the debtors and debtors in possession, applied for $3.48 million in legal fees.

Earlier in the summer, a judge approved more than $56 million in fees for Kirkland & Ellis from Toys R Us’ bankruptcy proceedings.  The firm is likely to reap further fees from the representation of luxury retailer Barneys in its own Chapter 11, filed in August.

Plaintiffs’ Must Produce Billing Records in NCAA $45M Fee Request

August 21, 2019

A recent Law 360 story by Dorothy Atkins, “NCAA Athletes Must Produce Billing Records in $45M Fee Ask,” reports that a California magistrate judge granted the NCAA's request for attorneys representing student-athletes to produce five years of billing records to support their bid for $45 million in fees for winning a ban on certain pay restrictions but said the cost of producing records can be added to their fees.

During a hearing in San Jose, U.S. Magistrate Judge Nathanael Cousins ordered the athletes to produce the records so that the NCAA's attorneys can review them and ensure there aren't clerical errors, double billing or charges for time the attorneys spent doing media interviews.  He said the records can be subject to a protective order if necessary and he's not waiving any attorney-client privilege.

He also acknowledged that the time and expense it takes for the athletes' counsel to produce the records might not justify the amount of money the NCAA could potentially save in reviewing the records.  However, Judge Cousins said the athletes' counsel can charge the NCAA for the work.  "That's clearly what the defense has asked for," the judge said.

The judge's ruling came at the end of a hearing on the athletes' request for $45 million in fees for securing a permanent injunction in March after a weekslong landmark antitrust bench trial that bars the NCAA from restricting student-athletes' education-related compensation.  After the decision, counsel for the athletes sought to recoup the $30 million they said they sank into the long-running litigation, plus another $15 million based on a 1.5 multiplier, in light of "the exceptional nature of the outcome," and roughly $1.3 million in costs.

During the hearing, Karen Hoffman Lent of Skadden Arps Slate Meagher & Flom LLP, who argued on behalf of the NCAA defendants, said they wouldn't object to awarding the five lead plaintiffs between $10,000 and $15,000 each.  However, she complained that the athletes' attorneys only submitted a list of attorneys and their work hours, which totaled 51,000 hours, to support their $45 million fee request.  "It's a lot of money they're asking for, with virtually no evidence or support," she said.  Lent argued that the NCAA is entitled to more details about the records so that they can review them with a "much more critical eye."

However, the athletes' counsel, Jeffrey L. Kessler of Winston & Strawn LLP, pushed back, arguing that the NCAA is trying to conduct an unfair "fishing expedition" into their billing records.  Kessler said there's no evidence that lead counsel's hourly rates are excessive or they've duplicated their work.  He said it would also be "enormously burdensome" to redact five-years worth of billing records, which he argued contains privileged work-product material.

Kessler added that if they have to produce their billing records, then the NCAA's legal counsel should also have to produce their records, which he said they don't want to do.  Kessler pointed out that approximately a dozen law firms representing the NCAA defendants have "dwarfed" the athletes in their legal fees and those firms had charged the NCAA defendants $60.7 million as of June 2018, which was months before a trial was held before U.S. District Judge Claudia Wilkin in November.  "The idea the size of [our request] warrants it is just false," Kessler said of the NCAA's demand for its billing records.

Kessler also argued that the injunction they achieved against the NCAA is an extraordinary result for athletes.  He noted that the athletes' expert, University of San Francisco professor Daniel Rascher, conservatively estimates that the injunction will provide NCAA athletes with $235 million a year in additional benefits.  Therefore, he said, a 1.5 multiplier is on the low end, considering $45 million represents 12.7% of the $235 million a year in additional benefits.