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Category: Fee Dispute Litigation / ADR

NALFA Announces The Nation’s Top Attorney Fee Experts of 2019

August 20, 2019

NALFA, a non-profit group, has a network of attorney fee expertise. Our network includes members, faculty, and fellows with expertise on the reasonableness of attorney fees.  We help organize and recognize qualified attorney fee experts from across the U.S. and around the globe.  Our attorney fee experts include court adjuncts such as bankruptcy fee examiners, special fee 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 reasonable attorney fees and expenses.  The following NALFA profile quotes are based on bio, CV, case summaries and case materials submitted and verified by us.  Here are the nation's top attorney fee experts of 2019:

"The Nation's Top Attorney Fee Expert"
John D. O'Connor
O'Connor & Associates
San Francisco, CA
 
"Over 30 Years of Legal Fee Audit Expertise"
Andre E. Jardini
KPC Legal Audit Services, Inc.
Glendale, CA
 
"Outstanding Skills Assessing Reasonable Attorney Fees in Class Actions"
Stephen J. Herman
Herman Herman & Katz LLC
New Orleans, LA

"The Nation's Top Bankruptcy Fee Examiner"
Robert M. Fishman
Fox Rothschild LLP
Chicago, IL

"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
 
"Strong on Fee and Billing Issues in Mass Torts"
Craig W. Smith
Robbins Arroyo LLP
San Diego, CA
 
"Highly Experienced in Dealing with Fee Issues Arising in Complex Litigation"
Marc M. Seltzer
Susman Godfrey LLP
Los Angeles, CA

"Total Mastery in Resolving Complex Attorney Fee Disputes"
Peter K. Rosen
JAMS
Los Angeles, CA
 
"Understands Fees, Funding, and Billing Issues in Cross Borders Matters"
Glenn Newberry
Eversheds Sutherland
London, UK
 
"Solid Expertise with Fee and Billing Matters in Complex Litigation"
Bruce C. Fox
Obermayer Rebmann LLP
Pittsburgh, PA
 
"Excellent on Attorney Fee Issues in Florida"
Debra L. Feit
Stratford Law Group LLC
Fort Lauderdale, FL
 
"Nation's Top Scholar on Attorney Fees in Class Actions"
Brian T. Fitzpatrick
Vanderbilt Law School
Nashville, TN
 
"Great Leader in Analyzing Legal Bills for Insurers"
Richard Zujac
Liberty Mutual Insurance
Philadelphia, PA

Texas Attorney Fee Dispute Heads to Arbitration

July 29, 2019

A recent Law 360 story by Sarah Jarvis, “Texas Attys Must Arbitrate Dispute Over Referral Fees,” reports that a dispute between two Texas attorneys over fees stemming from a referral agreement for asbestos lawsuits will head to arbitration after a state appellate court ruled that the lower court erred when it denied an arbitration motion.  Judge Peter Kelly said Dennis Weitzel’s motion to compel arbitration with Brent Coon’s law firm was allowed under an agreement the two signed in 2010 after Weitzel left Coon’s firm.  The panel remanded the case to trial court with the direction that the court order Weitzel and Brent Coon & Associates to arbitrate.

The case arose from a dispute about a fee agreement between Brent Coon & Associates and a nonparty law firm that Coon alleges was supposed to receive portions of payments for referrals of certain asbestos, mesothelioma and lung cancer clients.  Michael T. Gallagher and The Gallagher Law Firm PLLC sued Coon and his firm in 2018 alleging breach of the referral agreement, and Coon filed a third-party claim against Weitzel, arguing he did not forward portions of payments to Gallagher that he received from Coon’s firm.

Weitzel moved to compel arbitration on the matter, under the 2010 separation agreement, but the trial court denied Weitzel’s motion in December 2018, according to the opinion.  The arbitration clause in that agreement stipulates that Weitzel and Brent Coon & Associates would resolve any disputes that arose under the agreement by arbitration, Judge Kelly said.

The law firm argued that the dispute was not covered by the scope of the 2010 agreement, but by another agreement from 2002 which outlined the percentage of fees Weitzel and Gallagher would receive upon a case’s favorable resolution if they referred certain clients.  The panel sided with Weitzel’s argument that the 2010 agreement applies, and that the 2002 agreement was incorporated into the 2010 agreement by reference.

“Because BCA and Weitzel agreed that the arbitrator would decide these questions, the trial court should have granted this aspect of Weitzel’s motion so that the dispute, including the extent to which the 2002 agreement was incorporated into the 2010 agreement, could be resolved in arbitration,” Judge Kelly said.  “The parties incorporated the AAA Rules into the 2010 agreement and thus agreed that the arbitrator, not the trial court, would decide gateway issues, including whether their dispute falls under the arbitration clause of the 2010 agreement.”

But the panel said Weitzel did not meet his burden to show the trial court abused its discretion by denying his motion to compel arbitration against Coon, because the signatory to the 2002 and 2010 agreements was Coon’s firm and not Coon himself.

Texas Law Firm Settles Attorney Fee Dispute with Chevron

July 11, 2019

A recent Texas Lawyer story by Angela Morris, “Austin Appellate Boutique to Settle Fee Dispute with Chevron Phillips Chemical Co.,” reports that there’s a settlement coming in a long-running dispute over whether $494,000 from a sanctions award should pay attorney fees to Austin-based appellate boutique Alexander Dubose & Jefferson, or pay an underlying judgment instead. 

On June 28, at the request of the law firm and defendant Chevron Phillips Chemical Co., the Texas Supreme Court overturned an earlier intermediate appellate court’s opinion in the fee dispute and sent the matter back to the trial court with orders to render a judgment according to the settlement agreement.  Court documents don’t list details about the settlement.

“The terms of the settlement are confidential.  This is a long, ongoing feud.  It’s just a matter of both sides getting together and saying, ‘It’s time to end this,’” said Alexander Dubose founding partner Doug Alexander, who represents his firm in the case.  The firm this year changed its name from Alexander Dubose Jefferson & Townsend to Alexander Dubose & Jefferson, he said.  The background of the dispute is explained in the March 14 overturned opinion by the Ninth Court of Appeals, Alexander Dubose Jefferson & Townsend v. Chevron Phillips Chemical Co.  The underlying lawsuit involved a failed real estate transaction in which Alexander Dubose represented plaintiff Kingwood Crossroads Inc.

Kingwood won attorney fee sanctions against one defendant, Exxon Land Development Inc., for discovery abuses. Alexander Dubose and another of Kingwood’s law firms, Mayer Brown, had an alternate fee agreement with Kingwood that said those sanctions would be split between Kingwood, Mayer Brown and Alexander Dubose.

A 2011 appellate court ruling made the sanctions award final. In 2013, Exxon Land paid $989,000 in sanctions, and Mayer Brown deposited the money in its Interest on Lawyers Trust Account.  Meanwhile, one defendant in the underlying case, Chevron Phillips Chemical, had won $1.2 million in attorney fees for prevailing on a separate breach of contract claim.  Chevron Phillips Chemical sought a turnover of Kingwood’s sanctions funds to pay part of the judgment.

Next, Alexander Dubose intervened and asked for a declaratory judgment to protect its interest in the funds, arguing that the firm had a contingent fee agreement that gave it ownership over some of the money, and that the firm’s contractual claim had priority over Chevron Phillips Chemical’s claim.  The trial court ordered Kingwood to pay half the funds to Chevron Phillips Chemical, and to deposit the other half, $494,000, into the court’s registry.  In the end, the court denied Alexander Dubose’s bid to get the money and ordered it released to Chevron Phillips Chemical.

The appellate court found the trial court abused its discretion by failing to use the right procedure to decide whether Alexander Dubose had a claim to the funds.  The trial court should have conducted separate, initial proceedings to resolve the firm’s claims.  The opinion sent the case back to the trial court to try again.  Now, thanks to the Texas Supreme Court’s June 28 ruling, the trial court has new orders to enforce the parties’ settlement instead.

Attorney Fee Dispute Litigation in Pelvic Mesh Case

July 3, 2019

A recent Law 360 story by Bill Wichert, “NJ, Texas Firms Unlawfully Pocketed Mesh Funds, Suit Says,” reports that law firms including Nagel Rice LLP and Potts Law Firm improperly pocketed attorney fees and expenses from the settlements of roughly 1,450 pelvic mesh cases in New Jersey state court by using invalid retainer agreements or no agreements at all, according to a proposed class action made available.  The lawsuit, filed in Bergen County Superior Court, says the firms unlawfully retained excessive fee percentages, deducted those fees "off the top" of gross settlement amounts, took expenses out of clients' portions of the recovery, and engaged in invalid fee-sharing.

"The defendants were negligent in that their conduct fell below and breached the applicable standard of care, because they failed to ensure that all the cases were retained, filed, litigated, settled and disbursed in accordance with New Jersey law,” according to the complaint filed by Mazie Slater Katz & Freeman LLC.  The alleged misconduct was "reckless and undertaken with willful and wanton disregard" for the rights of plaintiff Debbie Gore and the proposed class members, the complaint said.

In addition to New Jersey-based Nagel Rice and Texas-based Potts Law Firm, the defendants include Texas-based firms Bailey Cowan Heckaman PLLC, Junell & Associates PLLC, Burnett Law Firm and Houston attorney Annie McAdams.  The complaint, which includes legal malpractice, breach of fiduciary duty and other claims, asserts that the defendants should be ordered to disgorge all attorney fees and expenses from the cases and be limited to collecting attorney fees on a quantum meruit basis.

"On information and belief, defendants performed very little, if any, actual legal services of value on behalf of plaintiff and the proposed class members, thus entitling defendants to little or no recovery in quantum meruit," the complaint said.

Gore, a Texas resident, has demanded that the defendants provide "a full accounting" of the retainer agreements in the cases, the settlements, and the attorney fees and expenses deducted from those settlements.  Superior Court Judge Rachelle Lea Harz ordered the defendants to appear in court on July 11 to show cause why the court should not issue an order requiring them to turn over that information.  Gore entered into an invalid retainer agreement with one or more of the defendants in May 2013 that provided for 40% in attorney fees that would be deducted from the gross settlement amount and for expenses to be taken out of her share of the recovery, the complaint says.

Those provisions ran afoul of a New Jersey rule governing contingent fees, the complaint says.  Under that rule, an attorney can collect a fee of 33.33% of the first $750,000 recovered and then smaller percentages for subsequent amounts, and those fees must be based on the "net sum recovered" after deducting expenses.

The retainer agreement also "failed to disclose that some or all of the defendants were sharing the legal fees, and New Jersey law requires that all attorneys sharing in the legal fees — and the fee-sharing arrangement — be disclosed to and approved by the client in writing," the complaint said.  The agreement "allowed for the sharing of legal fees to attorneys who provided no legal services," the complaint said.

Nagel Rice and Potts — even though they were not "retained to act as legal counsel pursuant to a retainer agreement compliant with New Jersey law" — filed a suit on Gore's behalf in July 2014 as part of multicounty litigation against Johnson & Johnson and C.R. Bard Inc., according to the complaint.  Following settlements in the roughly 1,450 cases filed by Nagel Rice and Potts, the defendants improperly retained attorney fees and expenses and took part in the unlawful fee-sharing, the complaint says.

Nine Rules for Billing Ethically and Getting Paid on Time

May 28, 2019

An article on the ABA website by Todd C. Scott, “Nine Rules for Billing Ethically and Getting Paid on Time,” reports on the ethical rules on legal billing.  This article was posted with permission.  The article reads:

Henry Ferro (an Ocala, Florida, attorney) was very frustrated with his client, Ron Butler, for refusing to pay his legal fees from a criminal matter where Ferro represented Butler’s son Nick.  But all chances of Ferro recovering the $14,000 he says Butler owes him were probably lost for good when Ferro ran into his client at a Lowe’s checkout line and, according to a complaint filed against him, the attorney began yelling that Butler was “a deadbeat who does not want to pay his debts.”

As a result, Ferro became the subject of a harassment complaint by his client Butler, and Butler’s new lawyer argued that not only does his client not owe the fee (because there was no written fee agreement) but also that any amount in excess of the $3,500 Butler already paid to Ferro for his son’s burglary matter would be excessive and unreasonable.

Ferro’s personal attempt to recover his unpaid fee at a Lowe’s store were not any more successful than his other attempts, which are also coming back to haunt him.  According to the complaint, when Ferro’s phone calls to the client to inquire about the fees were unsuccessful, he attempted to discuss the fee issue with his client’s sister-in-law after phoning her about the matter.  Butler’s harassment claim sought a temporary restraining order enjoining the lawyer from having any further contact with Butler or any member of his family about the fee matter.

Nothing is more frustrating for a lawyer who has worked diligently on legal matters than the realization that clients do not intend to pay their bills.  Complicating matters is the fact that, given current economic difficulties, unpaid legal fees are on the rise, and lawyers are looking for ways to recover lost fees more than ever before.

From a malpractice carrier’s point of view, suing your client for unpaid legal fees rarely results in a good outcome.  Savvy clients who know that the legal fee is owed will often turn the tables on a lawyer, filing a counterclaim alleging that the fee the lawyer seeks to collect is unreasonable or cannot be justified because the lawyer did substandard work.  The client’s counterclaim may be a simple tactic to leverage a bill, but because it is a suit against a lawyer, it must be reported to the lawyer’s malpractice carrier, creating an added headache for a lawyer who just wants to be paid.

So what should a lawyer do to recover a legal fee in a matter that he or she is rightfully owed?  Most practice management experts agree that the key to successfully recovering the firm’s net receivables is to take certain steps up front, at the start of the attorney-client relationship, that will put the lawyer in control of the matter if the client falls behind in paying.  Also, what you do after the first time a client falls behind with a payment can determine whether you will ever recover anything for your legal services.

ABA Model Rule 1.5, Fees, is the primary regulatory guideline outlining proper fee arrangements and billing practices.  The rule addresses several aspects of fee setting, including contingency fees, prohibited fee arrangements, fee sharing, and whether a fee is reasonable.  Many states are now considering changes to Rule 1.5 to reflect some of the changing ways lawyers and clients are contracting for legal services.  Changes to the rule include provisions on flat fees, availability fees, nonrefundable fees, and unearned fees.  In Minnesota, changes to Model Rule 1.5 were adopted by the Supreme Court in late 2010 and became effective on July, 1, 2011.

Throughout Rule 1.5, a few themes are prevalent.  Legal fees, whether they are fixed, contingent, or shared with lawyers outside the firm, need to be reasonable.  Changes in the rule addressing availability fees and nonrefundable fees are also based on what’s considered to be reasonable billing practices.  Although determining whether a bill is reasonable can sometimes be difficult, the rule does provide some factors to be considered when determining the reasonableness of a fee including: the difficulty of the matter, the fee that is customarily charged, whether the work precluded you from working on other legal matters, the results obtained, and the experience of the lawyer performing the service.

Another theme throughout Rule 1.5 centers on consumer protection and has to do with putting the fee agreement in writing.  Although the rule stops just short of requiring that a fixed fee agreement be in writing, the authors of the rule state that the “preferable” method for communicating a fee arrangement to a client is in writing, and a written fee agreement is required for legal services involving contingent fees, nonrefundable fees, flat fees, and fee sharing.

So why do some clients choose to not pay their legal bills?  When asked, most clients involved in legal fee disputes will tell you the primary motivator for not paying their lawyer was their sense that the amount they were being billed was unfair.  Even one small item that affects the client’s sense of fairness in an otherwise large legal bill can sometimes be enough to delay payment and jeopardize the good will that the lawyer previously established.  By closely following the tenants of 1.5, lawyers stand a better chance of having clients who understand the billing process and pay the legal bill on time.

The following nine rules for billing and collecting fees from clients that will help you stay on firm ethical grounds, and avoid spending a lot of time on legal work for which you will never be compensated.

1. Communicate the fee arrangement before you start the case.

Getting your client to pay your bill starts with making sure he or she fully understands what you will charge for your services. It may not be a requirement in your jurisdiction, but putting the fee agreement in writing is a good idea, and it allows both you and the client to refer to the document if there are ever any misunderstandings about the bill.  Any lawyer that works for several hours on a legal matter and then discusses with the client the fee arrangement risks losing the billable time already devoted to the matter.   Clients may not like what they are being charged, but if they feel they understand why they have received the charge and it conforms to what they previously agreed to, they are more likely to pay their legal bill in full.

2. Your fee better be reasonable.

The factors for determining reasonableness of a legal fee in Rule 1.5 are a good guideline for fee setting, and they should be considered on the whole.  For example, your hourly fee may be appropriate for the type of work that you are doing, but if your lack of legal experience requires you to spend an inordinate amount of time performing a routine legal task, the amount you bill might be out of line with what’s considered to be reasonable.  It is a good idea to take a close look at the factors for determining whether a legal fee is reasonable because they are likely to be referred to by both the lawyer and the client when parties find themselves arbitrating a legal fee dispute.

3. “Nonrefundable” does not mean that you can be paid for doing nothing.

Nonrefundable retainer agreements have caused an increase in attorney-client fee disputes; especially when a lawyer accepts a large retainer fee at the outset of a matter and the matter is soon settled or the lawyer is discharged after having done little or no work.  The sense of “reasonableness” that permeates the rules on legal fees extends to nonrefundable fee arrangements, so even if your state has not yet adopted changes prohibiting nonrefundable fee arrangements, you should be ready to refund any unearned portion of your fee unless you can show the amount retained is not disproportionate to the amount of work you committed to the legal matter.

4. Verbal flat fee arrangements are as good as the paper they’re written on.

Some states have adopted changes to the professional fee rules to reflect the growing trend towards flat fee arrangements.  A flat fee represents a complete payment for specified legal services and is typically paid in full in advance of the lawyer providing the services.  Unless both the lawyer and the client have a clear understanding what the client will be receiving in exchange for the fee, flat fee arrangements can be fraught with misunderstandings and disappointed parties.  Therefore, make sure your flat fee agreement is in writing, signed by the client, and notifies the client with specificity the nature and scope of the services to be provided, the total amount of the fee and other terms of payment, that the fee will not be held in trust until it is earned, and that the client has the right to terminate the lawyer-client relationship.

5. Availability fees are separate and distinct from legal services fee.

An availability fee is a charge that ensures the lawyer may be available to the client during a specified period of time or on a specified matter.  Because the fee is only for reserving your time that could be used working on other legal matters, your writing to the client should state the fee is for availability only and that fees for legal services will be charged separately.

6. If the fee is shared with someone outside the firm, the client should know exactly where it is going.

It is never a good idea to surprise a client at the end of a legal matter by revealing to them in a remittance statement that an attorney who is not a member of the firm will be sharing in some of the fee.  Clients will sometimes assume that if an outside legal expert was involved, then the lawyer they’ve been talking to all along didn’t really do anything to earn the portion of the fee that is going to them.  Fee sharing between lawyers of different firms is permitted under Rule 1.5 so long as the division is in proportion to the services performed by each lawyer, the client agrees to the arrangement in writing (including the share each lawyer will receive), and the total fee is reasonable.

7. Three keys for effective invoicing: detail, detail, detail.

Clients may not always like getting a legal bill from you, but if they have sufficient information in the invoice about the legal services you performed, they are more likely to consider the bill to be reasonable and compensate you for your work.  The description area for each time entry in the invoice is a prime spot to inform the client with specificity what tasks the lawyer or the staff has performed on their behalf.  Even if you’ve handled tasks for which you have no intention of charging the client, let the client know about the work, how much time you spent on the task, and the fact they are getting the service for no charge.

8. When the payment is late, be direct. Clients like direct.

For individual clients that are on a tight budget, when deciding whether to pay the lawyer’s bill or the bill of the person who may have just completed shingling their garage, they think that the lawyer is sufficiently wealthy and won’t mind accepting a late payment.  Maybe you don’t mind, but if you do, contact the client after the first missed payment and be direct about your expectations.  Often, if you let them know that it is important, they will pay you on time.  They may need to be reminded to adhere to the payment schedule in order to continue receiving legal services.

9. Foonberg’s rule: If you’re going to get burned, get burned cheap.

It is much easier to resolve fee problems with clients early on in the legal matter then later when there may be much more at stake.  One question lawyers often reflect on when fee disputes arise is, “Why did I let the bill get so high?” If you have to part ways with a client who won’t pay, it is a lot easier to do if they don’t already owe you a lot of money.  Jay Foonberg, author of the best selling ABA publication “How to Start and Build a Law Practice,” sums up his advice for lawyers in these situations: if you’re going to get burned, get burned cheap.

Todd C. Scott is VP of Risk Management at Minnesota Lawyers Mutual and specializes in helping lawyers understand legal ethics, risk management techniques, and legal technology systems.  Todd blogs at www.attorneysatrisk.com and can be reached at tscott@mlmins.com.