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Category: Billing Practices

WY Supreme Court: Billing in 15-Minute Increments Not Abusive

March 30, 2018

A recent ABA Journal story by Debra Cassens Weiss, “Billing Client in Minimum 15-Minute Increments Wasn’t Abusive, Wyoming Supreme Court Says,” reports that a law firm that routinely billed a longtime client in 15-minute increments isn’t required to reduce its legal tab, the Wyoming Supreme Court has ruled.

The court upheld a decision by the Wyoming State Bar Committee for Resolution of Fee Disputes regarding the fees charged by Daly & Sorenson, the Legal Profession Blog reports.

The law firm had no written fee agreement with Gabrielle Manigault, but it had represented her in 97 separate legal matters for more than 16 years, according to the March 27 decision.  She typically paid her bills when proceeds from her oil and gas interests and cattle sales became available.

The fee dispute centered on the law firm’s legal bills in trust litigation that originated in 2012. Daly & Sorenson lawyers had become concerned about possible malfeasance by trustees and accountants, and the firm needed to hire tax and accounting experts to review thousands of pages of documents in preparation for numerous depositions.

At the time, Manigault owed more than $71,000 in legal bills, and the law firm needed money to hire the experts. Manigault promised payment, but the money wasn’t paid. Daly & Sorenson was eventually permitted to withdraw from the litigation, and it sued for $84,500 in unpaid fees.

In a first round, the bar fee-dispute committee determined that Manigault owed the firm $64,621.05.

After an appeal and a remand, the fee-dispute committee considered whether Manigault’s bill should be reduced because of the billing in minimum 15-minute increments. The bar committee said the practice was normal for the firm, and it had used 15-minute billing in in the 97 matters it handled for Manigault. The committee found the practice wasn’t unreasonable.

Manigault had alleged on appeal that the firm likely used the 15-minute minimum billing to routinely charge her for work that took far less time to accomplish, and speculated that the firm was billing for unproductive casual conversations between attorneys and paralegals.

She pointed to Board of Professional Responsibility v. Casper, a 2014 Wyoming Supreme Court case in which a lawyer misused her 15-minute minimum billing interval.

The lawyer in Casper billed for 15 minutes every time she signed a document. She also billed 15 minutes to review a short document and then billed another 15 minutes for signing it. The Wyoming Supreme Court said the case was different.

“Nothing approaching that sort of unreasonable or abusive billing is evident on this record,” the court said.

Indeed, the law firm’s two principal lawyers had testified that they rounded down to the lower minimum time interval when billing for a task that may have bridged two intervals, the court said. They also testified that a phone conversation in itself or typing an email may have taken less time than the amount billed. But the billing took account of the time spent locating the client file, making notes and memorializing a conversation after a phone call.

The court also pointed to testimony by firm partners that off-the cuff casual office conversations about progress on a case were not billed to clients. More formal meetings were billed, however.

The lawyers’ testimony supported the decision of the fee-dispute panel, the court concluded.

New York Lawyer Censured for Falsifying Billing Records

January 11, 2018

A recent New York Law Journal by Jason Grant, “Manhattan Lawyer Censured for Falsifying Time Records, Even Though Clients Unscathed” reports that a Manhattan lawyer has been publicly censured for adding 94.8 hours of fabricated billing to his law firm’s internal records, in an effort to look busy to his partners, even though he removed the false entries before the bills went out to clients.

A unanimous Appellate Division, First Department, panel censured lawyer Jeffrey Leighton, while noting that the Attorney Grievance Committee and Leighton had stipulated to the punishment, even though there is apparently no precedent for a censure when the clients aren’t cheated.  The panel also noted, under mitigating factors weighing against a harsher punishment, that Leighton, a 34-year veteran lawyer, had lost his partnership at his firm because he’d padded the bills.

“The [First Department Attorney Grievance] Committee found no precedent for any public censure for falsifying time records where clients were not harmed,” the panel wrote, adding, “Disciplinary cases involving false or over-billing that have resulted in public discipline involved more egregious conduct in which the clients were directly impacted by the misconduct.”

However, the panel also pointed out that “the Committee and [Leighton] agree that public censure is appropriate because he engaged in this conduct for a period of over two years, he is a senior attorney with extensive experience, and although he did not intend to financially benefit or over-bill his clients, he intended to and did ‘deceive his colleagues and his firm about how busy he was.’”

Leighton was admitted in the Second Judicial Department in 1983, according to the panel, which consisted of Justices David Friedman, Marcy Kahn, Ellen Gesmer, Cynthia Kern and Peter Moulton.  He had an office in the First Judicial Department at all relevant times, and the committee and Leighton stipulated that between March 2012 and September 2013 he’d engaged in a pattern of making fake internal firm billing entries, the panel wrote in the Jan. 4 decision.

In mitigation of the punishment, the panel pointed out in Matter of Jeffrey Leighton, 2018 NY Slip Op 00089, that Leighton had never previously been the subject of a disciplinary investigation, that he cooperated with the committee, and that he’d “expressed genuine remorse and embarrassment.”

NALFA: Serial Class Action Objectors Not Qualified in Attorney Fee Analysis

January 5, 2018

A recent The Recorder story by Amanda Bronstad, “$38M Fee Request in Anthem Data Breach Settlement Under Scrutiny” reports that an objection says the fee request, which is 33 percent of the $115 million settlement, was “outrageous on its face” and should be closer to $13.8 million.

A prospective class member has objected to the Anthem data breach settlement, specifically criticizing a fee request of nearly $38 million, and planning to ask that a special master investigate the case for potential over-billing.

Class action critic Ted Frank, of the Competitive Enterprise Institute’s Center for Class Action Fairness, filed the objection on Dec. 29 on behalf of Adam Schulman, who is an attorney at his Washington D.C. organization.  The objection said the fee request, which is 33 percent of the $115 million settlement  was “outrageous on its face” and should be closer to $13.8 million.  He particularly targeted the average $360 per hour rate for contract attorneys submitted by four lead plaintiffs firms, one of which is San Francisco’s Lieff Cabraser Heimann & Bernstein.  A special master in Boston is investigating Lieff Cabraser, along with two other law firms, for potential over-billing for staff attorneys in a $74.5 million fee request over securities class action settlements with State Street.  The special master’s report is due in March.  Frank said he planned to file a motion on Thursday asking that a special master be appointed in the Anthem case.

He wants a special master to look into “the same thing they’re investigating in State Street, which is why this billing happened and whether it’s appropriate and whether there was an attempt to mislead the court.”  He also questioned why 49 other firms not appointed by the court stood to earn a total of $13.6 million in fees and “whether there were side agreements to back scratch or trade favors in other MDLs to get work in this MDL.”

U.S. District Judge Lucy Koh, who trimmed the number of plaintiffs firms appointed to lead the Anthem case, has scheduled a Feb. 1 hearing for final approval of the settlement in San Jose, California.  Two other objections were filed on Dec. 29 that also challenged the fee request, among other things.  Class counsel is expected to respond to the objections by Jan. 25.

Eve Cervantez, of San Francisco’s Altshuler Berzon, who is co-lead counsel in the case along with Andrew Friedman of Cohen Milstein Sellers & Toll in Washington D.C., wrote in an email: “The three professional objectors made the same typical, boilerplate objections we often see in consumer class actions, and neglected the true value of the settlement to the class—protection of their personal data both by mandated improvements to Anthem’s cybersecurity to prevent future hacks, and by credit monitoring to prevent misuse of their personal data by the hackers that stole it.”

In the Anthem case, Koh preliminarily approved the settlement in August.  The deal provides two years of credit monitoring and identity protection services to more than 78 million people whose personal information was compromised in 2015.  It also provides a $15 million fund to pay costs that class members were forced to pay due to the breach, such as credit monitoring services and falsified tax returns.

In motions filed last month, the four lead plaintiffs firms defended their fee request as adequate compensation for obtaining the largest data breach settlement in history.  The case involved “massive discovery” and “complicated factual and legal research,” they wrote.  It also was “extraordinarily risky,” given that many data breach cases have been dismissed.  The fees also were reasonable given the total lodestar—or the amount billed multiplied by the hourly rate—was $37.8 million.  The hourly billing rates of partners were between $400 to $970—rates that Koh has approved in prior cases.

“There is no true comparator to this groundbreaking settlement,” Cervantez wrote.  “Other data breach cases have not resulted in common funds that come close to $115 million, nor have they included the comprehensive cybersecurity improvements mandated by this settlement, coupled with a major, quantifiable investment in cybersecurity.”

The other two objections, one filed by solo practitioners John Pentz in Massachusetts and Benjamin Nutley in California, and the other by a trio of law firms from Missouri and Colorado, raise additional concerns over the cash value of the settlement, a proposed $597,500 in incentive payments to 29 lead plaintiffs and a request on both sides to seal portions of the deal—in particular, the amount of money Anthem has agreed to spend on cybersecurity in the future.

Koh has slashed fee requests in past cases, some involving the same plaintiffs firms.  Last year, she cut fees in a $150 million settlement involving the poaching of animators at DreamWorks and The Walt Disney Co. to $13.8 million after finding the original $31.5 million request to be “unreasonably high.”  In that case, Koh relied on the billing records, concluding that the U.S. Court of Appeals for the Ninth Circuit’s 25 percent benchmark in class action settlements would result in a windfall to the three plaintiffs firms, which included Cohen Milstein.

Billing Misconduct Leads to 2 Year Suspension for Georgia Attorney

December 18, 2017

A recent Law.com, by Mike Scarcella and Kristen Rasmussen, “Barnes & Thornburg Partner Suspended for 2 Years for Billing Misconduct” reports that a Barnes & Thornburg partner in Atlanta who faced possible disbarment for fraudulently billing a corporate client tens of thousands of dollars instead will be suspended for two years, the Georgia Supreme Court says.  John F. Meyers was a Seyfath Shaw labor and employment partner at the time of the professional conduct violations.

John F. Meyers, a member of the Georgia bar since 1983, is a labor and employment partner in Barnes & Thornburg’s Atlanta office.  He joined the firm in 2012 from Seyfarth Shaw.  Barnes & Thornburg removed Meyers’ biography from the firm’s website after the discipline was announced.

Barnes & Thornburg said in a statement: “The conduct underlying the complaint against Mr. Meyers occurred before he joined [the firm].  We are committed to providing the best possible service to our clients and, above all, this includes the highest standards of ethical and professional conduct.”

Meyers, then at Seyfarth Shaw, ran afoul of ethics rules through his relationship with a lawyer named Michael L. DiTano, formerly an in-house counsel at the New Jersey-based manufacturer J.M. Huber Corp.  The privately held company was a client of Seyfarth Shaw, and DiTano was the contact person for the law firm on the account.

DiTano told Meyers that Huber allowed him to do outside legal work—for his own clients—as long as those services were performed on personal time and posed no conflict to the interests of the company, according to the Georgia Supreme Court’s discipline order.

Several Seyfarth Shaw lawyers, including Meyers, beginning in 2011 provided legal services for some of DiTano’s outside, personal clients.  But Seyfarth Shaw ran into trouble trying to collect fees on some matters, the Georgia Supreme Court said.

“When difficulties arose in collecting the fees for those services from the in-house counsel’s personal clients, the amounts due were rolled into the bills sent to the law firm’s corporate client, with the descriptions of the work that had been performed edited to eliminate information that would make clear that the work was not performed directly for the corporate client,” according to the Georgia Supreme Court’s order.

Huber fired DiTano in 2012 after it discovered the billing scheme.  DiTano, who had worked at the company for more than a decade, in 2013 voluntarily surrendered his Georgia bar license.

Meyers, who is also a member of the Florida bar, resigned from Seyfarth Shaw around the time he was confronted about the altered bills that had been submitted to Huber.

In the disciplinary proceeding in Georgia, he denied participating in any scheme to defraud Huber.  Meyers claimed DiTano duped him by saying the billing procedure was acceptable because the services would ultimately benefit Huber.

“Our position is that John Meyers is an honest guy that did what lawyers in that position do,” Meyers’s lawyer, Lester Tate, said during a November 2015 hearing before a special master, David Anthony LaMalva.  “And our defense in this case … is actual innocence.  This is not a technical defense.  This is a case where John had been dealing with an inside general counsel for a long period of time and he did what the inside general counsel told him to do.”

LaMalva found Meyers violated various Georgia bar rules, including one that forbids an attorney from making a material misrepresentation of fact.  LaMalva, finding Meyers complicit in the billing scheme, recommended disbarment.  A review panel later concluded that disbarment was too harsh.  The Georgia Supreme Court agreed.

“This court agrees that a two-year suspension from the practice of law is a sufficient sanction for Meyers’ conduct in this case,” the state justices wrote in their unanimous decision.

Meyers paid Seyfarth Shaw about $95,300—an amount that included improper billings paid by Huber and other bills that the company had not paid, according to the Georgia Supreme Court.

Greenberg Traurig Wins $2M Fee Award in U.S. Court of Claims

November 20, 2017

A recent Law.com story by C. Ryan Barber, “Greenberg Traurig Wins $2M Fee Award in Suit Against U.S. Government,” reports that a federal claims court judge ordered the government to pay $2 million in legal fees to Greenberg Traurig for its work representing a Florida real estate developer that prevailed in a long-running case over the denial of a permit to fill in wetlands.  After two rounds through U.S. Court of Federal Claims, each followed by an appeal to the U.S. Court of Appeals for the Federal Circuit, the company, Lost Tree Village Corp., prevailed in its challenge when the U.S. Supreme Court declined in June to hear the case.

The U.S. Department of Justice had asked the high court to review a 2015 decision that said the U.S. government’s denial of the fill permit amounted to an uncompensated “taking” of Lost Tree’s property.  Charles Lettow, a judge on the U.S. Court of Federal Claims, ordered the government to pay $4.2 million in damages, plus $3.5 million in interest.  Lost Tree Village Corp.’s lawyers at Greenberg Traurig, led by Washington partner Jerry Stouck, had argued the government owed more.

Stouck this summer went to the Federal Claims court seeking about $2 million in attorney fees from the government, along with $100,000 in other fees and expenses incurred by Lost Tree.  Stouck, chairman of the firm’s regulatory and administrative law practice, identified Lost Tree’s legal fees in remarkable detail, noting a period in which he and two other principal timekeepers at Greenberg Traurig had given discounts of between 5 and 15 percent of the standard hourly rates.  Stouck identified his standard billing rate, for 2017, at $810 an hour.  Greenberg Traurig’s court filings reveal standard billing rates for Stouck and other Greenberg lawyers from 2007 to now.

For the first appeal to the Federal Circuit, Stouck said, the firm and Lost Tree agreed on a fixed fee of $67,00, plus expenses, with an additional $300,000 payable only if Greenberg Traurig prevailed. (It did so.)

The $300,000 success fee, under the terms of the agreement, would be “recoverable from the government as part of the reasonable attorneys’ fees due to Lost Tree.”  Stouck told the court that Lost Tree “has achieved complete success.”  He added: “Perhaps more importantly, while this case was hard-fought and long-fought, Lost Tree has prevailed completely on what both parties and the court recognized from the outset was the principle issue to be decided—the ‘relevant parcel’ issue.”

The Justice Department, arguing that Greenberg Traurig’s billing “reflects excessive rates for attorney and paralegal work,” said Lost Tree should be awarded at most $1,078,121 in fees.  In a court filing, the Justice Department said Greenberg Traurig billed for “work done on matters unrelated to this case and irrelevant to the merits, work where the hours devoted to tasks were far beyond reasonable or duplicated by multiple attorneys, and work where very senior personnel were performing tasks typically done by more-junior personnel.”

From the government’s filing: “Most egregiously, plaintiff seeks reimbursement for a $300,000 bonus not-yet paid that is not based on work done for the case, but instead because they were victorious on appeal.  The United States has not waived its sovereign immunity to reimburse ‘success fees’ sought in addition to fees for the hours actually devoted to work on the case.

“I was actually surprised that the government had disputed our fees so aggressively because, as you can see from the opinion, my client has paid all of the fees,” Stouck said.  “And I think that is a very substantial proof of the reasonableness of it.”

In a court filing, Stouck defended the $300,000 success fee as not just reasonable but a “greatly reduced” fee for the appeal.  “This is not a situation where Greenberg is seeking an ‘enhancement’ to its hourly rates,” he wrote in a court filing.  “Lost Tree and Greenberg are simply asking the court to enforce their reasonable, arm’s length agreement.  In the context of this case, the alternative fee arrangement represents Greenberg’s commercially-available rate.”  The judge did not award the success fee but did award $91,000 in fees that were incurred beyond the fixed expense of $67,500.