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Category: Fee Expert / Member

FTC Ordered to Pay Attorney Fees and Costs Under EAJA

December 27, 2019

A recent NLJ story by Mike Scarcella, “FTC Ordered to Pay $843K in Legal Fees, Costs After Losing Privacy Case,” reports that the Federal Trade Commission must pay more than $843,000 in attorney fees and costs to the law firms that represented a now-defunct medical diagnostic testing company that had long argued the agency was misguided in an enforcement action alleging inadequate data-privacy protections.

Atlanta-based LabMD, which has claimed the FTC’s enforcement action put it out of business, was represented by such firms as Ropes & Gray, Dinsmore & Shohl, and Wilson Elser Moskowitz Edelman & Dicker.  A team from Ropes & Gray served pro bono as lead counsel for LabMD in the U.S. Court of Appeals for the Eleventh Circuit, which last year ruled against the FTC.

The appeals court this week upheld a special master’s report that said the law firms were entitled to fees and costs for their successful advocacy on behalf of LabMD.  The report said the FTC’s litigation position was not “substantially justified,” a threshold test for disputes involving whether a federal agency is on the hook for legal fees.  Ropes & Gray was awarded nearly $300,000 in fees.  Dinsmore was granted about $346,000, and Wilson Elser was awarded $83,200.

LabMD’s lawyers sought to recoup attorney fees under the Equal Access to Justice Act, which can provide some relief to parties who prevail against federal agencies.  FTC lawyers had urged the federal appeals panel to reject any legal-fee award at all.  “LabMD is not entitled to recover any of its fees or costs because the commission’s position at every stage—when it opened the investigation, prosecuted an enforcement complaint, and defended its cease-and-desist order on appeal—had ‘a reasonable basis in both law and fact’ and therefore was ‘substantially justified,’” FTC attorney Theodore Metzler said in a court filing last month.

The special master, Walter Johnson, a U.S. magistrate judge in Rome, Georgia, concluded the FTC was not “substantially justified” in its investigation and prosecution of LabMD.  Johnson, like others before him, examined the FTC’s relationship with, and reliance on, a company that allegedly tried to get LabMD to buy its data-protection services after informing the company of an alleged information-security breach.  “Tragically, as this case was proceeding through the enforcement action stage, LabMD was forced to cease operations,” Johnson wrote in his report.

LabMD’s fee petition in the Eleventh Circuit revealed various rates for leading Ropes & Gray partners and associates as of October 2018.  The firm said it would reinvest any awarded compensation into further pro bono work.  Douglas Meal, the primary lawyer for LabMD in the Eleventh Circuit and formerly co-leader of the firm’s privacy and cybersecurity practice, reported an hourly rate of $1,500.  Appellate partner Douglas Hallward-Driemeier was charging $1,200, and then-partner Michelle Visser was billing at $1,060 hourly.  The firm’s fee application presented both current hourly rates and discounted figures that were used as the basis for the petition.

NALFA to Conduct 2020 Class Action Hourly Rate Survey

December 3, 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.

Starting in 2020, NALFA will be conducting the 2020 Class Action Hourly Rate Survey, the nation’s most comprehensive survey of hourly rates in class action litigation.  This survey will show current, that is 2020, hourly rate data for class action litigators in the nation’s 16 largest legal markets:

1. New York, NY
2. Los Angeles, CA
3. Chicago, IL
4. Miami, FL
5. Washington, DC
6. Dallas, TX
7. Atlanta, GA
8. Boston, MA
9. Houston, TX
10. Philadelphia, PA
11. San Francisco, CA
12. Seattle, WA
13. San Diego, CA
14. New Orleans, LA
15. Tampa, FL
16. Denver, CO

This inaugural hourly rate survey will be conducted via email in early 2020.  The survey results will show the current average hourly rate range of class action litigators (plaintiff and defense) at senior partner, partner, senior associate, and associate levels in the nation’s top legal markets.  This billing rate survey may be the first ever to make a distinction between plaintiffs' rates and defense rates.  This survey will be available for purchase.

Three Places Overbilling May Be Lurking

December 2, 2019

A recent Law 360 article by Andrew Strickler, “3 Places Overbilling May Be Lurking,” reports on overbilling.  The article reads:

By most accounts, the wild ol’ days of lawyer invoicing — rampant “block” entries, unauthorized billers, a stubborn dearth of detail — are a fading memory.  Over the last two decades or so, sophisticated buyers of legal services have tightened up billing standards, poured money and time into auditing, and routinely questioned what they’re getting for all those “0.2 hour” line items.

At the same time, courts and the bar have also become far more strict about what constitutes a “good” — and ethical — legal bill and helped cure the profession of at least some of its worst timekeeping habits.  But that doesn't mean overbilling doesn't happen or that the partners and managers responsible for reviewing bills can let down their guard.

“Law firms across the board have really improved their quality control, and if it keeps up like this, one day they’ll put me out of business,” said California legal fee auditor Jim Schratz.  “But I can also say they’re still far from perfect, and sometimes they just increase the chances their bill doesn’t get paid.”

Here are three overbilling trouble spots to watch for.

All Those Meetings

Any review of a legal bill, either before it goes to the client or an audit after the fact, should include a hard look at time billed for meetings, particularly repeat “update” meetings, experts say.  Professional auditors say “interoffice” get-togethers and conference calls are routinely scrutinized by cost-conscious clients for overbilling or inefficiencies.  But many firms still bill meeting time for people not clearly involved in the active issues in a case, or reflexively bill for the entire length of a meeting that might also cover nonbillable topics.

A good rule of thumb: Meetings attended by attorneys and support staff should represent 5% or less of all time billed over the course of a matter, professional fee auditors say.  Anything more reasonably invites questions about whether the client is paying to have billers “listen in” but not really push the client’s case forward.

“There are lots of things a lawyer can’t control, like how many depositions the other side calls,” Schratz said.  “But there are plenty of things you can, including staying away from these repeat entries saying something like ‘Conference with Joe’ when it’s not clear what Joe really contributed.”

Managing a Case vs. Managing the Business

Another flashpoint for overbilling comes at the intersection of partners working with junior lawyers doing billable work, and the more “supervisory” and firm-business kinds of tasks that aren’t.  While the agreed-to billing rules of engagements can vary, as a general rule, lawyers describing substantive legal work on time sheets should avoid "delegation" or administrative-sounding descriptors — training, assigning and proofing, to name a few examples.

Elise Frejka, a New York attorney and fee expert, said clients want to see "bang for their buck" language that doesn't imply that a biller is simply overseeing another biller's work.  "There is a trust factor here, and there is also good word choice," she said.  "And if I ever see the words 'ponder' or 'consider,' well, that sounds to me like something you should be doing in the shower."

John Trunko, legal audit director at fee audit firm Stuart Maue, agreed that practice leaders and managers can confuse client and supervisory duties, particularly when they’re overseeing lawyers and paralegals spending most of their time supporting the partner's matter.  “There is some gray area there, when you’re talking about billing for a specific discussion [with a junior person] related to an aspect of a case, or if it’s really about supervising and training someone more generally on their job or even just transmitting information to them,” Trunko said.  “At some point, that does become an administrative function rather than a billable piece of legal work," he added.

“Miniblocks"

The practice of block billing, in which lawyers include a long series of billable tasks in a single time entry, is widely understood to lead to client “upcharging” and has been rightly disparaged by many judges and bar ethics committees.  And in an era of increased scrutiny on outside legal budgets, many corporations explicitly prohibit law firms from using block billing in outside counsel guidelines.  But the practice persists, even if it’s not nearly as common as it was a decade ago.

Today, fee auditors say they often see firms grouping small numbers of billable tasks in single time entries.  And such “miniblock" billing isn’t necessarily a bad thing — as long as the client doesn’t object and the described tasks are obviously related, experts say.  Still, practice group leaders and supervising partners should double-check that block entries are used consistently and moderately.  That's particularly true in the last months of the year, as associates, and many partners, feel pressure to bill every hour possible.

Kay Holmen, a senior auditor at KPC Legal Audit Services in Glendale, California, cautions against grouping more than three tasks in one block, or block billing a client for more than a single hour per entry.  Lawyers can also avoid pushback by taking some extra care to describe each step covered by a block entry.  “Take the few extra seconds.  Come up with some words that describe what you really did. If you say you’re doing document review and writing a memo, what specific document did you look at?” Holmen said.  “Don’t put a copy-and-paste description on the time sheet.”

Class Counsel Seek Recommended Fees in Chipotle Data Breach Case

November 8, 2019

A recent Law 360 story by Joyce Hanson, “Chipotle Customers Want $1.2M Atty Fees in Data Breach Suit,” reports that customers in a class action suit over a 2017 Chipotle data breach that exposed their names and payment card numbers to hackers asked a Colorado federal judge for $1.2 million in attorney fees, saying a mediator proposed that figure as the parties were settling.

The Chipotle Mexican Grill Inc. customers' unopposed motion calls for fees of $1,165,782 after about $34,000 in expenses are deducted, based on class counsel's 2,406 hours of investigation, prosecution and litigation settlement, according to a brief filed.  Also under the fee proposal, six class representatives led by Todd Gordon and five other plaintiffs will each receive an incentive award of $2,500.

Settlement class members would be eligible for out-of-pocket reimbursement of up to $250, including an automatic payment for each affected card, payment for customers' time spent dealing with fraud issues and reimbursement for credit monitoring and identity theft insurance, the brief said.  In addition, class members who suffered other "extraordinary" unreimbursed monetary losses because of compromised information can make a claim for reimbursement of up to $10,000, according to the proposed settlement.

"Without these individuals' investment of time, and their courage to step forward and vindicate the class' rights against a large institution, the class would not have obtained the substantial relief offered by the settlement," the customers said.

Chipotle revealed in April 2017 that it had detected a data security breach in its electronic processing and transmission of confidential customer and employee information.  The burrito chain acknowledged at the time that it may be subject to lawsuits because of the breach that reportedly affected transactions from March 24 through April 18 of that year.

Financial institutions that sued over the breach told the court in March that the parties had reached a confidential settlement agreement.  On June 19, U.S. District Judge Christine M. Arguello granted the customers' June 13 unopposed motion for preliminary approval of the settlement, conditionally certifying the class.

Bennett G. Picker of Stradley Ronon Stevens & Young LLP served as a private mediator after the customers sent their settlement demand to Chipotle in November 2018, according to the brief.  The parties first held several phone calls with Picker before sitting down with him in a full-day mediation session in Florida, the customers said.

After agreeing on the data breach settlement's material terms, the parties turned to the question of attorney fees and costs, according to the brief.  When they reached an impasse and couldn't agree despite significant negotiation, Picker submitted a mediator's proposal that both sides finally accepted, the brief said.

The customers said the requested fee award is consistent with attorney fees approved in the court and in other data breach settlements.  Class counsel's lodestar of $1.44 million through Oct. 31 represents a 0.83 negative multiplier, which "supports the reasonableness of the fee requested," the customers said.

Weil Gotshal Seeks $2M in Fees in PG&E Bankruptcy

October 22, 2019

A recent Law 360 story by Ryan Boysen, “Weil Gotshal Seek $2M for Work on PG&E Case,” reports that Weil Gotshal & Manges LLP is asking for $2 million in fees and costs for its work in August on the massive bankruptcy of California’s Pacific Gas and Electric Co., with billable hours from just two partners accounting for nearly half of the haul.  In a fee application, the firm said it put in about $2.5 million worth of work into the PG&E case throughout August, just as a proposed $24 billion Chapter 11 reorganization plan came into focus.  After a customary 20% haircut is applied, it brings the total to about $2 million.

Nearly $1 million of that comes from the billable hours of just two attorneys: Weil Gotshal’s Stephen Karotkin, who worked 300 hours, and Jessica Liou, who worked 275 hours.  While Weil Gotshal is the primary firm representing PG&E, the nation’s largest power utility has retained lawyers at several other firms in various capacities.  One report estimated in March that PG&E had spent at least $84 million in attorney fees up to that point.  It’s not clear how much more overall the utility has since spent.  That's not to mention the powerhouse restructuring attorneys representing the committees, creditors and other stakeholders who are all vying for an advantage in the massive case.

Earlier this month PG&E criticized the court-appointed fee examiner for attempting to put its attorneys on too tight of a leash, saying the examiner's suggested cost-cutting measures and fee caps were too strict.  PG&E, the nation's largest utility, filed for bankruptcy in January after racking up more than $30 billion in potential liabilities tied to its alleged role in causing a series of wildfires that tore through the Golden State in 2017 and 2018, killing 130 people and destroying billions of dollars in property.