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Category: Fee Expert / Member

$15M in Legal Fees in Archdiocese Bankruptcy

May 24, 2017

A recent the Star Tribune story by Jean Hopfensperger, “Judge Laments $15M in Legal Fees in St. Paul-Minneapolis Archdiocese Bankruptcy,” reports that the judge overseeing the bankruptcy of the Archdiocese of St. Paul and Minneapolis expressed concern over the legal fees being racked up in the case — about $15 million to date.

“It bothers me so much that all these attorney fees are being run up,” U.S. Bankruptcy Judge Robert Kressel said at a hearing, adding that legal fees are consuming funds that could be directed to survivors of archdiocese clergy sex abuse.

In an attempt to curb the spending, Kressel ordered that no expert witnesses be hired for the time being.  He also ordered a tighter schedule for both parties to argue their legal objections to each other’s compensation plans.  “I’m trying to save money and time and get this decided,” Kressel said.

Kressel’s remarks came in response to the archdiocese’s proposal to “retain certain experts” to advise on the competing victim compensation plans before the court, on the value of parish contributions to the settlement, on insurance settlements and other issues, according to a motion before the court.

During the first three months of this year, the archdiocese bankruptcy rang up $1.28 million in attorney and professional fees, according to documents filed with the court.  The bills are from three law firms representing the archdiocese, one representing parishes and one representing victims, according to operating budgets filed with the court.  Average monthly legal and professional fees were $420,000 from January to March, the last month for which figures were available.

The fees are high compared to other bankruptcies nationally, and the process in the Twin Cities has been long, said Chuck Zech, a church finance expert at Villanova University in Pennsylvania.  The Milwaukee Diocese, considered the “mother of all bankruptcies,” spent $23 million in a protracted battle to settle with abuse victims, plus $7 million for the victims’ attorneys, he said.  “Milwaukee is the poster boy for a disastrous way to do a bankruptcy,” said Zech.  “It seems to me that St. Paul is approaching that status.”

The fee issue surfaced during what was supposed to be a routine hearing to schedule the next steps in the two-year-old case, including approving a compensation plan and insurance settlements.

Over $5M in Disputed Legal Fees Resolved in NALFA’s Mediation Program

May 1, 2017

NALFA’s Fee Dispute Mediation Program is the nation’s only program devoted exclusively to resolving attorney-client fee disputes.  NALFA’s Fee Dispute Mediation Program reached a milestone recently: Over $5 million in disputed legal fees resolved between parties.  Since its inception, NALFA’s Fee Dispute Mediation Program has settled over $5 million in disputed attorney fees and expenses between parties in over 35 cases.  The over 35 cases were brought by both law firms and clients ranging from fee dispute matters of $37,000 to $975,000 from across the U.S.  One fee dispute case was from the UK.

Attorney fee disputes are the result of a breakdown in the attorney-client relationship.  This breakdown may be a misunderstanding in the fee agreement or confusion over the law firm billing records.  Whatever the cause, mediation is the quickest, simplest, and most cost-effective way to resolve these attorney fee disputes.  NALFA offers a private mediation service specifically designed to resolve attorney fee disputes of all types and sizes.

NALFA's fee dispute mediators are uniquely qualified to resolve fee disputes between parties in a cost effective and confidential manner.  These fee dispute mediators are trained neutrals who understand the underlying issues in fee and billing dispute matters.  Their fee dispute mediators include former judges, seasoned litigators, and in-house counsel. 

NALFA's fee dispute mediators are highly knowledgeable on reasonable attorney fees and proper legal billing practices.  They understand the array of issues in fee dispute cases such as fee agreements, hourly rates, tasked performed, fee entitlement, attorney fee ethics, and fee award factors.  These mediators can often provide each side with an unbiased assessment of the strengths and weaknesses of their case.  They can also discuss with the parties what might happen if the fee dispute does not settle. 

Since the program began, NALFA’s Fee Dispute Mediation Program has achieved a 86% success rate—parties who mediate in a session are resolved six out of every seven times.  This rate is significantly higher than most bar-administered fee dispute programs.

NALFA is dedicated to providing parties a mediation process that offers flexibility, a level playing field, and time and cost savings.  Parties control when and where the mediation will occur, who will serve as the mediator, and whether they will accept a settlement offer.  Unlike most bar-administered programs, NALFA stays with the fee dispute matter as long as necessary to bring it to a resolution.

"This achievement belongs to the outstanding work of our members, the nation's best fee dispute mediators," said Terry Jesse, Executive Director of NALFA.  "Their understanding of fee issues and their mediation skills are the reason we're celebrating this milestone," Jesse concluded.

NALFA Podcast with Bankruptcy Fee Examiner Robert M. Fishman

April 17, 2017

NALFA hosts a podcast series on attorney fee issues.  We talk with thought leaders, attorney fee experts, and attorney fee newsmakers who’ve helped shape and influence the jurisprudence of reasonable attorney fees.  NALFA interviews members, faculty, judges, law professors, in-house counsel, and others on a range of attorney fee and legal billing issues.

NALFA’s third podcast features an interview with NALFA member and bankruptcy fee examiner Robert M. Fishman.  Robert Fishman is a partner at Shaw Fishman in Chicago.  The NALFA podcast with Robert Fishman focused on his background and his work in bankruptcy cases.  Robert Fishman has represented a range of clients and stakeholders in bankruptcy proceedings.

Fishman discusses the role of the bankruptcy fee examiner, the stakeholders in bankruptcy cases, and his work as a fee examiner in the large City of Detroit Chapter 9 bankruptcy case.  Fishman also discusses the effectiveness of bankruptcy mediation and shares his thoughts on the U.S. Trustee Program and their billing guidelines.

“These podcasts are the perfect broadcast format to discuss attorney fee and legal billing issues,” said Terry Jesse, Executive Director of NALFA.  “In addition to his work, Robert Fishman also shares his philosophy of examining fees and expenses in large Chapter 11 Cases,” concluded Jesse.  Click on the link below to listen to the NALFA podcast:

https://soundcloud.com/thenalfa/nalfa-podcast-with-bankruptcy-fee-examiner-robert-m-fishman

NALFA: Some Class Counsel Turn to Fee Experts When Seeking Fees

February 27, 2017

Attorney fees are often a bone of contention in class actions.  In fact, upon settlement, the only disputes usually to surface center around the attorney fees.  Upon settlement approval, class counsel file somewhat self-interested fee requests with the court.  Here, even when prepared with the proper standard of care, these fee requests appear bias and self-serving.  Indeed, these self-seeking requests for fees are a source of frustration for the courts and often contested by professional fee objectors.  These internal dynamics can drag class action litigation on for years.  Recently, some class counsel have even grudgingly low-balled their fee requests to avoid this confrontation and delay in payment (see Race to the Bottom: Class Action Lawyers are Low-Balling Fee Requests).  This unjustified self-reduction in fees is short-sighted and sets a bad precedent for future class action cases.

In order to break this stalemate, some class counsel are rethinking their fee requests by turning to attorney fee experts.  Attorney fee experts are fully qualified expert witnesses who provide expert declarations on the reasonableness of attorney fees and expenses in underlying actions.  They are skilled litigators with subject matter expertise and are highly qualified on a range of fee and billing issues like hourly rates, billing practices, fee award factors, litigation management, and lawyering just to name a few.  A qualified, outside fee expert provides a fee-seeking attorney with an independent, unbiased, and objective analysis of the attorney fees and expenses in the underlying class action.  Fee experts can manage the entire fee application process, provide an expert report/opinion, or advise and consult on fee matters.  Some fee experts include law professors and former judges.

Hiring a qualified fee expert during the settlement phase shows the court and would-be professional fee objectors that you are taking the setting of attorney fees in a constructive and impartial manner.  Retaining a fee expert shifts the focus from an internal and rather self-assured fee analysis to an outside, objective, and peer review-driven fee analysis.  By relying on a qualified fee expert, class counsel can defuse the existing tensions within the class action and speed up the recovery of attorney fees.  What is more, courts are more likely to rule in favor of a fee analysis provided by a qualified and disinterested expert, rather than someone with a financial stake in the outcome.

Insurer Fights Fee Discovery in Texas

February 22, 2017

A recent Law 360 story by Michelle Casady, “Texas High Court Told to Nix Attys’ Fee Discovery Ruling,” reports that National Lloyd's Insurance Co. urged the Texas Supreme Court to upend a lower court ruling compelling discovery of its attorneys’ fee information in litigation with property owners who allege the insurer underpaid their damage claims, contending that information is privileged.

The justices heard arguments on whether National should be able to keep that fee information under wraps — a fight that stems from four property insurance cases in which the property owners argued they had been shortchanged on claims following two hailstorms in Hidalgo County, Texas, in March and April 2012.

Scot Doyen, arguing on behalf of the insurer, told the court that siding with the property owners would “add layers of complexity to an area of the law that is otherwise clear and workable,” that the information sought is privileged and that the “relational nature” of fee consideration renders its fees irrelevant.  Such fees hinge on "the relationship between the party and the lawyer, not the relationship between the party and the other party,” he told the court.  “It is relational to that specific lawyer to client relationship," Doyen said.

Arguing on behalf of the insured property owners, Jennifer Bruch Hogan rejected the notion that an opposing counsel's fee information, including hourly rates and total hours billed, is “patently irrelevant,” though she said the tasks themselves may be privileged information subject to redaction.

“The second point I want to make is that the defendants have voluntarily designated their lead trial lawyer as a testifying expert, and not as a testifying expert on their own attorneys' fees, but as a testifying expert who can challenge the plaintiffs' attorneys' fees as unreasonable and unnecessary,” she also told the court, adding that the arrangement had put the case in "an unusual posture." 

In its petition for writ of mandamus filed with the state high court in August 2015, National argued that a defendant's fees are irrelevant, and that there are other methods in place — including the lodestar method and Arthur Andersen factors — that can be used without compelling a party to turn over rate and fee information it argues is privileged.

National's petition said the Thirteenth Court of Appeals decision caused a split among state appellate courts over whether a plaintiff can discover a defendant's attorneys' fee information, which it said is reflective of a split in other state and federal courts as well.  It said that the state high court has never adjudicated the issue and the Thirteenth Court erroneously relied on Chief Justice Nathan Hecht's concurring opinion in the 2012 case El Apple I v. Olivas in justifying its holding that the fee information is both relevant and discoverable.

As part of the underlying legal battle, the property owners were seeking damages and attorneys' fees on their breach of contract and Texas Insurance Code claims, according to court documents.  The cases were consolidated with thousands of others in a multidistrict litigation in Texas, and special master Roberto Ramirez was appointed to resolve any disputes.  In March 2015, according to the petition, the property owners in this case moved for additional discovery on attorneys’ fee information, including rates, invoices, payments and audits.  The insurers objected.

In April 2015, the special master permitted the additional discovery, which resulted in requests for the information being served to National Lloyds, Wardlaw Claims Service Inc. and Ideal Adjusting Inc., which objected to the requests.  After a hearing, the special master overruled each objection, according to the petition, and an appeal to the Thirteenth Court of Appeals followed.

The case is In re: National Lloyds Insurance Co et al., case number 15-0591, in the Supreme Court of the State of Texas.

Top NALFA Headlines of 2016

January 4, 2017

NALFA is a non-profit organization specializing in attorney fees and legal billing.  Our members provide a range of services on attorney fee and legal billing matters.  We host CLE programs on...

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NALFA 2016 Year in Review

December 26, 2016

NALFA had another successful year.  The following is a list of major accomplishments of NALFA in 2016: NALFA Offers a Certificate in Reasonable Attorney Fees, the Nation’s First and Only...

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