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Category: Fee Data / Analytics

Report: New Jersey Hourly Rates Near the Top Nationwide

October 31, 2017

A recent New Jersey Law Journal story by David Gialanella, “NJ Hourly Rates Near the Top Nationwide, Report, Report Finds” reports that New Jersey trails only a handful of markets when it comes to average hourly billing rates for law firms, a recent report has found.  The state’s $272 average hourly rate for 2016, which takes into account both lawyer and nonlawyer rates, ranks sixth in the nation, behind New York ($297), Connecticut ($296), the District of Columbia ($292), Nevada ($285) and California ($277), according to the “2017 Legal Trends Report” issued by Clio, a Canadian cloud-based researcher that tracks legal industry metrics.

New Jersey’s $272 average combined rate placed it ahead of markets such as Illinois ($261), Maryland ($257) and Pennsylvania ($243), the report stated.   New Jersey also was sixth in lawyer hourly rates, at $288, again behind the same five markets, which all topped $300 per hour.

The average nonlawyer billing rate for New Jersey was $199 — second only to Connecticut, whose $228 rate was highest by far. New Jersey’s average nonlawyer rate put it firmly ahead of Nebraska ($175) and Nevada ($174), as well as Pennsylvania and New York (each $171), according to the report.

“Real” hourly billing rates, which are adjusted for cost of living in 2016, also are included: In New Jersey, that rate is $251 for lawyers, $174 for nonlawyers and $237 combined.  The latter number trails the same five markets mentioned above, as well as Florida, Illinois, Texas, Georgia, Arizona and Pennsylvania.  The data was collected from some 60,000 Clio users, as well as surveys of legal professionals and consumers of legal services, the report notes.

The report is critical of law firms for what it calls poor “utilization” rates—contending that lawyers on average nationwide spend only 2.3 hours of the eight-hour workday on billable tasks.  It pegs the utilization rate in New Jersey at 30 percent, which is one point higher than the national rate of 29 percent (meaning that a New Jersey lawyer spends 2.4 hours per day on billables, rather than 2.3 hours).  The report ranks lawyers in West Virginia and Maine at the top in this category, with realization rates of about 40 percent.

New Jersey is toward the back of the pack when it comes to realization rates, the report finds: At 79 percent, the state ranks 34th and is well behind Utah, South Dakota, South Carolina, Wyoming and New Hampshire, which approach or eclipse 90 percent, but still ahead of such large markets as New York (39th), Florida (43rd), Delaware (46th) and D.C. (48th), according to the report.

New Jersey also fares badly in collection rate, according to the report.  At 82 percent, it was ahead of only six markets in that category: Arizona, New York, West Virginia, D.C., Mississippi and Michigan.

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 the average of partner hourly rate ranges in major legal markets:

2017: $1005-$878
2016: $921-$807
2015: $886-$783

Key findings:  Not only have partner rates increased every year, but the variance (i.e. the range of rates) has increased as well.

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 Fees in Federal Litigation” in an article on class action fee awards.  The full article reads:

After reaching a $101 million class action settlement to resolve lawsuits brought over a chemical spill that contaminated a West Virginia river, the plaintiffs lawyers asked a federal judge to grant them 30 percent of the fund as contingency fees.

The judge praised their work but found that fee request to be just too high.  "Even without accounting for fund size, the empirical literature clearly demonstrates that a 30 percent fee is higher than that awarded in the vast majority of class actions," U.S. District Judge John Copenhaver of the Southern District of West Virginia wrote in a July order.  "Courts have found through empirical analysis that larger common funds typically have smaller percentage fees."

The empirical analysis Copenhaver referred to came from the findings of two leading academic reports — both cited in the opinion — that federal judges across the country have used for the past decade to guide them in decisions about attorney fees in some of the nation's largest class action settlements.

New York University School of Law professor Geoffrey Miller and the late Theodore Eisenberg, a professor at Cornell Law School, wrote one of the studies, an updated version of which is set to be published this year.  The second is a 2010 study conducted by Brian Fitzpatrick, a professor at Vanderbilt University Law School.

Both studies have provided critical assistance for federal judges, particularly when it comes to class action settlements of $100 million or more.  The concern for those on the bench is how to award plaintiffs lawyers for their work without granting them excessive fees and leaving class members in the lurch.

"Judges do take the role seriously," said William Rubenstein, a professor at Harvard Law School whose highly regarded "Newberg on Class Actions" has cited the Eisenberg/Miller and Fitzpatrick studies in his 11-volume treatise, alongside data he has used from a former publication called Class Action Attorney Fee Digest.  "And they understand they're a bulwark against excessive fees from the class members' money."

How to determine the exact amount has often been more art than science.  In a webinar earlier this year hosted by the National Association of Legal Fee Analysis, U.S. District Judge David Herndon of the Southern District of Illinois, who has handled several of the nation's largest mass torts and class actions, said a lot depends on the amount of recovery to the class.

"It just depends … on the case and what the benefit is that the lawyers have achieved by their work," he said at the webinar, called "View from the Bench: Awarding Attorney Fees in Federal Litigation."  "If it's reasonable, then you can approve the contingency, but if it's pretty far out of whack maybe you've got to have the lawyers justify the difference or perhaps go with the lodestar.  There are a lot of things to look at."

And there are outside concerns as well.  Judges have increasing scrutiny from appeals courts, which often take up the petitions of objectors to class action settlements, Rubenstein said.  "Public policy generally cautions against awarding too high a fee," Copenhaver wrote in the West Virginia water case.  "The court's challenge is to award a fee that both compensates the attorneys with a risk premium on their skill and labor and avoids a windfall."

Last month, plaintiffs lawyers in the case submitted a renewed motion for settlement approval that lowered their fee request to 25 percent — more in line with what Copenhaver had found was reasonable.

Judges often look to previous case decisions, or their own experience, to determine what amount is appropriate to award lawyers in class actions.  They also get a list of cases from the lawyers — but those often come with vested interests.  For a long time, there was limited statistical data on what other judges had done.  That's where Fitzpatrick said he and the Eisenberg-Miller team tried to give judges a starting point.

"We tried to give the judges the full data instead of just leaving them at the whim of the cherry-picked cases the lawyers give them," he said.  "The judges don't have to replicate what other courts have done, but they have the opportunity to stick within the mainstream of what their colleagues have done if they want it now that they have the power of empirical studies."

Miller said he came up with the idea while serving as an expert witness in cases.  When his first report with Eisenberg published in 2004, one year before the U.S. Class Action Fairness Act passed, the political atmosphere was rife with criticism about attorney fees in class actions.  At the time, only one group had looked at the data — but it wasn't really a controlled study.

"On the issue of fees, the data was there but hadn't been developed," he said.  Eisenberg wasn't an expert on class actions, Miller said, "but he was the leading person probably in the world who was doing empirical studies of legal material."  Their report looked at published data of class action settlements from 1993 to 2002.

By the time of their second report in 2009, which expanded the data through 2008, Miller and Eisenberg had some competition.  Fitzpatrick thought that their report, like those before it, relied too much on "ad hoc" data that focused primarily on bigger, published decisions.  "I really endeavored to find every last one to have the complete and representative picture," he said.

He came up with a wider range of class action settlements within a shorter period of time — just 2006 and 2007.  Combined, both reports have been cited by judges more than 100 times, Miller said.  And they often involve the biggest settlements in dollar amount, he said.  "The issue is that there aren't as many cases," he said.  "There's less data. And that puts an additional premium on getting what data there is, so that's one reason judges look to this research in big cases."

Another came in 2012, he said, when U.S. District Judge Lee Rosenthal of the Southern District of Texas, the former chairwoman of the Judicial Conference Committee on Rules of Practice and Procedure, endorsed both studies in a case called In re Heartland Payment Systems Customer Data Security Breach Litigation: "District courts increasingly consider empirical studies analyzing class-action-settlement fee awards to set the appropriate percentage benchmark or to test the reasonableness of a given benchmark," she wrote.  "Using these studies alleviates the concern that the number selected is arbitrary."

Economies of Scale

Both studies have come out with slight differences in their specific findings.  But they came to the same conclusions: The vast majority of judges award fees based on a percentage of the total settlement amount — then cross-check that amount against the total number of hours the lawyers billed multiplied by the hourly rate, referred to as the lodestar.  There's a good reason for that trend.

"It's economies of scale," Miller said.  "Judges understand that to get a $1 billion settlement is not 1,000 times harder for an attorney to get a $1 million settlement.  It's a lot harder, but not 1,000 times harder."

Herndon, in the webinar, said that's just common sense.

"If they got a third of $1 billion, and compared to their lodestar, it would be an astronomical per hour figure," he said.  "There's some common sense in doing something like that, and I don't really have a particular feeling one way or the other, but I think there's certainly authority in the law for doing it."

In fact, many judges who cite the Eisenberg-Miller and Fitzpatrick reports look specifically to the data as it pertains to the size of the settlement in front of them and what the case is about.

But Fitzpatrick questioned whether judges were doing the right thing in lowering the percentages as the settlements get bigger.  "I think the judges are responding to perception when they do that and they're not responding to good economic policy analysis," he said.  "Because why would we want to punish lawyers with lower percentages for getting their clients more money?"

Not all judges agree with the conclusions made by the professors, who sometimes go up against each other as paid experts in individual cases.  In a $415 million settlement of "no poach" claims involving high-tech workers, U.S. District Judge Lucy Koh of the Northern District of California weighed Fitzpatrick's report against the Eisenberg/Miller study in awarding $40 million in fees.  In that case, Fitzpatrick was a paid expert for the lead plaintiffs attorneys, while Rubenstein cited the Eisenberg-Miller report in a declaration filed on behalf of one of the lead firms that had submitted a separate fee request.

"The court finds the Eisenberg & Miller study more persuasive than the Fitzpatrick study," Koh wrote in a 2015 order, concluding that the "length and large sample size of the Eisenberg & Miller study suggest that its results are entitled to greater weight."

Fitzpatrick said he's working on an updated report, likely to be drafted next year.  "Whenever I hear from these judges, they say the same thing: We love your study but we need more recent data," Fitzpatrick said.  "So that's what I'm trying to give them."  But gathering the data takes a lot of time and money, he said.  He's hired research assistants to code all the data.

The latest Eisenberg-Miller report, co-authored with research scholar Roy Germano at NYU's law school, uses data through 2013.  Without Eisenberg, who died in 2014, Miller said he's not certain he'll keep publishing the report.  "I don't think I'll do it anymore," he said. "It is a lot of work."

Class Attorneys Seek $45M in Fees in $210M Shareholder Settlement

July 11, 2017

A recent Law 360 story by Rachel Graf, “Salix Class Attys Seek $44.6M in Fees For $210M Settlement,” reports that attorneys who secured a tentative $210 million settlement to end a proposed class action by Salix Pharmaceuticals Ltd. shareholders claiming the company misrepresented inventory levels to falsely inflate its stock price asked a New York federal judge for $44.6 million in fees.

The shareholders’ attorneys said the amount, representing about 21.24 percent of the settlement, is similar to the fees granted in comparable class actions, and is reasonable given the “numerous challenges” the counsel faced in proving liability and damages, especially since they brought the action on a contingent basis.

“The significant monetary recovery was achieved through the skill, tenacity and effective advocacy of lead counsel, which litigated this action on a fully contingent fee basis against highly skilled defense counsel,” the attorneys said in the filing.  “Lead counsel had to devote a vast amount of time and resources to the action, litigating through an extensive and hard-fought fact discovery process before the settlement could be obtained.”

The case originated from two securities lawsuits that were filed after Salix stock plunged by more than 30 percent following the company’s November 2014 disclosure that it had much more inventory of many of its drugs than management had previously claimed.  The suits were consolidated in March 2015, and the amended complaint alleged violation of the Securities and Exchange Act.  The parties agreed to a $210 million settlement in March for a class of shareholders estimated to be in the thousands.

The shareholders’ attorneys said that fees for a non-class action would typically range between 30 percent and 33 percent of the settlement amount, and argued their requested award of 21.24 percent of the settlement is “well within the range of percentage fees that have been awarded in the Second Circuit in securities class actions and other similar litigation with comparable recoveries.”

The requested fee is based on an agreement the firm reached with a lead plaintiff before litigation began, and should therefore be given a “presumption of reasonableness,” according to the filing.  In addition to the $44.6 million fees award, the attorneys have requested to be reimbursed for $1.9 million in litigation expenses and $29,800 in costs. 

The suit is In re Salix Pharmaceuticals Ltd, case number 1:14-cv-08925 in the U.S. District Court for the Southern District of New York.

Plaintiffs Firms Earned $1B in Fees in Securities Class Action Settlements in 2016

June 21, 2017

A recent law.com story by Scott Flaherty, “Plaintiffs Firms Earn Almost $1B in Fees From 2016 Securities Class Action Settlements,” reports that last year was a big one for high-dollar settlements in securities class actions—and for the plaintiffs lawyers representing investors, who earned nearly $1 billion in attorney fees and expenses in connection with settlements finalized in 2016.

Settlements in 13 securities class actions that came to points of resolution in 2016 made it onto an annual list of the top 100 securities settlements of all time, according to a report (pdf) released on June 14 by Securities Class Action Services, a division of Institutional Shareholder Services Inc.  That’s a record, ISS said, “resulting in the largest approved settlement fund of any single year.”

In all, the 13 settlements that made the ISS top 100 list in 2016 add up to about $5.6 billion, with an average of $431.4 million.  And according to an analysis by The American Lawyer based on court records, plaintiffs firms involved in those deals came away with fees and expenses totaling about $999.8 million, with an average fee and expense award of $76.9 million.  (See the table for a full breakdown of the 2016 entrants onto the ISS list.)

Among the high-ranked settlements jumping onto the list in 2016 were the seventh-ranked $1.575 billion settlement in litigation involving Household International Inc., and the 11th-ranked $1.06 billion settlement in securities litigation against Merck & Co. Inc.  Some of the deals on the ISS top 100 list are the product of multiple settlements in a particular litigation.

A pair of heavyweight plaintiffs firms in the securities class action realm led investors to those two highest-ranked settlements finalized in 2016—Robbins Geller Rudman & Dowd served as lead counsel in the Household International case, resulting in a fee and expense award totaling $33.6 million, while Bernstein Litowitz Berger & Grossmann led the Merck litigation and secured an award of $221.5 million in fees and expenses.

The Merck case, which dated back to 2003 in New Jersey federal court, resulted in the highest fee and expense award of the 13 settlements that made the top 100 list in 2016.  The lead firm for investors in that case, Bernstein Litowitz, also came up the most often as lead plaintiffs counsel among the group of 13 settlements finalized in 2016, serving as lead or co-lead counsel in six of the 13.

“Since [ISS] began compiling and publishing data on securities litigation recoveries and the law firms prosecuting the cases over a decade ago, [Bernstein Litowitz] has been at or near the top of their rankings every year—often with the highest total recoveries, the highest settlement average, or both,” the firm said in an announcement noting its place on the ISS list.

Beyond the Merck settlement, two other cases also led to awards of more than $100 million to plaintiffs lawyers.  In connection with a $486 million settlement of litigation against Pfizer Inc., which ranked 29th on the ISS list, a federal judge in Manhattan awarded roughly $156.1 million in fees and expenses.  Grant & Eisenhofer was lead counsel for the investor plaintiffs in that case.

And a $310 million settlement in litigation against Caremark Rx Inc. led an Alabama Circuit Court judge to award $126.6 million in fees and expenses.  That case had lead counsel from three plaintiffs firms that are smaller than typically seen elsewhere in the ISS report: Hare Wynn Newell & Newton; Francis Law; and Somerville.

The ISS list follows a report released earlier this year by Cornerstone Research, which also tracks securities litigation, saying that a record number of new securities class actions were filed last year.  The Cornerstone report, released in late January, showed that 270 new securities class actions were filed in 2016, with many of them lodged against biotechnology and health care companies.