A recent Law.com story by Lisa Willis, “New Ruling Affects Fees For Lawyers Who Serve as Expert Witnesses”, reports that, an appeal in Florida’s Fourth District Court of Appeals— challenging a trial court’s decision to award appellate attorney fees and include an expert witness fee as a cost—has been affirmed.

One South Florida attorney said this appeals case ruling seemingly undid the Florida Supreme Court’s 1985 decision in Travieso v. Travieso, which had found that such fees were awarded at the court’s discretion.  Now, the new opinion clarifies whether an expert witness is necessary to confirm the amount of fees being claimed.

“Basically, they said they’re kind of overruling the 1985 Supreme Court case, saying that if you have an attorney testifying as an expert, [the] fees must be awarded as costs,” Palm Beach County attorney Peter M. Feaman said.  Feaman and Nancy E. Guffey of Peter M. Feaman P.A. in Boynton Beach represented the appellee, Suzanne J. Trombino.  The ruling was entered pursuant to the Fourth DCA’s reversal opinion and attorney’s fees order in Trombino v. Echeverria from 2022.

In affirming the lower court ruling, the appeal court stated, “Our order permitted the trial court to award attorney’s fees to appellate Suzanne J. Trombino (individually and as trustee of two family trusts) if it found that the equities favored the imposition of fees. … The trial court determined Trombino was entitled to fees.”

Feaman, who has been practicing law more than 40 years, said the body of case law that has developed since the 1985 ruling says attorneys must have an independent expert every time to testify to the reasonableness of fees.  “So that’s why the 1985 Supreme Court opinion can be interpreted differently now because the law has changed and been clarified via this ruling as to whether an expert witness is necessary to corroborate the amount of fees being claimed,” Feaman said.  “The Fourth DCA appears to be saying is not discretionary any longer.”  “I think that’s a significant part of the ruling, which is kind of a departure from the 1985 Supreme Court case, where they ruled it was discretionary with the trial court,” Feaman said.

The appeal was Dale Echeverria v. v. Suzanne J. Trombino as trustee of The Family Trust Created Under the Jose I Echeverria 2006 Trust, and as trustee of the Dorothy Jeanne 2006 Trust.  It stems from a prior decision in Trombino v. Echeverria, where the appeals court had reversed a ruling and allowed for the potential awarding of attorney’s fees to Suzanne J. Trombino under specific statutory conditions.  Palm Beach County Circuit Court Judge Charles E. Burton was the presiding judge in the Palm Beach County case.

Judge Alan O. Forst wrote the opinion with judges Martha C. Warner and Dorian K. Damoorgian concurring specially with opinion.  “Hearings for the assessment of reasonable attorney’s fees have become much more complicated and time consuming since 1985 when the supreme court decided Travieso,” Warner wrote in concurring with opinion.

The jurist said that time spent reviewing an attorney’s work and testifying at a fee hearing has increased substantially.  “No longer does one find an attorney at the courthouse on the day of the hearing to briefly review the case file and opine on the fee,” Warner said.  “More likely, this case is an example of a typical contested fee hearing.”

The appellee’s attorney is in agreement.  “When an attorney is testifying as an expert, his fees must be taxed as costs as part of the award,” Feaman said.  “Previous to this, all the judges thought that it was discretionary.  I think in the fourth district, that’s no longer the case.”

Upon remand to the trial court, Trombino sought attorney’s fees, arguing that the circumstances warranted such an award.  However, the trial court sided with Trombino, finding she was entitled to the fees.  Echeverria appealed.

Feaman said this ruling makes sense because, in 1985, the law was unsettled as to whether you needed an expert witness to corroborate your fee request.  “Since that time, the law has developed now quite clearly, you must have an expert witness,” Feaman said. “So now that you must have an expert witness to corroborate your fee requests, it only makes sense that those fees incurred by that expert be taxed as cost because now it’s mandatory that you have an expert fee witness.  So his charges or her charges should be mandatory as well that those charges get taxed.”

Trombino presented evidence of the costs incurred during the appeal process and introduced an expert in attorney’s fees, who testified that the requested amount was reasonable.  Dale Echeverria also brought forth an expert, advocating for a lower fee, but the court ultimately ruled in favor of Trombino’s original request and included the full amount of the expert’s fee as a taxed cost.

Echeverria’s appeal raised three primary issues: the timing of the equity determination for the fee award, the evidence supporting the fee award, and the inclusion of the expert’s fee as a taxable cost.  In affirming the trial court’s decision, the appellate court noted Echeverria’s own use of an expert witness to challenge the fee amount, which further justified the trial court’s discretion in this matter.

“The parties getting fees shouldn’t have to bear the brunt of the expert that now must testify to support those fees,” Feaman said. “Because if you’re the prevailing party and you’re getting fees, why should you have to be penalized for bringing in an expert witness? It should all be part of the cost incurred.”

A recent Law 360 story by Jeff Montgomery, “Epic Tesla Fee Bid May Blaze Extraordinary Chancery Path”, reports that an unprecedented $5 billion-plus stock-based fee award sought by class attorneys who recently short-circuited Tesla CEO Elon Musk's 12-step, $51 billion compensation package has set up an equally unprecedented test for Delaware Court of Chancery fee guidelines and a potential award one law expert described as "dynastic wealth."

Class attorneys who have battled Tesla's compensation scheme for Musk since mid-2018 last week sought more than 11% of the 266,947,208 Tesla shares freed up Jan. 30, when Chancellor Kathaleen St. J. McCormick ordered rescission of the options that Tesla's board awarded to Musk in an all-stock compensation plan.  The value had been estimated initially at $5.6 billion, but would fluctuate with the value of Tesla's stock.

While the process of seeking a stock fee award instead of cash is not unprecedented, it is an unusual posture for Delaware Chancery litigation, and its scale is likely to reopen what were once considered settled questions over counsel risks, rewards, and just how much attorneys can command for corporate benefit fees, experts told Law360.

"Given the order of magnitude here, I suspect that the case will not set any records in terms of percentage of the recovery awarded to the plaintiffs attorneys, but in absolute terms it'll still amount to dynastic wealth," said University of Connecticut School of Law professor Minor Myers. He described the fee as "destined to be epic, if only because it involves the invalidation of a pay package that was itself comically large."

Chancellor McCormick put the fee in play with an order rescinding Musk's 12-tranche, all-stock compensation plan Jan. 30, after a week-long trial in November 2022.  The ruling cited disclosure failures, murky terms, conflicted director architects and Musk's own conflicted influence in Tesla's creation of an Everest-sized mount of fast-triggering stock options.

"Plaintiff won complete recission of the largest pay package ever issued," the fee motion, filed last week, said.  "Our research demonstrates that the court's decree of recission, conservatively valued, was the largest compensatory award in the history of American jurisprudence by multiples," driven by "the gargantuan size of the tort underlying this action."

But class attorneys are seeking an equally gargantuan fee, even after departing from calculation customs that Vice Chancellor J. Travis Laster stressed last year in declining to apply a size reduction to a nearly 27%, $267 million award to stockholders who challenged a Dell Technolgies stock swap in 2018.  In his fee ruling, the vice chancellor said the calls to reduce the Dell fee conflicted with court efforts to reward attorneys for going deeper into litigation and taking greater risks in pursuit of legitimate claims.

"Of course, everyone involved will try to fit this into an existing framework, but the reality is that a $5.6 billion fee award is staggeringly high, whatever factors are considered," said Lyman P.Q. Johnson, Robert O. Bentley professor of law, emeritus, at Washington and Lee School of Law.  "I think Chancellor McCormick will find a way to go a fair bit lower, while still providing the attorneys with a very high award of some amount."  Johnson added: "The shock of Musk's compensation, undone by the chancellor, is unlikely to be followed by what many would regard as a shockingly high $5.6 billion fee award."

Vice Chancellor Laster's most recent big fee ruling established, pending appeal, a $266.7 million fee last year for attorneys who secured a $1 billion settlement for minority stockholders who sued over a $23.9 million Dell Technologies stock swap in 2018.

In Dell, the vice chancellor rejected investor arguments that large "mega-fund" settlements justified throttling back on fee payouts because customary fee percentages can produce massive, windfall payouts.  Instead, Vice Chancellor Laster defended the use of customary, variable percentages, including 15% to 25% shares of awards for settlements after "meaningful litigation and motion practice" and up to 33% post-trial.  He also acknowledged the tension between successful plaintiffs' counsel seeking appropriate compensation and large investors working to minimize carve-outs from court awards.

In Tesla, class attorneys, wary of blowback over big recoveries borne of typical fee ratios, acknowledged the Dell ruling's guidance, but also pointed to an earlier ruling that produced the current largest court-approved fee, a $304 million award approved in 2011 by then-Chancellor Leo E. Strine and upheld by Delaware's Supreme Court a year later.

That decision required Grupo Mexico to return to Southern Peru Copper Corp. nearly $1.3 billion worth of Southern Peru stock — rather than cash — after finding that Southern Copper had been coerced by a conflicted, controlling stockholder into overpaying for a Grupo Mexico mine in 2005.  With pre- and post-judgment interest, the award reached more than $2 billion, with class attorneys awarded 15%, or $304 million, for fees and expenses.

Tesla class attorneys referenced the 15% fee carve-out approved in Southern Peru, but adjusted even that percentage downward — to just over 11% — to reflect value added by the absence of a holding period for any award of Tesla shares before they could be sold.  Case costs included more than $13.6 million in attorney fees and more than $1.1 million in expenses during the multi-year Chancery action.  Requested fees would equal a $288,888 hourly rate that the fee motion said was justified by the case's complexity, results and attorney skill levels, among other factors.

Jill E. Fisch, Saul A. Fox distinguished professor of business law at the University of Pennsylvania Carey Law School, said use of stock for attorney fees was once "kind of frowned upon," but is not unprecedented.  "They are repeat players" in Delaware's courts, Fisch said of the attorney teams that prevailed in the Tesla case.  "They want credibility before the court.  The numbers, I think, reflect the benefit and risk of this kind of litigation, and traditionally, Chancery Court has acknowledged those risks."

The suit, led by stockholder Richard Tornetta, branded Musk's compensation package as unprecedented and unfair, noting that Musk had already qualified for some $20 billion in awards by the time the suit was filed, "making him one of the richest men on Earth" at the time.  It alleged in part that he relied on two in-house Tesla attorneys for work on the plan before the board's conflicted compensation committee took up the issue.

Ann M. Lipton, the Michael M. Fleishman associate professor in business law and entrepreneurship at Tulane University Law School and associate dean, pointed to another Tesla- and Musk-related case to illustrate the risks stockholder attorneys take.

Last year, after about seven years of litigation, Delaware's Supreme Court upheld a post-trial dismissal of a suit filed by stockholders of rooftop solar venture SolarCity, seeking damages tied to Tesla's $2.6 billion purchase of the company, for which Musk was CEO and also held a big share of company stock.

At one point during the case, the SolarCity stockholders suggested a damage award amounting to a $13 billion giveback of Tesla stock Musk received for his SolarCity shares. Dismissal of the case and rejection of class claims, however, wiped out class attorneys' hopes for a share of a big award.

In the more-recent scuttling of Musk's Tesla stock awards, Lipton said, shareholders benefited from the stock award cancelations by being dramatically less diluted in their holdings.  "That the attorneys are asking for a little bit of dilution" through their fee, "but far less than the shareholders would otherwise have suffered, seems like a real benefit that was provided, from a financial point of view."

Lipton said she was not familiar enough with the current Tesla fee motion to comment on the percentage sought, but cited the enormous risk and stockholder counsel loss in SolarCity and said that "attorneys deserve to be compensated" when they prevail.

University of Michigan Law School professor Gabriel Rauterberg said the fee bid in Tesla appears excessive, despite the importance of fee as a motivator.  "It seems to me extremely implausible that an award this large is necessary to provide the right incentives, given that plaintiffs attorneys' fixed costs for investigating lawsuits, conducting research, and prosecuting cases can be significant but not on this scale," Rauterberg said.  "It seems like a windfall to me. You can give the attorneys a large award, while still falling short of billions."

Counsel for the Tesla stockholders have pointed out that Delaware's Supreme Court has in the past declined to replace the current fee approach with declining percentages.  "Under Delaware law, the unprecedented size of the benefit conferred does not alter plaintiff's counsel's entitlement to 33% of that benefit," attorneys for the Tesla stockholders wrote.  They also pointed to voluntary concessions reducing the total ask to around 11%, with features that reduce the cost to the company.

Some of the sting felt by Tesla, the brief indicated, could be taken away by federal tax law terms that will make 21% of the fee award cash tax-deductible, reducing the post-tax fee award cost from $5.63 billion to $4.45 billion.  State corporate income tax and payroll tax deductions and allowances also could offset the share payout.

UConn's Myers said the Tesla stockholder attorneys won a landmark victory and "deserve to be compensated handsomely" for taking a risky case through trial, while also predicting that the court will "take a hard look at the magnitude of the benefit actually achieved here — that may be a figure in some dispute."  The case nevertheless also stands as an example of "how the Delaware system effectively harnesses the efforts of folks like the plaintiffs attorneys to generate powerful incentives for good governance at public companies," Myers said.

NALFA, a non-profit group, is building a worldwide network of attorney fee expertise. Our network includes members, faculty, and fellows with expertise on reasonable attorney fees and ethical billing practices. We help organize and recognize qualified attorney fee experts from across the U.S. and around the globe. Our attorney fee experts also include court adjuncts such as bankruptcy fee examiners, special masters, and fee dispute neutrals.

Every year, we announce the nation's top attorney fee experts. Attorney fee experts are retained by fee-seeking or fee-challenging parties in litigation to independently prove outside attorney fees and expenses in court or arbitration. The following NALFA profile quotes are based on bio, CV, case summaries and case materials submitted to and verified by us. Here are the nation's top attorney fee experts of 2024:

"The Nation's Top Attorney Fee Expert"
John D. O'Connor
O'Connor & Associates
San Francisco, CA

"ABOTA Trial Attorney With Over 35 Years of Legal Fee Audit Expertise"
Andre E. Jardini
KPC Legal Audit Services, Inc.
Glendale, CA

"Widely Respected as an Attorney Fee Expert"
Elise S. Frejka
Frejka PLLC
New York, NY

"Experienced on Analyzing Fees, Billing Entries for Fee Awards "
Robert L. Kaufman
Woodruff Spradlin & Smart
Costa Mesa, CA

"Highly Skilled on a Range of Fee and Billing Issues"
Daniel M. White
White Amundson APC
San Diego, CA

"Excellent at Communicating Her Fee Analysis to Juries, Triers of Facts, and Clients"
Jacqueline S. Vinaccia
Vanst Law LLP
San Diego, CA

"Real World Billing Review Combined With Over 40 Years of Trial Experience"
Fred M. Blum
Edlin Gallagher Huie + Blum
San Francisco, CA

"Nation's Top Scholar on Attorney Fees in Class Actions"
Brian T. Fitzpatrick
Vanderbilt Law School
Nashville, TN

A recent Law 360 story by Bryan Koenig, “Epic Calls Apple’s $73M Fee Bid An Overreach”, reports that Epic Games blasted Apple for seeking $73.4 million in legal fees following the pair's California federal court antitrust battle over App Store payment fees, arguing that antitrust claims like Epic's are immune from legal fees and that Apple cannot wrap its demands in successful contract breach counterclaims.

Apple's fee bid, according to Epic, "overreaches at every turn" after the U.S. Supreme Court refused to consider a Ninth Circuit decision upholding a district court ruling largely siding with the iPhone maker, except on Epic's California state law claims targeting Apple rules barring app developers from steering users to alternative payment options.

"Apple seeks recovery of unrecoverable fees and costs incurred in defending against Epic's antitrust claims; it seeks recovery of fees and costs it incurred in defending against other plaintiffs' antitrust claims; and it seeks recovery of categories of expenditures that go beyond what the Ninth Circuit's ruling in this case permitted," Epic said in its opposition brief. "Apple even seeks its fees and costs incurred in seeking its fees and costs, even though the vast majority of those fees and costs it seeks are not recoverable and Apple made no effort to meet and confer with Epic to determine the scope of any dispute before filing the motion."

According to Epic, Apple's mid-January bid for legal costs is grounded in the latter's win on claims that Epic breached its developer program licensing agreement when offering users an in-app workaround for the up to 30% commission that Apple charges on in-app purchases, such as through Epic's Fortnite game juggernaut. Epic is only the most prominent of multiple plaintiffs to target those commissions.

The problem with a fees bid based on the contract breach claims, Epic said, is that a California state appeals court held in Carver v. Chevron USA Inc. that defendants, even ones who successfully defeat antitrust claims, cannot claim any fees incurred in that defense.  According to the brief, it doesn't matter that the developer program licensing agreement otherwise calls for plaintiffs to reimburse Apple.

"Moreover, any fees and costs that are 'inextricably intertwined' with those incurred in defending against antitrust claims also cannot be recovered, even if they were incurred also in connection with a breach of contract claim," Epic said.  "Apple may thus recover only those fees and costs it incurred specifically to litigate separable, non-antitrust claims — i.e., fees and costs attributable to work performed for Apple's contract claims that did not overlap with its defense against Epic's (or other plaintiffs') antitrust claims."

But Apple hasn't tried to separate or identify those costs, according to the brief. "To the contrary, Apple completely ignores this binding precedent and seeks primarily and specifically the unrecoverable fees and costs it incurred in defending against Epic's antitrust claims," it said.

Epic also assailed Apple for seeking to recover costs incurred in defending against other plaintiffs who'd also targeted the Apple rules leaving the App Store as the only way to get apps on iPhones.  It attacked Apple for going beyond the Ninth Circuit mandate to pursue only attorney fees; according to Epic, around 40% of the fees Apple has claimed cover costs for things like expert witness and consulting fees, travel and logistical support.  And it assailed Apple for seeking costs incurred from putting together the motion for costs.

"Moreover, Apple did not meet and confer with Epic prior to filing its motion as required by Civil Local Rule 54-5, and, as a result, incurred attorneys' fees and costs that it could well have avoided," Epic said.  "Specifically, Apple unilaterally engaged two experts and a team of nine analysts from an expert consulting shop to review its invoices, without so much as checking whether Epic intended to dispute any of its calculations or the reasonableness of the fees and costs it incurred."

Epic said it hasn't tried to assess the accuracy of Apple's fees bid, preferring to leave that issue until after the court determines the appropriate scope of any fees bid.  It further called a detailed review "wasteful when Apple has sought to sweep in much to which it is not legally entitled" and it assailed Apple for providing "only an incomplete set of materials just days before this opposition was due."

A recent Law 360 story by Alex Wittenberg, “Kidde-Fenwal’s Ch. 11 Fee Examiner Oks $20.4M for 15 Firms”, reports that the fee examiner appointed in fire-suppression company Kidde-Fenwal's Chapter 11 case has recommended that a Delaware bankruptcy judge approve $20.4 million in pay for 15 firms working on the proceedings, after they agreed to cut their requested compensation by about $333,000.

In a report submitted, examiner Diana G. Adams detailed interim fees requested by law firms and others working on behalf of Kidde-Fenwal Inc., its unsecured creditors committee and an ad hoc group of governmental claimants.  The fees cover work conducted from Aug. 1 to Oct. 31 by professionals for the debtor and the creditors committee, and work done from mid-May or June 1 to July 31 by firms representing the ad hoc group.

U.S. Bankruptcy Judge Laurie Selber Silverstein ordered the appointment of a fee examiner in July to help avoid duplication of efforts by counsel for unsecured creditors in the case.  Kidde-Fenwal is one of the companies at the center of massive multidistrict litigation over the sale and use of toxic firefighting foams.

The debtor's attorneys, from five separate firms, requested about $9.61 million in total for their work during the period and agreed to reduce their fees to $9.49 million following discussions with Adams, according to the report.  Sullivan & Cromwell LLP stands to be the highest-paid firm representing the debtor, with reduced fees of $5.27 million and an hourly rate of $1,347.

Seven firms representing unsecured creditors asked for $10.1 million in total and agreed to reductions of about $187,000. Brown Rudnick LLP's reduced fees for representing the committee amount to about $4.05 million.  Three companies working for the ad hoc committee of governmental claimants would reap $1.01 million after cuts of around $23,000.

Kidde-Fenwal filed for Chapter 11 protection in May 2023, saying it faced more than $1 billion of liability tied to claims arising from a former subsidiary's manufacture and sale of aqueous film-forming foam.  The chemical foams have given rise to thousands of lawsuits alleging the companies caused lingering pollution of public waterways and aquifers, and to billions of dollars in toxic exposure claims tied to cancers, thyroid diseases, elevated liver enzymes and decreased fertility among those exposed.

After Judge Silverstein ordered the appointment of an examiner in July, Kidde-Fenwal asked the court to approve its request to pay the ad hoc group of governmental claimants, an atypical arrangement.  The debtor said doing so was necessary in part because of prohibitions against government-entity membership in regular unsecured creditor committees.

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