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Category: Fee Data / Analytics

$503M in Attorney Fees in Syngenta GMO Corn Settlement

December 10, 2018

A recent Law 360 story by Bonnie Eslinger, “Attys Get $503M in Fees for Syngenta GMO Corn Settlement,” reports that a Kansas federal judge gave final approval to Syngenta AG’s $1.5 billion deal to resolve claims filed on behalf of 650,000 corn producers over the agricultural giant's genetically modified corn seed, a deal that handed class counsel a $503 million cut.  The order from U.S. District Judge John W. Lungstrum noted that the case was "hotly contested," with the merits of the corn producer claims "thoroughly vetted through litigation" in multiple jurisdictions.  That litigation included one multiweek class action trial in his court and extensive preparation for other trials.

"This is not a situation in which the parties proceeded quickly to settlement without serious litigation of the claims on their merits, such that there might be reason to suspect that the settlement was not fairly negotiated," the judge wrote.  "Indeed, the protracted negotiation process and the vigor with which the parties litigated the merits of the claims provide additional assurance that this agreement was fairly and honestly negotiated."

The litigation winds back to 2014, when corn farmers and others in the corn industry began filing lawsuits, including class actions, against Syngenta over the company's marketing of two insect-resistant GMO corn seed products, Viptera and Duracade, without securing approval from China, according to the court's order.

"The plaintiffs alleged that Syngenta's commercialization of its products caused the genetically-modified corn to be commingled throughout the corn supply in the United States; that China rejected imports of all corn from the United States ... [and] that such rejection caused corn prices to drop in the United States; and that corn farmers and others in the industry were harmed by that market effect," the judge noted.

Hundreds of suits were brought together in the multidistrict litigation heard in Judge Lungstrum's courtroom.  The nationwide settlement class is generally divided into four subclasses: corn producers who did not purchase Viptera or Duracade; corn producers who did purchase one of those products; grain handling facilities; and ethanol producers.  Of the 650,000 class members, 52 percent have submitted claims and only 17 members properly exercised their right to opt out, and just nine objections by 15 members were submitted in the end, the judge said.

"The fact that the class members have reacted so overwhelmingly in favor of the settlement further supports a finding that the settlement is fair and reasonable and adequate," he said, adding that the court found the objections filed in opposition to the settlement to "lack merit."  The judge also said that the immediate payout that the settlement offers — even after the award of one-third of that amount for attorneys' fees — had more value than the "mere possibility of a more favorable outcome after further litigation."

The first trial in the MDL, which won class certification in September 2016, tested the negligence claims of four Kansas farmers representing 7,000 others who believed that Syngenta rushed Viptera seed to market in 2010, willfully ignoring the importance of Chinese regulatory approvals.

The Kansas farmers alleged that varieties of harvested corn were mixed together indiscriminately on their export journey.  When China discovered the rogue strain in November 2013, they alleged, it immediately rejected American corn cargo, shutting down the Chinese market for U.S. corn and costing the domestic U.S. industry more than $1 billion.  The jury sided with the farmers, finding Syngenta negligent and awarding the class of corn producers $217.7 million in compensatory damages. Syngenta said it planned to appeal.

In July, Judge Lungstrum further consolidated the seven remaining separate state class actions in Arkansas, Illinois, Iowa, Missouri, Nebraska, Ohio and South Dakota.  Syngenta then urged the court to certify the $217.7 million verdict as a final judgment, telling Judge Lungstrum in September that it was necessary to prevent needless delay of the company's appeal since it knew the farmers planned to dispute the finality of the verdict.  The farmers shot back in October by asking the judge not to sign off on the verdict because the outcomes of other classes could influence the appropriateness of the jury's decision.

The case is In re: Syngenta AG MIR162 Corn Litigation, case number 2:14-md-02591, in the U.S. District Court for the District of Kansas.

Article: Challenge Calif. Insurer Limits on Independent Counsel Rates

November 12, 2018

A recent Law 360 article by Susan P. White, “Challenge Calif. Insurer Limits on Independent Counsel Rates,” reports on hourly rates and independent counsel in insurance coverage litigation in California.  Susan P. White is a partner at Manatt Phelps & Phillips LLP in Los Angeles.  This article was posted with permission.  The article reads:

When a liability insurer agrees to defend its insured after the insured has been sued, this is often cause for celebration, as the insured believes its defense will be paid.  The insurer may reserve its rights to deny coverage, and advise that such reservation creates a “conflict of interest” entitling the insured to “independent” counsel.  Thus, instead of the insurer selecting the insured’s defense counsel, which is common under a duty to defend policy, the insured gets to choose its own counsel.  Still reason to celebrate, right?  But, as you may suspect, this selection right comes with a catch.  The insurer advises that while the insured can choose its own counsel, the insurer only agrees to pay a very low hourly rate, maybe $225 or $250 per hour (it varies, sometimes dramatically so), which is much less than what is being charged by the insured’s independent counsel.  If the litigation against the insured is significant, the delta between the rate the insurer agrees to pay and counsel’s actual rate can add up to millions of dollars.

An insurer claims it need only pay these low hourly rates pursuant to the requirements set forth in California Civil Code section 2860(c), which governs the financial relationship between an insurer and an insured’s independent counsel. Section 2860(c) states:

The insurer’s obligation to pay fees to the independent counsel selected by the insured is limited to the rates which are actually paid by the insurer to attorneys retained by it in the ordinary course of business in the defense of similar actions in the community where the claim arose or is being defended.

While section 2860(c) allows an insurer to only pay independent counsel the same rates it pays to other lawyers to defend similar actions in the same locale, an insured should not simply accept the insurer’s say so on this.  There are several ways to both challenge an insurer’s unilaterally imposed rates.  This article addresses a few such ways.

First, an insured should demand that the insurer produce detailed information about the counsel to whom it is paying these low rates.  An insurer often imposes “panel counsel rates” in these situations, which are rates that an insurer pays to certain law firms that have special agreements with the insurer, often in writing.  In these agreements, the panel counsel often agree to charge the insurer reduced hourly rates, regardless of the type of case, or location of the litigation, typically in exchange for the anticipation of a large volume of work from the insurer.  Under such a situation, an insured can argue that there is no “similarity” of actions as mandated by the statute.  Instead, the panel counsel’s rates are unaffected by the complexity, sophistication, nature of the allegations, legal claims, factual circumstances, location or any other factors of the cases in which they are appointed.  Thus, such rates provide no support under the § 2860 requirements.

Second, an insured should demand that the insurer provide detailed information about the specific cases that the insurer is touting as “similar actions in the community where the claim arose or is being defended,” to support the low hourly rates imposed.  With this information, an insured can ascertain whether such cases are, in fact, “similar” or not.  For example, are these purported “similar” actions less complex than the lawsuit against the insured? Do they involve different legal and/or factual issues?  What about the amounts in controversy — are they dramatically less and thus, the exposure potentials are not even comparable?  Also, where are these other actions pending?  Are they in different communities?  The more an insured can demonstrate dissimilarities the better to demonstrate that the insurer cannot support the hourly rate it seeks to impose pursuant to § 2860.

Third, if the parties cannot informally agree on an acceptable hourly rate for independent counsel, either party can seek to resolve the dispute through final and binding arbitration pursuant to § 2860.  And, in any arbitration, if the arbitrator determines that insurer’s evidence does not satisfy the § 2860 requirements, the insured should argue that a “reasonableness” standard should be applied to determine the appropriate rate for the insured’s independent counsel (with evidence to support that independent counsel’s actual rates are “reasonable”).  Indeed, a “reasonableness” standard is a ubiquitous standard for attorneys’ fees in insurance litigation and other contexts.

An insured need not simply accept its insurer’s word when it imposes inappropriately low hourly rates on an insured’s independent counsel.  Instead, an insured should challenge such rates, when appropriate, either informally or in arbitration.

Susan P. White is a partner at Manatt Phelps & Phillips LLP in Los Angeles.  Susan resolves complex insurance coverage disputes through litigation, arbitration and mediation.  These include bad faith claims, as well as other commercial and contract matters.  She has also successfully recovered millions in attorneys’ fees and costs for her insured clients.

New Class Action Guidelines Address Attorney Fee Issues in N.D. Cal.

November 7, 2018

A recent The Recorder story by Amanda Bronstad, “New Class Action Guidelines in Northern District of California Prompt Commendation and Concerns,” reports that the Northern District of California’s new procedural guidance for class action settlements is among the most detailed in the nation, prompting welcome relief to critics but raising fresh concerns for some practitioners.  The guidance, announced on Nov. 1, comes as little surprise to lawyers who practice in the Northern District of California, which is home to numerous consumer class actions and judges who have spoken out about reforms.  The guidance also mimics proposed changes to the Federal Rules 23 of Civil Procedure.

But the Northern District’s guidance seeks to implement some of the most far-reaching revisions in the country.  Many lawyers said it creates transparency that’s been long needed in the class action process.  “It’s a good first step,” said Joel Fleming, a partner at Block & Leviton in Boston.  “Sunlight is the best disinfectant and, generally speaking, having more information to the courts and the class is a good thing.”

Defense attorneys and law professors who have called for more transparency in the class action process praised the new procedures.  “They’ve done a wonderful job of figuring out what are the most important things to worry about, and let’s make sure every judge has a checklist,” said Brian Fitzpatrick, a professor at Vanderbilt University Law School.  “They are wise to focus on what happens to the money after the settlement’s approved because we don’t know.”

The guidelines apply to all of the district’s judges, some of whom already have detailed standing orders on class action settlements.  Others have raised numerous questions about class action settlements before approving them.  “It’s been my experience that the judges in the Northern District of California have been more attentive to these issues than others in the country,” said William Rubenstein, a professor at Harvard Law School.

Among other things, the guidance asks lawyers to provide billing calculations in class counsel’s fee request, identify the process used to select the settlement administrator, consider social media and a marketing specialist for the notice program, disclose relationships between the parties and cy pres recipients, and file an accounting of the settlement 21 days after distributing the fund to the class.  Most of the concerns, such as poor claims rates or leftover settlement funds that revert to the defendants, focus on consumer class actions, not securities fraud cases, Fleming said.  For most lawyers, he said, the guidelines shouldn’t impact how they do their jobs.

“If a settlement is reached that would benefit the attorneys more than class members, this information being required will probably serve as a deterrent because it’s getting at information that’s useful for class members to know,” Fleming said.  “But for plaintiffs’ lawyers doing their jobs, and keeping the best interests of class members at heart, I don’t think any of this would change the way you’d litigate your case or change the way you’d structure a settlement.  It will require careful review of your materials to make sure you’re complying, but it won’t have a strategic impact.”

The biggest change in the guidelines is the accounting guidance.  That revision is noteworthy because, in most cases, judges don’t keep up with what happens to a class action settlement after granting final approval.  And there’s a slew of information that lawyers are supposed to post on the settlement’s website: The number of notices sent to class members, claim forms submitted, opt-outs and objections, for example, and the average, largest and smallest amounts paid to class members, methods of notice and payment, number and amount of checks not cashed—all in an “easy-to-read chart.”

The accounting revision is similar to a requirement tucked into a class action reform bill that the U.S. House of Representative passed last year.  “It’s very hard to determine whether class settlements are doing what they’re supposed to be doing if you don’t know where the money goes and where it winds up, and you don’t know how much of the class gets paid,” said Andrew Trask, of counsel at Shook Hardy & Bacon in San Francisco.  “In the past, it’s the propriety information of the settlement vendor.  So the defendant might see that information in a few cases, but usually they don’t.  To the degree we continue to have debates over what class certification ought to be and what class settlement ought to look like, having that information publicly available is better than not having it.”

Fitzpatrick said the data also would help law professors who study class action trends.  “The data that we will be able to gather from these new guidelines will help inform a lot of debate and discussions about whether the class action system is working as intended,” he said.  “They’re making a great contribution to the public understanding of class actions by requiring the lawyers to be transparent and return to the court with this data.”  But the guidelines haven’t come without new concerns.  Rubenstein said the guidance could “dissuade lawyers from filing in the Northern District because it feels like more hoops to jump through.”

Fitzpatrick specifically flagged the revisions prompting plaintiffs attorneys to turn over their lodestar billing, which are the hours they worked on the case multiplied by their hourly rate.  He said such a mandate could encourage more judges to use the lodestar when assessing an attorney fee request that is based on a percentage of the settlement fund. That’s not required in the U.S. Court of Appeals for the Ninth Circuit, he said.

More importantly, he said, the practice raised concerns about the motivations of plaintiffs attorneys in settling class actions.  “The more and more courts that are doing lodestar cross-checks, the more lawyers are going to worry they need to bill a bunch of hours in order to get a decent fee award instead of focusing on the most important thing, which is getting the most recovery for the class,” Fitzpatrick said.  Fleming agreed that requiring lodestar could create “misaligned incentives” but, in most cases, plaintiffs lawyers are prepared to submit billing records as part of their fee requests in the event judges use them as cross-checks.

For more on the N.D. Cal.'s new class action guidelines, visit https://www.cand.uscourts.gov/ClassActionSettlementGuidance

Report: Some Lawyers Spend 30 Percent of Workday Billing Clients

October 5, 2018

A recent Texas Lawyer story by Brenda Sapino Jeffreys, “US Lawyers Spend Only 30 Percent of Workday on Billable Hours, Report Says, reports that U.S. lawyers are still spending too little of their workday on billable hours, a year after an eye-opening report found lawyers devoted only 29 percent — 2.3 hours — of each eight-hour workday to billable hours.  This year’s Legal Trends Report, prepared by Clio, a Canadian company that provides cloud-based practice management for firms, found that the average utilization rate improved only incrementally to 30 percent, which is 2.4 hours of billable hours each workday.

Additionally, the third annual Legal Trends Report, made public, finds that lawyers invoice clients for only 1.9 hours accomplished during an eight-hour workday and collect only 1.6 hours of that time.  That’s a lot of time not spent on billable hours.  Instead of completing billable hours during the workday, the lawyers spend their time on billing and financials; marketing and business development; and firm organization and administration.  “The fact that lawyers miss out on nearly 5.6 hours of billable work each day should be a wake-up call for why efficiency is so important to law firms — it’s a critical leverage point for increasing revenues,” Clio wrote in the report.

A large majority, 84 percent, of legal professionals surveyed for the report said they equate success with increasing firm revenue.  But George Psiharis, chief operating officer for Clio, said it is surprising that few of the lawyers and other legal professionals consider factors that can increase revenue — growing a client base and billing more hours — as important factors in a firm’s success.  Only 34 percent of the legal professionals said growing the firm’s client base is a key route to success, and only 23 percent said that billing more hours would make their firm more successful.

In contrast, 80 percent of lawyers said improving efficiency of firm operations is an important factor, and 77 percent said hiring more staff would also help the firm be successful.  “That was a big surprise for us. The top two things you think about doing for driving more revenue were at the bottom of the list,” Psiharis said.

However, increasing revenue by producing more billable hours, according to the report, is not as simple as working more than eight hours a day. Clio reports that the average full-time lawyer plans to work 46.8 hours a week, but actually works 49.6 hours a week.  That adds up to an extra 3.5 weeks of unplanned work each year.  Three-quarters of lawyers report that they work outside of regular business hours, and 39 percent said that negatively affects their personal life.

The report is based on data collected from nearly 70,000 legal professionals that are Clio clients, a survey of 1,968 legal professionals, including Clio users and non-users, and a survey of 1,336 consumers.  Psiharis said most of the company’s clients work at firms ranging from solos to middle-market firms of about 200 lawyers.

The report also found that billing rates at U.S. firms hit an average of $245 an hour as of February 2018, a level that keeps pace with the rise in the cost of living from 2010 through February.  Billing rates for nonlawyers, however, have changed little since 2011.

Some practice areas are more profitable than others, because of higher realization and collection rates.  For instance, intellectual property lawyers charge an average of $327 an hour and collect $258, while lawyers who represent juvenile court clients bill an average of $87 an hour and only collect $60.

The report shows these average billing rates for lawyers in 10 large metropolitan markets: $368/hour in New York; $346 in Los Angeles; $327 in Washington, D.C.; $312 in Chicago; $305 in Atlanta; $302 in Dallas; $297 in Miami; $288 in Boston; $287 in Houston; and $269 in Philadelphia.

Law’s $1,000-Plus Hourly Rate Club

July 23, 2018

A recent Wall Street Journal story by Vanessa O’Connell, “Big Law’s $1,000-Plus an Hour Club,” reports that leading attorneys in the U.S. are asking as much as $1,250 an hour, significantly more than in previous years, taking advantage of big clients' willingness to pay top dollar for certain types of services.  A few pioneers had raised their fees to more than $1,000 an hour about five years ago, at the peak of the economic boom.  But after the recession hit, many of the rest of the industry's elite were hesitant, until recently, to charge more than $990 an hour.

While companies have cut legal budgets and continue to push for hourly discounts and capped-fee deals with their law firms, many of them have shown they won't skimp on some kinds of legal advice, especially in high-stakes situations or when they think a star attorney might resolve their problem faster and more efficiently than a lesser-known talent.  Harvey Miller, a bankruptcy partner at New York-based Weil, Gotshal & Manges, said his firm had an "artificial constraint" limiting top partners' hourly fee because "$1,000 an hour is a lot of money."  It got rid of the cap after studying filings that showed other lawyers surpassing that barrier by about $50.

Today Mr. Miller and some other lawyers at Weil Gotshal ask as much as $1,045 an hour.  "The underlying principle is if you can get it, get it," he said.  "Not many attorneys can command four figures hourly, and I do have trouble swallowing that," said Thomas L. Sager, general counsel at chemical maker DuPont Co. Still, he added, DuPont pays more than $1,000 an hour to a "select few," particularly for mergers-and-acquisitions advice.

Janine Dascenzo, associate general counsel of General Electric Co. said that her company is willing to pay what it must when it needs a lawyer with "unique" expertise.  "We'll keep paying them a lot of money, because they're worth that," she added.  Industrywide, attorneys in finance-related practices such as M&A, bankruptcy law and taxes, tend to command a premium to their peers in other specialties.

One of the priciest attorneys over the past year, according to court filings, has been Kirk A. Radke, whose specialty at Kirkland & Ellis LLP in New York is advising clients on leveraged buyouts and forming private-equity funds.  As of early 2010, Mr. Radke, whose clients include private-equity firm Avista Capital Partners, had an hourly fee of $1,250.  Mr. Radke and Kirkland & Ellis declined to comment, as did Avista Capital.

Such rates are contributing to inflation across the $100 billion-a-year global corporate-law industry as the slow economic recovery has left many law firms struggling to finance the hefty pay packages they award their stars.  Since most law partners bill roughly 2,000 hours, those asking $1,100 hourly will bring in $2.2 million, a few million short of the $3 million or $4 million in annual compensation star attorneys get at many big firms.

To help fill the gap, the firms rely on the profit they often reap on the work of junior attorneys, or associates.  Dozens of associates at a time can work on a single case, and some firms bill as much as $700 an hour for their time, according to Valeo Partners, a Washington consulting firm that maintains a database of hourly legal rates in fields such as litigation, corporate law and intellectual property.  That strategy can fuel tensions with clients. "We are much less willing to pay an army of associates at the ever-increasing rate," said GE's Ms. Dascenzo.

"Plenty of clients say to me, 'I don't have any problems with your rate,' " said William F. Nelson, a Washington-based tax partner at Bingham McCutchen, who commands $1,095 an hour, up from $1,065 last year.  "But there is price pressure for associates, especially junior lawyers.  A small but growing number of top lawyers are using other arrangements in place of hourly billing.  David Boies, chairman of Boies, Schiller & Flexner and a prominent trial lawyer, charges $960 an hour, a spokeswoman for the firm said.  But just a third of his time is devoted to matters that are billed hourly.  More often his deals with clients involve alternatives such as pegging fees to his success, she said.

More typically, big law firms' managing partners dictate hourly rates annually, often studying what their rivals charge, according to disclosures in their attorney-fee filings in corporate-bankruptcy cases, which provide a rare public peek at the industry.  Such cases involve more than just bankruptcy lawyers; they frequently draw in a range of attorneys, including specialists in such areas as taxes, product liability and environmental and intellectual-property law.

This year, top litigators at Morgan, Lewis & Bockius LLP, a Philadelphia-based firm, are asking as much as $1,200 an hour.  A spokeswoman for the firm said "less than 1% of our partners are at rates of $1,000 or more."  Gregory B. Craig, a former counsel to the Obama White House who joined Skadden, Arps, Slate, Meagher & Flom LLP a year ago as a Washington-based litigation partner, is asking $1,065 an hour, according to a court filing last month.

M&A lawyer John M. Reiss, from White & Case in New York, started billing $1,100 an hour last year.  "Some clients do focus on the hourly rate, but in the end what really matters is their total cost and whether they got a fair price," said Mr. Reiss.  In recent years, pressure from clients for discounts has made it increasingly difficult for law firms to increase their lawyers' fees across the board.  Hourly rates for partners rose by an average 3% in 2009 and 2010, and 2.3% this year, compared with an 8% increase in 2008, according to Hildebrandt Baker Robbins.  The average law-firm partner now asks $635 an hour and bills $575, the firm said.  But a small group of attorneys in some specialties command significantly more.

Nearly 2.9% of partners at a group of 24 large U.S. and British law firms asked for $1,000 an hour or more in U.S. cases last year, up from 1.5% in 2009, according to Valeo.  London-based lawyers have tended to charge higher per-hour rates than their U.S.-based counterparts.  However, London attorneys typically don't bill as many hours on a case as do U.S. attorneys, some lawyers say.

NALFA Analysis: Partner Bankruptcy Rates

October 27, 2017

NALFA conducted a survey of partner hourly rates in bankruptcy cases.  NALFA examined dozens of court filings in bankruptcy cases over the past couple years.  The following results of our survey are...

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National Law Journal Cites NALFA Program

September 11, 2017

A recent NLJ article by Amanda Bronstad, “Judges Look to Profs in Awarding Lower Percentage Fees in Biggest Class Actions,” quotes NALFA’s CLE program, “View From the Bench: Awarding Attorney...

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