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Category: Contingency Fees / POF

No Fee Enhancement in Prolonged Med Mal Case

November 10, 2017

A recent New York Law Journal story by Jason Grant, “Morelli Denied Enhanced Fee in Seven-Year Long Med Mal Case” reports that the Manhattan-based firm, led by famed civil litigator Benedict Morelli, was sufficiently compensated when it was paid $376,198.50 for 970 hours of legal services, in accordance with Judiciary Law § 474-a(2), which sets out a schedule for contingency fees earned by lawyers in medical, dental or podiatric malpractice actions.

The Morelli Law Firm is not due an increased contingency fee award based on alleged “extraordinary circumstances” in representing a client in a medical malpractice lawsuit for 7½ years, a state appeals court has ruled.  A unanimous Appellate Division, Second Department, panel ruled that, while the statute provides for higher fees based on extraordinary circumstances, Morelli had not made a “threshold showing” that the money collected by his firm was inadequate.

“The law firm expended approximately 970 hours, that included 9 days of trial, over the course of the 7½ years it represented the plaintiffs in this medical malpractice action,” wrote Justices John Leventhal, Betsy Barros, Valerie Brathwaite Nelson and Linda Christopher.  “The record is devoid of any evidence that the amount of time spent on the representation of the plaintiffs resulted in an exceptionally low hourly rate of compensation, or that it caused the law firm any financial detriment.”

“Inasmuch as the law firm failed to make the threshold showing that compensation in this case was inadequate, it is not necessary to reach the issue of whether extraordinary circumstances existed,” the panel added in a terse opinion issued Nov. 1, in Siu Kiu Lam v. Nelly Loo, et al.; Morelli Law Firm, PLLC, nonparty-appellant, 20028/09.  The panel’s opinion affirmed the June 2016 decision of Kings County Supreme Court Justice Bert Bunyan, who had denied the Morelli firm’s motion under Judiciary Law § 474-a for an increased contingency fee award.

NCAA Athletes Fire Back at $41M Lone Fee Objector

November 7, 2017

A recent Law 360 story by Darcy Reddan, “NCAA Athletes Fire Back at $41M Fee Objection,” reports that student-athletes suing the NCAA over alleged anti-competitive caps on scholarships pushed back against the single objection to their $209 million settlement over a $41 million cut for attorneys, saying the fee is less than established Ninth Circuit precedent.
 
The class of student-athletes fired back at the lone objector, NCAA Division I football player Darrin Duncan, citing a 25 percent benchmark for assessing the fairness of a fee award set by the Ninth Circuit after Duncan called the request unfair.  Duncan also cited a “mega fund rule” that the class argues runs contrary to established circuit law and if applied would give attorneys less incentive to take cases with inherent risk.

“Duncan simply arbitrarily argues that the fee award should be lower, unsupported by Ninth Circuit law.  And the facts here show that the fee request is reasonable,” counsel for the class said in the filing.  “The fact that Duncan is the only, lone objector also indicates the reasonableness of the fee request.” 

Aside from challenging Duncan’s arguments, the class pointed out that Duncan allegedly objected to other settlements before the court, including O’Bannon v. NCAA and Keller v. Electronic Arts Inc. et al.  In September, Duncan objected to a $41.7 million fee request for the $209 million settlement reached in March.  The lawsuit challenged NCAA rules that prohibit universities from paying students more than a full grant-in-aid, which covers up to the full cost of attendance.  Duncan had argued that the percentage of the award, 20 percent of the settlement, was too high and that a “mega fund rule,” which decreases fee awards as the settlement total increases, should be applied.

The class fought back against this logic, though, stating in the filing that a Ninth Circuit ruling, Fischel v. Equitable Life Assur. Soc’y of the United States, established a 25 percent benchmark as a starting point for evaluating fees that is then subject to five factors.  The class contends that the award is fair when analyzed under these criteria.  The five factors include the results of the case, risk and complexity, whether fees were contingent upon success, similar case results and whether the class was notified of the requested fees.

The class also said that reducing the award simply due to the size of the award “has the potential to disincentivize counsel from risking pursuing even larger awards for the class.”

The request is for approximately $41.7 million in fees, or 20 percent of the settlement's common fund, as well as nearly $3.2 million in costs and expenses, and $20,000 each as an incentive award for the four class representatives.  The rest of the class is entitled to an average of $6,000.

The class characterized the rest of the objection as “absurd,” pointing out that Duncan suggests “subtle signs of collusion” despite the fact that a mediator was used during the settlement process and there is a lack of a clear sailing provision in the settlement terms.

The cases are In re: National Collegiate Athletic Association Athletic Grant-in-Aid Cap Antitrust Litigation, case number 4:14-md-02541, and Jenkins et al. v. National Collegiate Athletic Association et al., case number 4:14-cv-02758, both in the U.S. District Court for the Northern District of California.

Fee Allocation Dispute in NFL Concussion Litigation

October 30, 2017

A recent Legal Intelligencer story by Max Mitchell, “NFL Concussion Lawyers Pile on Seeger’s $70M Fee Request” reports that nearly 20 attorneys and firms involved in the NFL concussion litigation are challenging a lead attorney’s proposal for divvying up $112 million in attorney fees, which had allocated the lion’s share to his firm.  According to court filings, 16 firms and one former member of the plaintiff’s steering committee have filed objections to the proposal that Christopher Seeger submitted to the court in mid-October.  That proposal had included more than $70 million for his firm, Seeger Weiss.  Among the firms that submitted objections to the proposal are Anapol Weiss, home to Sol Weiss, who is co-lead counsel with Seeger in the litigation.

Anapol’s response proposed an alternative methodology for the court to use in dividing up the fees.  The suggested formula would not rely as heavily on lodestar multipliers and would accounted for hours spent working toward significant benchmarks in the litigation, rather than applying a “straight-line mathematical computation” that treated all hours equally, the filing said.

The 15-page alternative proposal, which was filed by Pietragallo Gordon Alfano Bosick & Raspanti attorney Gaetan Alfano, said it would more adequately account for Anapol’s role in developing the litigation and hammering out the settlement agreement.

“While Seeger and Anapol shared the role of co-lead class counsel, the Seeger firm’s proposed apportionment would leave one co-lead class counsel firm (Seeger) with 65.4 percent of the attorneys’ fees and the other (Anapol) with 4.3 percent of the attorneys’ fees,” the filing said in a footnote.  “The Seeger firm requests that this court award it over 15 times the fees that it allocated to its co-lead counsel, Anapol.  On its face, Mr. Seeger’s proposed apportionment is grossly inequitable, given, inter alia, Anapol’s extensive contributions to the case.”

In an emailed statement to the press, Seeger said, “We believe this allocation is reasonable and well within the precedent set in similar cases. Judge [Anita] Brody will ultimately determine the final allocation, and we appreciate her consideration of this matter.”

On Oct. 10, Seeger filed a 22-page declaration to the U.S. District Court for the Eastern District of Pennsylvania, asking the court to award his firm $70.4 million.  The money, according to the request, would compensate Seeger Weiss for a total of 21,044 hours that his firm spent on the litigation since he was appointed to represent the class in 2012.

Although many of the responses took issue with the lodestar multipliers Seeger used to develop his proposal, some contended that a neutral special master needed to be appointed to handle the fees and others said the proposal was premature.

“To avoid even the appearance of placing their own financial interests ahead of the retired NFL players’ needs, class counsel is urged to join this motion and voluntarily seek to defer any ruling on payment of claimed attorneys’ fees until after at least the majority of the players have been paid,” Tampa-based attorney Steven Yerrid of the Yerrid Law Firm said in his firm’s response.  “With all respect, the undersigned submits this case must first be about the players’ well-deserved compensation and not the compensation of the lawyers representing them.”

Florida Supreme Court Rules on Fee Issue in Insurance Coverage Litigation

October 24, 2017

A recent FC&S Legal article by Steven Meyerowitz, “The Florida Supreme Court Just Made It Easier for Insureds’ Attorneys to get Big Fee Awards,” reports on a recent decision by the Florida Supreme Court in Joyce v. Federated National Ins. Co.  The article reads:

The Florida Supreme Court, in an insurance coverage dispute, has rejected appellate court rulings that trial courts may apply a contingency fee multiplier to an award of legal fees to a prevailing party only in “rare” and “exceptional” circumstances.

The Case

William and Judith Joyce, an elderly retired couple, filed a claim for insurance benefits with their homeowners’ insurance carrier, Federated National Insurance Company, following water damage to their home. Federated National denied coverage on the basis of alleged material misrepresentations made by the Joyces in the application process – namely, that the Joyces had failed to disclose certain losses they had with their previous carrier.

The Joyces hired an attorney on a contingency fee basis and sued Federated National, alleging that the insurer had wrongfully denied their claim. After months of litigation, Federated National finally agreed to settle.  The parties stipulated that the Joyces were entitled to recover reasonable legal fees under Florida Statutes Section 627.428.

At the fee hearing, the trial court heard testimony from the Joyces’ attorney and fee expert and Federated National’s fee expert.  The trial court also examined certain evidence exhibits, including time records for the Joyces’ attorney and a copy of the contingency fee agreement.

After the hearing, the trial court awarded the Joyces $76,300 in attorneys’ fees, using a two-step process.  First, the court calculated the “lodestar” amount – the number of hours reasonably incurred by the Joyces’ attorney, multiplied by a reasonable hourly rate – as being $38,150, or 109 hours reasonably expended at a reasonable hourly rate of $350.  Second, the trial court applied a contingency fee multiplier of 2.0 to the lodestar amount.

Federated National appealed both the trial court’s calculation of the lodestar amount and its use of the contingency fee multiplier.  The appellate court affirmed the lodestar amount but reversed the trial court’s use of a contingency fee multiplier, concluding that the lodestar approach included a “strong presumption” that the lodestar represented the “reasonable fee.”

Florida Law

Section 627.428, Florida Statutes provides:

(1) Upon the rendition of a judgment or decree by any of the courts of this state against an insurer and in favor of any named or omnibus insured or the named beneficiary under a policy or contract executed by the insurer, the trial court or, in the event of an appeal in which the insured or beneficiary prevails, the appellate court shall adjudge or decree against the insurer and in favor of the insured or beneficiary a reasonable sum as fees or compensation for the insured’s or beneficiary’s attorney prosecuting the suit in which the recovery is had.

The Florida Supreme Court’s Decision

The court quashed the appellate court’s decision.  First, the court reviewed its precedent regarding contingency fee multipliers and declared that it was “clear” that it had “never limited the use of contingency fee multipliers to only ‘rare’ and ‘exceptional’ circumstances.”

In fact, the court said, it had recognized “the importance of contingency fee multipliers to those in need of legal counsel” and it had made clear that trial courts “could consider contingency fee multipliers any time the requirements for a multiplier were met.”

In the court’s opinion, the contingency fee multiplier provided trial courts with the “flexibility” to ensure that lawyers who took a difficult case on a contingency fee basis were “adequately compensated.”The court rejected the argument that a contingency fee multiplier encouraged “nonmeritorious claims” and said, instead, that solely because a case was “difficult” or “complicated” did not mean that the case was nonmeritorious.  “Indeed, without the option of a contingency fee multiplier, those with difficult and complicated cases will likely be unable or find it difficult to obtain counsel willing to represent them,” the court said.

The court then disagreed that the possibility of receiving a contingency fee multiplier amounted to a “windfall.”  The court concluded that there was not a “rare” and “exceptional” circumstances requirement before a contingency fee multiplier could be applied.  It decided that the trial court’s findings, “which properly considered the complexity of these types of cases and this case in particular,” were not in error, and it ordered the appellate court to reinstate the reinstate the attorneys’ fees award.

PA Justices Consider “Loser Pays” for Workers Comp Cases

October 18, 2017

A recent Legal Intelligencer story by Max Mitchell, “Justices Urged to Avoid Chilling Effect of Lower Court ‘Loser-Pays’ Ruling in Comp Case” reports that, if the state Supreme Court upholds a decision that workers’ compensation lawyers can be ordered to pay the employer’s attorney fees for unreasonable contest, if the employer prevails on appeal, there will be a chilling effect on smaller cases, a lawyer representing a claimant told the justices.  Attorney David Landay of Pittsburgh, who is representing the claimant in County of Allegheny v. Workers’ Compensation Appeal Board (Parker), argued that the Commonwealth Court’s decision in his client’s case was against the statutory scheme of the Workers’ Compensation Act.

“Judges will think twice before awarding attorneys fees if they think they may be taken away,” Landay said.  He gave the example of a dispute over $2,500 in medical bills.  Even if it is absolutely clear that the claimant was entitled to benefits, he said he would not be able to take the case, because, if he were unable to recover unreasonable contest fees, he would only be able to recover $5,000.  “I can’t afford to take that case,” Landay said.

The dispute stems from a December decision from the Commonwealth Court, which remanded claimant Harold Parker’s workers’ compensation case with instructions to order Parker’s lawyer to refund $14,750 in unreasonable contest fees to Parker’s employer, Allegheny County.

That decision had been based on the Commonwealth Court case Barrett v. WCAB (Sunoco), which held that “where litigation costs are awarded and are paid by the employer as a result of denial of a stay and the award of costs is later reversed on appeal, the employer is entitled to an order requiring the claimant’s counsel to repay the erroneously awarded costs.”  Although Barrett involved non-attorney fee litigation costs, the majority said the reasoning in Barrett applied to Parker’s case.

Landay, however, told the justices that Barrett was based on a plurality decision in a case that did not involve contingency fees.  “Once you take those out, then the opinion [in Parker] collapses of its own weight,” Landay said.  Landay contended the way unreasonable contest fees are paid is outlined in the Workers’ Compensation Act, and the act does not allow for disgorgement of the fees, but rather the fees should be paid out of the supersedeas fund.

Bradley R. Andreen of O’Brien, Rulis & Bochicchio, who represented Allegheny County, said the Workers’ Compensation Act was not meant to provide a windfall for plaintiffs’ attorneys.  “The claimant didn’t need to get more fees when we ultimately prevailed,” Andreen said.

Parker was receiving total disability benefits for a 1993 work-related injury when the county filed a petition in 2007 seeking to suspend his benefits.  A workers’ compensation judge granted the suspension petition in 2008, given that Parker had failed to follow through in good faith with a job referral that was within his physical limitations.  Parker was 80 years old at the time.

In 2009, however, the WCAB reversed and held that Parker was entitled to unreasonable contest attorney fees.  The employer, Allegheny County, successfully appealed that ruling in the Commonwealth Court, which also held that Parker was not entitled to unreasonable contest fees since he was ultimately not the prevailing party.

In the wake of the 2012 Commonwealth Court ruling, the county sought reimbursement from the supersedeas fund for more than $100,000 in compensation it paid Parker as well as $14,750 in unreasonable contest fees.  The Bureau of Workers’ Compensation approved reimbursement for the compensation paid, but not for the unreasonable contest fees.  So the county filed a petition seeking an order that would require Parker’s lawyer to pay the refund.

Andreen said the process ensures claimants do not have their benefits reduced due to a mistake the employer made, and any decision by the justices in Parker would not affect the claimant’s attorneys’ ability to recover fees.