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Category: Billing Record / Entries

Article: Block Billing Helped Obscure Overcharges, Plaintiffs Allege in Suit

October 1, 2019

A recent article by Karen E. Rubin of Thompson Hine LLP in Cleveland, “Law Firm’s ‘Block Billing’ Helped Obscure Overcharges, Plaintiffs Allege in TX Federal Suit,” reports on the ethics of block billing in a federal action in Texas.  This article was posted with permission.  The article reads:

Five businesses filed suit earlier this month in a Texas federal district court against Morrison & Foerster, a 1,000+-lawyer mega-firm headquartered in San Francisco.  The case is unremarkable in most ways: on the one hand, former clients who assert wrongdoing in how the law firm handled their matters (including billing improprieties) and a less–than-desirable outcome – and on the other hand, a law firm that says “Don’t believe everything you read in a complaint, the claims are baseless and we will win.”  (MoFo told the ABA Journal last week that “[t]he complaint has no merit” and that the firm “will be vindicated.”)

What is noteworthy is one of the allegations about the firm’s billing.  The plaintiffs claim that the firm’s misdeeds include “block billing.”  By grouping multiple tasks in a single time entry, the plaintiffs allege in the complaint, Morrison & Foerster made it “impossible to determine exactly what tasks were performed and the amount of time allegedly spent for such tasks.”

Ye olde one-line fee bills

At this early stage, the allegations in the complaint remain unproven, and it can’t be known to what extent MoFo may (or may not) have sent invoices that block-billed discrete tasks.  Certainly, in days of yore it was common for law firms to send invoices summarizing the services provided.  (It was also common to see fee bills with one line: “For services rendered…” and then the dollar amount.)  In the 1980s, say, it was certainly easier to dictate a summary of the work done on a matter than it was to break out specific tasks.  (Those of us who were young and tech savvy in those bygone days would use our fancy Dictaphones™, though the senior partners would have their secretaries take dictation on a steno pad.)

Today though, most of us put our daily time charges directly into software that will spit out a list of charges for the month.  Preparing a “summary” of those charges actually requires more work than giving the client a detailed description of how much time was spent daily on what and by whom.  Why ever spend the time summarizing?

But what the plaintiffs in the case against MoFo might be alluding to is the practice of stringing together many short tasks in one running description and assigning a single combined time charge to those discrete tasks.  That can effectively obscure how much time the lawyer spent on each of those tasks – which is something clients now expect to be informed of.

Billing rules of the road

There is no ethics rule that says you may not “block bill” (though many corporate clients today have outside counsel guidelines that prohibit the practice).  But several ethics rules are broadly relevant, including your jurisdiction’s version of Model Rule 1.4(a)(3) (keeping the client reasonably informed about the matter); Model Rule 1.5(b) (communicating the basis of the fees and expenses); and Model Rule 1.5(a) (not charging an unreasonable fee).

ABA Ethic Opinion 93-79 vividly describes a number of billing no-no’s, including: billing more than one client for the same hours; billing time during travel to one client while working on another client’s matters and billing the second client as well; “continuous toil on or overstaffing a project for the purpose of churning out hours;” and marking up expenses, such as meals.  (The latter practice prompted the ABA Ethics Committee to opine colorfully that “[t]he lawyer’s stock in trade is the sale of legal services, not photocopy paper, tuna fish sandwiches, computer time or messenger services.”)

Blocking and tackling

When a client alleges misconduct against a lawyer or firm, the burden of proof is on the client.  But what we know about the tendencies of juries suggests that any lawyer should want to be in the best position possible to justify his or her fee if it is ever called into question.  We’re not playing football here – less blocking is better.

Karen E Rubin is a member of Thompson Hine’s business litigation group.  She is a former chair of the Certified Grievance Committee of the Cleveland Metropolitan Bar Association, and a member and past chair of the Ohio State Bar Association’s Ethics Committee.  She also chairs that committee’s Ethics Opinions subcommittee, and has authored several ethics opinions on behalf of the OSBA interpreting the Ohio Rules of Professional Conduct.  Karen also is an adjunct professor at Cleveland-Marshall College of Law, teaching legal ethics.

More Law Firms Enter NFL Concussion Fee Allocation Dispute

September 18, 2019

A recent Law 360 story by Ryan Boysen, “More Firms Pile Onto Seeger Weiss in Concussion Fee Fight,” reports that Zimmerman Reed LLP and Kreindler & Kreindler LLP have added their voices to the growing chorus of attorneys claiming Seeger Weiss LLP shortchanged them for their work on the landmark NFL concussion settlement, in a contentious fee fight in the Third Circuit.  In separate briefs, Kreindler’s Anthony Tarricone and a handful of Zimmerman Reed lawyers said their early contributions to the litigation that led to the massive concussion settlement were overlooked and undervalued by Chris Seeger and U.S. District Judge Anita B. Brody when she determined how to divvy up most of the $112 million common benefit fund in 2017.

“Despite recognizing that 'every attorney involved in the litigation has taken on the risk that work will be performed but no payment will be received,’ the court’s awarded multipliers have almost no correlation to the actual” hours of work performed or the risk of nonpayment inherent in those hours, Zimmerman Reed said in its brief.  “That result is completely inconsistent with the court’s” decision to award Seeger Weiss a comparatively massive risk multiplier for its own hours, Zimmerman Reed added.

Tarricone received a risk multiplier of 1.25 for his hours and Zimmerman Reed received a multiplier of just 1, while Seeger Weiss received a 3.5 multiplier, according to court documents.  That huge 3.5 multiplier, coupled with the hundreds of hours billed by Seeger Weiss for its own work, have allowed it to take home nearly $65 million worth of the roughly $100 million that’s been paid out from the common benefit fund thus far.

Seeger is widely acknowledged as the primary architect of the settlement itself, but most of the 20 or so firms involved in the concussion litigation’s early stages have repeatedly bristled at his perceived heavy-handedness and concentration of power during that process.  While those firms are still able to collect contingency fees when their individual clients’ awards are approved under the settlement, practically all of them were left seething after Judge Brody’s lopsided allocation of the CBF money.

They’ve also taken issue with how that money was divvied up in the first place.  According to an opening brief filed last month that Tarricone, Zimmerman Reed and many other firms have all joined, Seeger was allowed to pour over each firm’s time records and decide what would count and what wouldn’t, and determine their risk multipliers.  That process was then essentially rubber-stamped by Judge Brody with hardly any independent analysis on her part, the opening brief claims.  Meanwhile, all of the other firms involved still have yet to lay eyes on Seeger’s own time records.

The first concussion lawsuit was filed against the NFL in 2011 and the settlement was finally approved in 2015, putting to rest claims that the NFL knew for decades about the long-term dangers of repeated concussions but did nothing to warn its players.  The uncapped deal has a 65-year lifespan and covers about 20,500 retired NFL players, all of whom are potentially eligible for payments ranging from a few thousand dollars to $5 million depending on their age and the severity of their football-related brain injuries.  Thus far it’s on track to pay out roughly $675 million to players, although many attorneys have complained that the process is far more difficult than they bargained for.

While the joint opening brief primarily takes aim at the broader issues that allegedly infected the CBF allocation process, Tarricone and Zimmerman Reed’s briefs focus on their own grievances.  Tarricone says he co-chaired the public relations effort undertaken by the lead lawyers in the concussion litigation and was instrumental in getting retired football players on television and favorable op-eds written, as well as steering reporters to write about concussions in football.

Nevertheless, in the brief, he claims Seeger ordered him to delete 80 hours that should have been payable from the CBF and discounted his efforts when coming up with what he considers the paltry risk multiplier of 1.25 for his other hours.  Tarricone and his firm ultimately received about $1.5 million from the CBF, but Tarricone claims it would have been higher if his actual work and risk were properly accounted for.

Similarly, Zimmerman Reed said the late Charles “Bucky” Zimmerman was instrumental in getting the concussion litigation off the ground in the first place, and then spent many hours from 2013 to 2017 monitoring some lawyers and lenders who were allegedly misleading retired players in an attempt to squeeze money out of them.

“During that time, Seeger Weiss largely ignored the [Ethics Committee’s] efforts,” Zimmerman Reed said.  “Once the issue gained public traction” through an article in the New York Times however, “Seeger Weiss, as was its practice in this case, unilaterally took over the effort initiated by the committee” and then “barely acknowledged the work Zimmerman Reed performed.”

“The district court’s failure to scrutinize Seeger Weiss’s recommendation that it be credited for certain work but that Zimmerman Reed not be credited for similar work on the Ethics Committee is clearly erroneous,” the firm said.  Neither Tarricone nor Zimmerman Reed gave precise dollar amounts or other figures in their briefs, but both were adamant that their final payouts from the CBF should have been higher.

For its part, Seeger has not yet submitted a reply brief in the fee fight.  But his response to the initial objections that were overruled by Judge Brody in her 2017 order on the CBF allocation can likely provide some foreshadowing of the arguments he’ll make before the Third Circuit.  “Certain firms disagree with the court’s decision to ask me to submit a proposed allocation, likening me to a ‘fox’ divvying up the chickens, and claiming that I cannot be objective, or worse,” Seeger wrote in that earlier response.

ISBA Mutual: Policy Won’t Cover Attorney Fee Disputes

September 16, 2019

A recent Law 360 story by Celeste Bott, “Novartis Whistleblower Attys Slam ‘Unjust’ $1.4M Fee Award,” reports that the Illinois State Bar Association Mutual Insurance Co. asked an Illinois state judge to declare it has no duty to defend an Illinois attorney fighting a lawsuit over alleged overbilling, saying lawyers' billing functions aren't a covered professional service.  The money at issue would not be considered damage under its policy, the insurer said in a Cook County Circuit Court complaint.

ISBA Mutual contends it's not on the hook for a fee dispute between Chicago attorney Alan E. Sohn and his firm and Randy Sly, the executor of an estate seeking to recover more than $280,000 stemming from "unreasonable and unnecessary billing" by Sohn.  Sohn's July 2016 to July 2017 insurance policy covers claims arising out of a wrongful act, including the "rendering of or failure to render professional services."

ISBA Mutual defines that term to mean "services rendered by the insured as a lawyer, including services, whether or not for a fee, as an administrator, arbitrator, conservator, executor, guardian, mediator, notary public, personal representative, real estate title insurance agent, receiver, trustee or in any other similar fiduciary activity," according to the filing.  Not included in that definition is the billing function of a lawyer or law firm, ISBA Mutual said.  The insurer said the suit against Sohn seeks recovery of money that wouldn't be considered damages under the policy, including fees "incurred as a consequence of the firm's or Sohn's billing."

Judge Applies ‘Average Fee-Paying Client' Test to Fee Request

September 10, 2019

A recent Law 360 story by David Simpson, “Hagens Berman, Cohen Milstein Fee Bid Slammed By Judge,” reports that no client would stand for the “insufficient” way that Hagens Berman Sobol Shapiro LLP and Cohen Milstein Sellers & Toll PLLC explained their billing in a $10 million attorney fee bid that followed a deal in an electronics price-fixing proposed class action, a California federal judge said in a fiery order.

U.S. District Judge James Donato said that the firms’ billing charts provide only an attorney’s name and an associated billing amount, with no explanation of how the billed time was used to help the proposed class members, which bought allegedly price-fixed linear resistors directly from electronics companies like Panasonic Corp.  The charts did not provide the level of detail required, the judge said, but he gave the firms a chance to refile their bid by next month.

“This approach is plainly insufficient under well-established standards,” Judge Donato said.  “No paying client would ever stand for it, and it is a disservice to the class and the court.”  The judge made clear that he is willing to award the firms attorney fees to compensate them for the risks they took and the work they did to reach the combined $50.25 million proposed deals on behalf of direct purchasers over the past year.

“But here, plaintiffs’ counsel at Cohen Milstein and Hagens Berman are in effect asking that they be paid whatever they think is fair, no questions asked,” Judge Donato said.  “That will not do.  The court will not award millions of dollars based on counsel’s and the named plaintiff’s say-so, especially when that money will be taken directly out of the hands of class members.”

The judge also thrashed a proposed order submitted by the firms, calling its “self-congratulatory” language “unwarranted and unhelpful.”  The proposed order described the firms’ results as “exceptional” and lauded the reputations of the two firms, the judge noted.  “Statements like these are better suited for firm marketing materials than they are for orders proposed for the court’s issuance,” he said.

The firms had asked for more than $1.8 million in expenses and requested a $25,000 bonus for named plaintiff Schuten Electronics, according to the fee bid.  Judge Donato said that the request for the named plaintiff bonus was “equally bereft of support.”

The president of the company “simply ‘estimates’ the hours of work he did with no time records or periods of any sort and only the vaguest of descriptions of what his work was,” the judge said.  “The court also notes that the proposed award equates to an eye-watering hourly rate of $455 for Schuten, which vastly exceeds anything the court has ever been asked to consider for a named plaintiff.”

Feds Oppose Environmental Groups Fee Request in Fracking Case

September 4, 2019

A recent Law 360 story by Michael Philliis, “Feds Slam Enviros’ Atty Fees Bid in Offshore Permit Case,” reports that the Environmental Defense Center and another group that successfully blocked fracking permits for offshore California are prematurely seeking attorney fees, inflating their billing, and seeking reimbursement for matters on which they lost, the federal government told a California federal court.  Not only did the EDC and Santa Barbara Channelkeeper ask for attorney fees before a slew of complicated issues can be hashed out on appeal, but their request also represented an inflated bid to recover money that should never be the taxpayers' obligation to pay, the government said in a brief opposing the groups' fee request.

The environmental groups' hourly rate was allegedly puffed up; they billed some duplicated hours; they wanted reimbursement on claims that had been dropped or where they had lost; and they asked for costs that weren't allowed, including more than 10,000 pages of copying that the federal government painted as outlandish, according to the brief.  And no, talking to the media isn't something the groups can charge the government for, the response said.

"It makes little sense at this time to invest more of the court's or the parties' time and effort into briefing and deciding whether an award of fees under the [Endangered Species Act] is appropriate and, if so, what the amount of any award should be," the government said, asking the court to stay the fees request.  "The myriad potential outcomes on appeal counsel against the duplication of effort inherent in addressing the issue of fees now."

In November, U.S. District Judge Philip Gutierrez blocked the federal government from approving any offshore fracking permits in the state in a consolidated case brought by environmental groups and California.  He said the Bureau of Ocean Energy Management and the Bureau of Safety and Environmental Enforcement violated the Endangered Species Act and another law in crafting an environmental assessment of a plan to allow offshore well-stimulation treatments, also known as fracking or acidizing, in the state.  The BOEM and BSEE violated the ESA by failing to consult with other parts of the government, the judge said.

The Ninth Circuit will now hear appeals and cross-appeals in the case.  Any number of decisions in that venue could impact a fee award, and the EDC and Santa Barbara Channelkeeper moved too soon in their request for money, according to the government.  The move "risks putting the court in the awkward position of having to supervise plaintiffs' repayment in the event that federal defendants prevail on appeal," the government's brief said.

The environmental groups asked for $360,263.  The government, while noting that not all the environmental groups had requested attorney fees, said if the court does decide to award fees, it should provide a maximum of $229,814.  While the environmental groups won on their ESA claims, they lost on their National Environmental Policy Act claims and should not be paid for that part of their work.  The government also said that nearly 25 of the hours requested were duplicative and represented hours when multiple attorneys conferred.

The EDC and Santa Barbara Channelkeeper submitted their request in early August.  After winning the case, they argued the ESA provides them an opportunity to collect fees and costs.  "Plaintiffs achieved the requisite degree of success on their ESA claims" to make a fee award appropriate, they argued.  They added that the request was correct and that they had reduced the amount of hours in their request to make sure it was reasonable and did a line-by-line review to ensure that the time billed wasn't inflated.

Margaret Morgan Hall, an attorney for the Environmental Defense Center, called the government's framing of the fee request "overstated and incorrect."  "We are only seeking recovery of reasonable hours spent on the litigation, after taking significant reductions of our time to avoid any potential duplication of hours.  We likewise only seek to recover reasonable costs that we are entitled to under the Endangered Species Act citizen suit provision," Hall said in an email to Law360.