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Category: Fee Agreement

NJ Judge Wrongly Used Past Private Practice to Cut Attorney Fees

July 29, 2020

A recent Law 360 story by Bill Wichert, “NJ Judge Wrongly Used Private Practice Past to Cut Atty Fees” reports that a New Jersey state judge improperly relied on unpublished decisions and her own private practice experience when she gave class counsel a lower attorney fee award than class counsel asked for when it settled a suit against a car dealership, a state appellate panel said Wednesday in nixing the ruling.  The panel concluded in a published opinion that Superior Court Judge Mara Zazzali-Hogan — formerly with Gibbons PC — was wrong to cut the requested hourly rates for attorney Christopher J. McGinn and lawyers and a paralegal at the Wolf Law Firm LLC to about $120,772 in fees and costs, which undercut their request by more than $40,000.

"In rejecting class counsel's submissions and reducing the hourly rate for all the attorneys and the paralegal, the judge relied on her personal experience in private practice, a methodology rejected in Walker ... and considered four unpublished decisions," the three-judge panel said, citing the New Jersey Supreme Court's 2012 opinion in Walker v. Giuffre.  As for Judge Zazzali-Hogan's reliance on the unpublished decisions, the panel pointed to the state Supreme Court's 2008 opinion in Brundage v. Estate of Carambio, which acknowledged that "[state court] rule 1:36-3 'provides that "[n]o unpublished opinion shall constitute precedent or be binding upon any court."'"

"Under these circumstances, we are persuaded that the judge's reduction of the hourly rates was based upon consideration of inappropriate factors, and thus reflects a mistaken exercise of discretion," the panel said, adding in a footnote: "In remanding this matter, we make no finding or suggestion about what hourly rates ultimately should be deemed reasonable for this kind of case."  McGinn and the Wolf Law Firm, representing plaintiff Nina Seigelstein, appealed the judge's decision in the suit against Shrewsbury Motors Inc. and its principal, which claimed the dealership unlawfully charged customers documentary fees that were not itemized, court documents state.

Under the settlement in the case, the defendants agreed to pay $125 to each member of a 2,883-member class, court documents state.  The attorneys sought roughly $162,000 in fees and costs, with hourly rates ranging from $165 for the paralegal to $500 for McGinn and $765 for fellow lead attorney Andrew R. Wolf, court documents state.

To back up the proposed hourly rates, the attorneys submitted certifications from Wolf, McGinn and three other lawyers who didn't work on the case, as well as two state court decisions, court documents state.  Citing the unpublished cases and her "fifteen years of private practice," Judge Zazzali-Hogan in March 2019 reduced the hourly rates, which set McGinn's and Wolf's at $475 and $575, respectively.  The judge also reduced the billable hours and used a smaller contingency fee enhancement percentage than what the attorneys requested.

CA Appeals Court Affirms Fee Award with High Rate But No Multiplier

July 16, 2020

A recent Metropolitan News story, “C.A. Affirms Attorney-Fee Award Not Boosted by Multiplier reports that a California Court of Appeal has affirmed a decision by a Los Angeles Superior Court judge who declined to apply a multiplier to an attorney fee award in an action that produced a $1 million judgment for a plaintiff who sued his employer for racial harassment, saying it assumes that the high hourly rate that was applied takes into account that the case was taken on a contingency basis.  However, the judge who made the award—Victor E. Chavez—made no such indication, saying in his order that the attorneys were worth the rates they proclaimed for themselves, but the nature of the case did not warrant an enhancement.

Justice Dorothy Kim of Div. Five wrote the unpublished opinion.  It upholds a post-judgment order by Chavez assessing attorney fees in favor of the Law Offices of Kyle Todd, located in downtown Los Angeles, in the amount of $592,075, the total lodestar amount the firm claimed based on 1,392.5 hours of work on the case over a three-year period.  The award was made under Government Code §12965(b) which provides for attorney fees to a prevailing party in an action brought—as was the that of the Todd firm’s client, Tracy Scudder—under the state’s Fair Employment and Housing Act.

In particular, Chavez granted Todd the $500-per-hour figure he claimed as reasonable for the 904.3 hours he said he devoted to the case, rejecting the defendant’s protest that such a rate exceeded the $360.27 norm for lawyers in Los Angeles County during the relevant period, from 2015-18.  The judge also honored the rate of $400-per-hour which, it was contended, represented the value of services of an associate in the office, Maximilian Lee, who said he spent 250.5 hours pursuing the interests of the client.

Chavez said that $360.27-per-hour figure, contained in the United States Attorney’s Office fees matrix “is not sufficient to compensate Mr. Todd based on his experience and the facts showing that he is an exceptional attorney” and also found that $400-an-hour was “a reasonable rate to bill for the legal services” that Lee provided.  The amount sought by Todd’s firm, with a multiplier of 200 percent, was $1,184,150. The award which the defendant, the state Department of Transportation, asserted would be appropriate was $289,458.04.

Chavez, a former presiding judge of the Superior Court, said in his Sept. 11, 2018 order: “There is no evidence that the questions in this case were novel or difficult.  This case concerned workplace harassment and discrimination based on race and there were no unusual or complex issues that required exceptional skill to resolve.

“Further, a review of the Court file does not reveal any exceptional skill displayed by counsel that far exceeds the quality of representation that would have been provided by an attorney of comparable skill and experience.  The Plaintiff’s attorneys identify the time that they spent or the case and the above amount of $592,075 will compensate them for their legal services.”  The judge found that Todd “does not provide specific facts to demonstrate that his attorneys were precluded from other employment” by virtue of devoting their concerted efforts to Scrudder’s case. He viewed as inadequate a declaration from Victoria Rolon, a legal assistant in the firm, who said:

“This case took up a large portion of our firm’s time since I joined in early 2016, and by November 2017, as the first genuine trial date approached, our firm’s work on other matters went down significantly.  From then through the end of trial on March 9, 2018, our firm was almost exclusively engaged in work on this case, at the expense of taking in new cases.  For example, I typically provide the first-line intake of new case matters, and for the preparation of trial and during, we were telling prospective clients we were simply too busy to accept new cases at the firm.”

Chavez remarked: “[A]lthough Victoria Rolon states in paragraph 6 that, as the trial date approached, the Plaintiffs firm was telling prospective clients that it was too busy to accept new cases, Ms. Rolon provides no specific facts to show that the Plaintiff’s firm was precluded from accepting such a substantial amount of business that a multiplier should be applied.”

Kim said that some of the assaults by the Todd firm on Chavez’s ruling cannot be addressed owing to the lack of a transcript of the fee-hearing before the judge.  But, she declared, based on the record that was presented, it is clear that the firm is in error in asserting that Chavez “refused to consider the relevant ‘contingency and delay factors’ present in this case” in declining to apply a multiplier.

She wrote: “[W]e…reject any argument by plaintiff that the trial court did not adjust the fee amount in any ‘manner to reflect the fact that the fair market value of legal services provided on [a contingent basis] is greater than the equivalent non-contingent hourly rate.’…The court rejected defendant’s request to lower counsel’s fees to the Los Angeles market rate as calculated by an attorney fee matrix, finding that the full rates sought by plaintiff’s counsel were reasonable.  Further, the court found that counsel, who worked on a contingency basis, would be ‘fully compensated’ by the lodestar amount.  We presume the court concluded that its lodestar calculation already accounted for the contingent nature of the fee award.”

It was conceded by the Todd firm, Kim noted, that Chavez did allude in his order to the contingency-fee arrangement.  He said in his order: “[A]lthough the Plaintiffs attorneys took this case based on a contingent fee retainer agreement, the above analysis of the Plaintiffs fee request demonstrates that the Plaintiff’s attorneys will be fully compensated for the time they spent on this case and this offers no grounds to award a multiplier.”

Kim said the Todd firm is in error in asserting that Chavez was legally obliged to apply a multiplier, and remarked: “The trial court was in the best position to evaluate the reasonableness of plaintiff’s requested attorney fees.  We find the court did not abuse its discretion.”

DC Bar Approves Cryptocurrency to Pay Legal Fees

June 30, 2020

A recent Law 360 story by Mike LaSusa, “DC Bar Oks Cryptocurrency Payments for Legal Fees” reports that the District of Columbia Bar has given lawyers the green light to accept cryptocurrencies in exchange for legal services, although the body's ethics opinion said attorneys should take care to ensure the arrangements are fair and that the payments are secure.  The D.C. Bar said in its undated June opinion that it didn't see a reason to treat cryptocurrencies as "a uniquely unethical form of payment" despite some of their potentially troublesome aspects.

"The nature of digital currency — as a new technology, a volatile alternative currency or asset, or client property — raises ethical challenges for lawyers that simply do not exist with fiat currency," the bar said.  "But lawyers cannot hold back the tides of change even if they would like to, and cryptocurrency is increasingly accepted as a payment method by vendors and service providers, including lawyers."

The bar pointed out that cryptocurrencies can fluctuate widely in value, possibly complicating an assessment of whether a particular fee arrangement is fair, especially when a client pays for services in advance.  "The reasonableness of a fee agreement involving cryptocurrency will depend not only on the terms of the fee agreement itself and whether or not payment is for services rendered or in advance, but also on whether and how well the lawyer explains the nature of a client's particularized financial risks, in light of both the agreed fee structure and the inherent volatility of cryptocurrency," the bar said.

Moreover, lawyers need to make sure they keep the payments safe from loss, scammers and thieves, the bar said.  "Because blockchain transactions are unregulated, uninsured, anonymous, and irreversible, cryptocurrency is regularly targeted for digital fraud and theft," the bar said.

John Reed Stark, the president of John Reed Stark Consulting LLC, a data breach response and digital compliance firm, told Law360 that the D.C. Bar's decision was "disappointing."  "Crypto's liquidity risk; price volatility; cybersecurity vulnerabilities; commission fees; AML implications; OFAC concerns; ethical dilemmas; tax burdens; entanglement mishaps and the rest, create a situation that could be unmanageable or even untenable for a law firm's shareholders or partners," Stark said.  "Not to mention that for the most part, the entire crypto system resides amid an unregulated, mysterious and arguably sinister environment — certainly a poor choice of virtual venue."

A growing number of lawyers have been making the jump into virtual currency and accepting client fees in the form of cryptocurrencies like bitcoin in recent years.  And the trend has started to make its way into the world of BigLaw.  In November, Quinn Emanuel Urquhart & Sullivan LLP announced it had started receiving fee payments from clients in bitcoins.  With that decision, Quinn Emanuel followed in the footsteps of other large firms that have started taking bitcoin fee payments, including Perkins Coie LLP and Steptoe & Johnson LLP.

Third Circuit Urged to Revive Pelvic Mesh Fee Dispute Case

June 26, 2020

A recent Law 360 story by Kevin Penton, “3rd Circuit Urged to Revive Pelvic Mesh Atty Fee Suit” reports that the Third Circuit should correct a mistake by a New Jersey federal court that allowed Texas law to be used to bless the collection of excessive attorney fees in pelvic mesh litigation against Johnson & Johnson and its Ethicon unit, two women have asserted.  According to a brief, the appellate court should recognize that if the underlying cases were filed in New Jersey, the attorneys should not be allowed to turn around and use Texas law to administer the settlements just so they could collect a higher percentage of the payouts, plaintiffs Debbie Gore and Doris Lance-Smith said.

"This manipulation of the process cannot be allowed by this court, as it would set a dangerous precedent that would allow contingency fee attorneys to file cases in New Jersey, then retreat to other jurisdictions in order to have the settlements 'administered' and 'approved' so that they can circumvent the New Jersey court rules and charge the clients excessive fees and expenses," the brief reads.  U.S. District Judge Madeline Cox Arleo in March nixed a proposed class action against Potts Law Firm, Nagel Rice LLP and other firms, saying Texas law governed the claims and permitted the fees.

The judge noted that "the complex settlement process, which plaintiffs consented to after ample opportunity for objection, was reached by negotiations between Ethicon and Texas law firms and was administered by the Texas state court and a Texas special master."  "Indeed, no New Jersey law firms or lawyers were even listed as receiving contingency-based attorneys' fees as part of plaintiffs' settlements," the judge said.  "As such, the state with the most significant relationship to the substantive claims at issue is Texas."

Gore, a Texas resident, and Lance-Smith, an Alabama resident, both retained Texas firms to pursue claims that they suffered injuries from allegedly defective pelvic mesh products, according to court documents.  While Gore and Lance-Smith each filed a master short-form complaint in New Jersey state court in 2014 as part of the litigation, Judge Arleo noted in March that "no litigation activities occurred" in the Garden State beyond those filings.

Fee arrangements in the case allowed the women's lawyers to receive 40% of their settlements, as Texas law has no particular cap on contingent fees, according to court documents.  Under a relevant New Jersey rule, an attorney can collect a fee of 33.33% of the first $750,000 recovered and then smaller percentages for subsequent amounts.  Those fees must be based on the "net sum recovered" after deducting expenses.

The Nation’s Top Attorney Fee Experts of 2020

June 24, 2020

NALFA, a non-profit group, is building a worldwide network of attorney fee expertise. Our network includes members, faculty, and fellows with expertise on the reasonableness of attorney fees.  We help organize and recognize qualified attorney fee experts from across the U.S. and around the globe.  Our attorney fee experts also include court adjuncts such as bankruptcy fee examiners, special fee masters, and fee dispute neutrals.

Every year, we announce the nation's top attorney fee experts.  Attorney fee experts are retained by fee-seeking or fee-challenging parties in litigation to independently prove reasonable attorney fees and expenses in court or arbitration.  The following NALFA profile quotes are based on bio, CV, case summaries and case materials submitted to and verified by us.  Here are the nation's top attorney fee experts of 2020:

"The Nation's Top Attorney Fee Expert"
John D. O'Connor
O'Connor & Associates
San Francisco, CA
 
"Over 30 Years of Legal Fee Audit Expertise"
Andre E. Jardini
KPC Legal Audit Services, Inc.
Glendale, CA

"The Nation's Top Bankruptcy Fee Examiner"
Robert M. Fishman
Fox Rothschild LLP
Chicago, IL

"Widely Respected as an Attorney Fee Expert"
Elise S. Frejka
Frejka PLLC
New York, NY
 
"Experienced on Analyzing Fees, Billing Entries for Fee Awards"
Robert L. Kaufman
Woodruff Spradlin & Smart
Costa Mesa, CA

"Highly Skilled on a Range of Fee and Billing Issues"
Daniel M. White
White Amundson APC
San Diego, CA
 
"Extensive Expertise on Attorney Fee Matters in Common Fund Litigation"
Craig W. Smith
Robbins Arroyo LLP
San Diego, CA
 
"Highly Experienced in Dealing with Fee Issues Arising in Complex Litigation"
Marc M. Seltzer
Susman Godfrey LLP
Los Angeles, CA

"Total Mastery in Resolving Complex Attorney Fee Disputes"
Peter K. Rosen
JAMS
Los Angeles, CA
 
"Understands Fees, Funding, and Billing Issues in Cross Border Matters"
Glenn Newberry
Eversheds Sutherland
London, UK
 
"Solid Expertise with Fee and Billing Matters in Complex Litigation"
Bruce C. Fox
Obermayer Rebmann LLP
Pittsburgh, PA
 
"Excellent on Attorney Fee Issues in Florida"
Debra L. Feit
Stratford Law Group LLC
Fort Lauderdale, FL
 
"Nation's Top Scholar on Attorney Fees in Class Actions"
Brian T. Fitzpatrick
Vanderbilt Law School
Nashville, TN
 
"Great Leader in Analyzing Legal Bills for Insurers"
Richard Zujac
Liberty Mutual Insurance
Philadelphia, PA