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Category: Challenging Fees

Insurer’s Fee Request Challenged by Film Producer

September 8, 2017

A recent Law 360 story by Rick Archer, “Producer Fights Insurer’s $1.9M Fee Bid in Film Accident Row,” reports that the producer of an Allman Brothers biopic objected to a demand it pay $1.9 million in attorneys’ fees for its unsuccessful attempt to win more insurance coverage for a fatal filming accident, saying it had done nothing worthy of sanction.

Film Allman LLC denied accusations by New York Marine and General Insurance Co. Inc. that the producer’s suit seeking additional coverage for the 2014 accident had been filed in bad faith, saying it had good-faith arguments for all its claims it was owed more coverage than New York Marine provided and should not be expected to pay the insurer’s claimed legal fees.

“Film Allman has a good faith belief in each of its claims, and there is evidence to support them.  Moreover, even if New York Marine is unhappy about some of the results, there is absolutely no evidence that Film Allman did anything for an improper purpose such as harass New York Marine or to cause undue delay or cost,” it said.

An Occupational Safety and Health Administration investigation showed Film Allman didn’t warn crew members working on the film “Midnight Rider” in February 2014 that they were filming on live train tracks or that CSX had denied a filming permit for the tracks prior to an accident on the first day of shooting that killed 27-year-old Sarah Jones and seriously injured several other workers.

In March 2015, the film’s director, assistant director and executive producer, respectively, pled guilty to, was found guilty of and entered an Alford plea to charges of involuntary manslaughter and criminal trespass.  A defendant entering an Alford plea acknowledges that the prosecution has the evidence necessary to prove guilt beyond a reasonable doubt, but nevertheless maintains that he is innocent.  New York Marine provided a defense to Film Allman, paid $5 million of a $6.5 million settlement to Jones' family, and then bowed out because policy limits were exhausted.

Film Allman filed suit against New York Marine in September 2014.  In May U.S. District Judge Otis Wright II ruled New York Marine was entitled to bow out under the terms of the commercial general policy, despite the fact that there are other suits remaining.  In December he had found coverage under a separate motion picture producers policy was barred by a criminal acts exclusion.  In August, New York Marine moved for more than $1.9 million in attorneys’ fees, claiming that as there was no dispute of either the criminal convictions or the policy limits, Film Allman had brought the suit in bad faith.

“As reflected by the record in this case, including in the court’s summary judgment rulings, Film Allman’s claims were fundamentally lacking any legal or evidentiary support and were, instead, based on assertions that it knew were false,” New York Marine said.

Film Allman, however, argued it did have good-faith arguments that Jones’ death did not trigger the exclusion because it had evidence there was genuine confusion over whether permission had been granted to film on the tracks and the death was not directly caused by an intentional criminal act.  It said it also had good-faith arguments that California insurance law required New York Marine to defend it from all of the suits arising from the accident, regardless of the policy limit.

“New York Marine asserts that if Film Allman had only accepted the fact that there was no coverage, it could have saved New York Marine all of its exorbitant litigation expenses.  But the same could be true of any policyholder seeking defense or coverage that an insurer denies,” it said.

The case is Film Allman LLC v. New York Marine and General Insurance Co. Inc., case number 2:14-cv-07069, in the U.S. District Court for the Central District of California.

Creditor Questions Fees in La Paloma Bankruptcy

August 30, 2017

A recent Law 360 story by Rick Archer, “O’Melveny Blasted for $2.6M Fee Bid in La Paloma Chapter 11,reports that the senior creditor of California-based power producer La Paloma Generating Co. LLC objected to the legal fees submitted by the producer’s former counsel O'Melveny & Myers LLP, calling the $2.6 million request “exorbitant.”   LNV Corp. called for O'Melveny’s request for fees for its seven months of work on the case to be cut by more than a third, saying it was “bewildered” by how much O'Melveny was asking for compared to the progress made on the case during its tenure.

“This amount is exorbitant in light of the fact that (i) this is not a complicated case, (ii) there were virtually no contested hearings held while O’Melveny was debtors’ counsel, and (iii) the debtors made no progress towards exiting these cases during O’Melveny’s tenure,” it said.

The four-unit power plant sought Chapter 11 protection on Dec. 6, saying it had been driven into the red by price competition from alternative energy sources and difficulty in meeting California's demands for payments on carbon emissions under the state's cap-and-trade program to combat climate change.  In late July, the company said it had settled a control dispute with LNV and that a confirmation hearing on its $524 million Chapter 11 plan was scheduled for Oct. 12.

O’Melveny had asked for approximately $2.6 million for fees and expenses incurred between Dec. 6 and June 30, when it was replaced as counsel by Debevoise & Plimpton LLP and Richards Layton & Finger LLP.

LNV asked that the fee be reduced by at least $793,000, saying the firm submitted more than 1,300 excessive or unjustified hours.  It said this included 470 hours in fee applications, well exceeding the standard of 5 percent of all time billed for applications.

“Work related to the plan and disclosure statement was entirely wasteful, as O’Melveny never filed a plan and disclosure statement or even shared a draft with LNV,” it said.  “And the time spent on the use of cash collateral is indefensible given that there was never a contested hearing on the use of cash collateral or any related dispute that wasn’t swiftly resolved.”

LNV counsel Thomas E. Lauria said in a phone interview that while he usually considers fee disputes a “sideshow” in bankruptcy cases, in this case the large fee and the lack of benefits for La Paloma required a response.  “It’s unfortunate we find ourselves in the extraordinary situation that there are issues here we cannot ignore,” he said.

The case is In re: La Paloma Generating Co. LLC et al., case number 1:16-bk-12700, in the U.S. Bankruptcy Court for the District of Delaware.

Tenth Circuit Affirms In Camera Only Review Rule of Billing Records

August 29, 2017

A recent Law 360 story by Christine Powell, “Tribal Co. Can Keep Atty Fees in $3M Gov’t Contract Row,” reports that the Tenth Circuit cemented an attorneys’ fee award given to one of the Fort Sill Apache Tribe's businesses and its leadership after escaping Team Systems International LLC’s lawsuit alleging that they breached an agreement for developing government contracts by failing to pay it nearly $3 million.

In a brief, unanimous ruling, a panel of three of the circuit court’s judges affirmed an Oklahoma district court’s award of $29,234 in attorneys’ fees to Fort Sill Apache Industries, its president and CEO Jeff Haozous and its board of directors as the prevailing party on TSI’s claims.

The attorneys’ fee award came after the Tenth Circuit last year separately affirmed the dismissal of TSI’s allegations that FSAI breached an agreement under which TSI supported FSAI’s work on government construction contracts by failing to fully pay it, concluding that TSI had failed to state a claim upon which relief could be granted.

When appealing the attorneys’ fee award, TSI had argued that the lower court abused its discretion by conducting an in camera review of certain unredacted billing and time records because TSI could not meaningfully challenge the reasonableness of the fee bid, but the panel rejected that contention.

“This court has held that a court reviewing a fee request did not abuse its discretion in denying the responding party access to the itemized time records and conducting in camera review of those records,” the panel said.  “Here, TSI did not pursue other avenues of discovery or contend on appeal that alternative discovery would have been inadequate.  Moreover, TSI has not shown that the district court’s reasons for its ruling were inadequate.”

The case is Team Sys. International v. Haozous et al, case number 16-6277, in the U.S. Court of Appeals for the Tenth Circuit.

Investor Rips Fee Request in $100M Halliburton Settlement

August 1, 2017

A recent Law 360 story by Jon Hill, “Investor Rips Atty Fee Requests to $100M Halliburton Deal,” reports that an investor representing Halliburton Co. shareholders in a $100 million settlement with the company over its asbestos liability disclosures has slammed attorneys’ fees requests from two law firms previously involved in the case, telling a Texas federal court that their work provided no meaningful benefit.

Former co-liaison counsel Federman & Sherwood and Kilgore & Kilgore PLLC have asked the court to award them attorneys’ fees of more than $333,000 combined, but lead plaintiff The Erica P. John Fund Inc. argued that the firms do not deserve to be compensated.  “Neither Federman nor Kilgore conferred any independent benefit upon the class and both firms had a role in work that was detrimental to the class,” the fund said.

The court granted preliminary approval in March of the $100 million settlement with oil services company Halliburton, marking the beginning of the end for what had become one of the longest-running class actions in U.S. history.  In connection with the settlement, class counsel Boies Schiller Flexner LLP and Kahn Swick & Foti LLC told the court that they would seek a combined fees award equivalent to a third of the settlement fund — more than $33 million — plus reimbursement for nearly $6.3 million in expenses for their decade of work litigating the suit.

But before that request was formalized in a motion filed by the EPJ Fund earlier this month, Federman and Kilgore filed their own bids for attorneys’ fees of more than $200,000 and $132,000, respectively.  The amounts were reasonable for the more than 300 hours that each firm clocked in efforts on behalf of the class since 2002, the firms argued. Both had served as co-liaison counsel to Schiffrin & Barroway LLP until that firm withdrew as lead counsel in 2005, at which point Kilgore continued on as local counsel for another two years.

But the EPJ Fund has opposed these fee requests, contending that both firms were supporting players and have not met the high burden of proof necessary for non-lead counsel to demonstrate the benefits they created for the class and overcome a lead plaintiff’s objections.

According to the fund, Federman has identified no specific beneficial tasks in its fee application and has even incorporated in its tally the time it spent on a previous fee application to accompany a rejected 2004 settlement proposal of $6 million that it supported.  This proposed settlement was a “disaster” that delayed recovery for the class by more than a year, the fund claimed.

“By including fee-related work pertaining to the failed $6 million settlement in its requested lodestar, Federman undermines the credibility of its entire fee application,” the fund said.  Kilgore’s request fared no better in the estimation of the fund, which noted that the firm “unbelievably” counted in its fee request the time it spent helping to oppose the fund’s effort in 2006 to replace the then-co-lead counsel.  These former co-lead counsel have “tellingly” not asked the court for fees, the fund said.

“That Kilgore seeks compensation for work that was indisputably detrimental to lead plaintiff and the class speaks volumes regarding its fee request,” the fund told the court.  The fund said it is not opposed to reimbursement of reasonable expenses incurred by either Federman or Kilgore, which are seeking to recover expenses of more than $18,000 combined.

In a separate filing, Federman objected to the class counsel’s attorney fee application on the grounds that Boies Schiller and Kahn Swick have not provided their “contemporaneous and detailed time and expense records” despite a request sent by both certified mail and email.

Such records are necessary so that the court and all parties involved “can make an informed and complete evaluation as to the reasonableness of the fee and expense award requested by class counsel,” Federman argued, urging the court to require disclosure of these reports before making any final decision on their award application.

But the EPJ Fund shot back in a footnote in its filing Monday, saying, “Federman’s request, like the firm’s fee quest, is without basis.”  The court will determine whether to approve the attorneys’ fee and expense award applications at or after a settlement fairness hearing scheduled for July 31.

NALFA’s Fee Dispute Mediation Program Achieves 86% Success Rate

July 19, 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 recently reached an achievement:  Since the program began, NALFA’s Fee Dispute Mediation Program has achieved an 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 has settled over $5 million in disputed attorney fees between parties in over 40 cases.  The cases were brought by corporate clients and law firms ranging from fee disputes of $32,000 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 fee dispute program is 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.  Our 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, billing practices and attorney fee ethics.

Unburden by bar association rules, NALFA provides parties with a mediation process that is flexibility, responsive and cost-effective.  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 case as long as necessary to bring it to a resolution.

"Our 86% success rate belongs to the outstanding work of our members, some of the nation's top rated 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 achievement," Jesse concluded.

Fee Request Challenge Sought in IP Suit

June 2, 2017

A recent Law 360 story by Nicole Narea, “Stanford, ThermoLife Seek To Slash Fee Award in IP Suit” reports that Stanford University and ThermoLife International asked a California federal court to...

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