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Category: Fee Agreements

Greenberg Traurig Wins $2M Fee Award in U.S. Court of Claims

November 20, 2017

A recent Law.com story by C. Ryan Barber, “Greenberg Traurig Wins $2M Fee Award in Suit Against U.S. Government,” reports that a federal claims court judge ordered the government to pay $2 million in legal fees to Greenberg Traurig for its work representing a Florida real estate developer that prevailed in a long-running case over the denial of a permit to fill in wetlands.  After two rounds through U.S. Court of Federal Claims, each followed by an appeal to the U.S. Court of Appeals for the Federal Circuit, the company, Lost Tree Village Corp., prevailed in its challenge when the U.S. Supreme Court declined in June to hear the case.

The U.S. Department of Justice had asked the high court to review a 2015 decision that said the U.S. government’s denial of the fill permit amounted to an uncompensated “taking” of Lost Tree’s property.  Charles Lettow, a judge on the U.S. Court of Federal Claims, ordered the government to pay $4.2 million in damages, plus $3.5 million in interest.  Lost Tree Village Corp.’s lawyers at Greenberg Traurig, led by Washington partner Jerry Stouck, had argued the government owed more.

Stouck this summer went to the Federal Claims court seeking about $2 million in attorney fees from the government, along with $100,000 in other fees and expenses incurred by Lost Tree.  Stouck, chairman of the firm’s regulatory and administrative law practice, identified Lost Tree’s legal fees in remarkable detail, noting a period in which he and two other principal timekeepers at Greenberg Traurig had given discounts of between 5 and 15 percent of the standard hourly rates.  Stouck identified his standard billing rate, for 2017, at $810 an hour.  Greenberg Traurig’s court filings reveal standard billing rates for Stouck and other Greenberg lawyers from 2007 to now.

For the first appeal to the Federal Circuit, Stouck said, the firm and Lost Tree agreed on a fixed fee of $67,00, plus expenses, with an additional $300,000 payable only if Greenberg Traurig prevailed. (It did so.)

The $300,000 success fee, under the terms of the agreement, would be “recoverable from the government as part of the reasonable attorneys’ fees due to Lost Tree.”  Stouck told the court that Lost Tree “has achieved complete success.”  He added: “Perhaps more importantly, while this case was hard-fought and long-fought, Lost Tree has prevailed completely on what both parties and the court recognized from the outset was the principle issue to be decided—the ‘relevant parcel’ issue.”

The Justice Department, arguing that Greenberg Traurig’s billing “reflects excessive rates for attorney and paralegal work,” said Lost Tree should be awarded at most $1,078,121 in fees.  In a court filing, the Justice Department said Greenberg Traurig billed for “work done on matters unrelated to this case and irrelevant to the merits, work where the hours devoted to tasks were far beyond reasonable or duplicated by multiple attorneys, and work where very senior personnel were performing tasks typically done by more-junior personnel.”

From the government’s filing: “Most egregiously, plaintiff seeks reimbursement for a $300,000 bonus not-yet paid that is not based on work done for the case, but instead because they were victorious on appeal.  The United States has not waived its sovereign immunity to reimburse ‘success fees’ sought in addition to fees for the hours actually devoted to work on the case.

“I was actually surprised that the government had disputed our fees so aggressively because, as you can see from the opinion, my client has paid all of the fees,” Stouck said.  “And I think that is a very substantial proof of the reasonableness of it.”

In a court filing, Stouck defended the $300,000 success fee as not just reasonable but a “greatly reduced” fee for the appeal.  “This is not a situation where Greenberg is seeking an ‘enhancement’ to its hourly rates,” he wrote in a court filing.  “Lost Tree and Greenberg are simply asking the court to enforce their reasonable, arm’s length agreement.  In the context of this case, the alternative fee arrangement represents Greenberg’s commercially-available rate.”  The judge did not award the success fee but did award $91,000 in fees that were incurred beyond the fixed expense of $67,500.

Judge Stands By Fee Split in Wells Fargo Class Action

November 2, 2017

A recent Law 360 story by Dave Simpson, “Court Won’t Nix Fee Split in Wells Fargo Case Dispute” reports that an Iowa federal judge declined to set aside a decision that requires one of the firms that handled a $25 million class action against Wells Fargo & Co. to give half its fee award in the case to one of its co-counsel, ruling that an arbitration agreement between the firms is not within the court’s jurisdiction.  U.S. District Judge Robert W. Pratt said that Reese LLP’s gripes over the amount of work done by Finkelstein Blankinship Frei-Pearson & Garber LLP’s do nothing to cancel out an arbitration agreement it signed with the firm.

“FBFG and Reese LLP — neither of whom are parties to this class action — present a separate dispute over their independent contractual obligations to each other as set out in [their arbitration agreement],” Judge Pratt said.  “That dispute is not amenable to resolution by this court in this case.  Rather, FBFG and Reese LLP have properly engaged in arbitration and discrete litigation concerning confirmation of the arbitration award in the state and federal courts of New York.”

The decision rejects Reese’s July motion, in which it told the court that Finkelstein Blankinship had not done enough work to justify taking 50 percent of Reese’s share of the Wells Fargo settlement.  Reese claimed that the fee-sharing agreement between Reese and Finkelstein Blankinship contradicted the settlement terms and asked the court to set aside an arbitration panel’s decision to uphold the agreement.

Judge Pratt shot down that argument as well, ruling that the agreement does not conflict with the settlement terms.  “FBFG’s request for fees is directly and exclusively related to the legal services rendered, whether or not the claimed fee and the amount of work are proportionate,” he said.

Reese’s July motion was swiftly opposed by Finkelstein Blankinship, Reese’s co-counsel Scott & Scott Attorneys at Law LLP, and Reese’s former partner Kim E. Richman, now of the Richman Law Group, who has also sued Reese in New York state court concerning Richman’s share of the fees from the case.

The firms all represented homeowners in a class action accusing Wells Fargo of ordering unnecessary property inspections and charging delinquent borrowers that concluded in 2015 with a $25.75 million settlement, the attorneys in which have been tied up in Reese’s fee dispute with FBFG, according to Scott & Scott.

The case is Edward Huyer et al. Wells Fargo & Co. et al., case number 4:08-cv-00507 in the U.S. District Court for the Southern District of Iowa.

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.

Texas Justices Weigh Attorney Pay After Oral Contingency Deals

October 13, 2017

A recent Law 360 story by Jess Krochtengel, “Texas Justices Weigh Atty Pay After Oral Contingency Deals,” reports that the Texas Supreme Court justices on questioned whether attorneys can collect a “reasonable value” for their work on behalf of clients if that value is tied to any type of contingency, as they weigh whether to throw out a $7.25 million award for
Shamoun & Norman LLP’s work in a dispute over a Hunt Petroleum Corp. heir’s family estate.  In oral argument, the justices probed lawyers for the firm and Hunt heir Al Hill Jr. about how lawyers can be paid for the work they’ve done when they don’t have an enforceable fee agreement.

Shamoun & Norman argues it earned a fee for the reasonable value of the services it provided to Hill when it negotiated a global settlement of 20 lawsuits over the family fortune.  But Hill contends there’s no evidence supporting that fee other than an unenforceable and disputed oral contingency agreement, and says the award should be reversed.

Questioning the firm, Justice Jeff Boyd asked whether the “reasonable value” a jury might award under a theory of quantum meruit recovery — an amount paid for services rendered when there is no legally enforceable contract between the parties — can be based even in part on the fact the client eventually prevailed.

Wallace B. Jefferson of Alexander Dubose Jefferson & Townsend LLP told the judge yes, it can, because Shamoun & Norman provided “tremendous value” to Hill by reaching an agreement with all parties to settle the cases for far less than Hill was willing to pay.  Jefferson said the jury didn’t base its award on the disputed contingency agreement, under which the firm claims it was to be paid half the savings it achieved for Hill.  Jurors came up with a reasonable fee based on what they determined was the value Hill ended up with as a result of the settlement.

Pushing back, Justice Boyd said if the reasonable value of the services provided is tied to the outcome of the case, that’s a contingency.  If the case hadn’t ended in a settlement in line with what Hill wanted, Shamoun wouldn’t be in court arguing the jury award was a reasonable amount, the judge said.  “You’re conceding your argument allows for the ‘contingency of prevailing’ to be a key factor in determining the reasonable value,” Justice Boyd said.  “I wouldn’t say it that way,” Jefferson said.  “Everything else you say says it that way,” Justice Boyd said.

Jefferson said the value of the services Shamoun provided doesn’t go away because of the contingency, nor does the value of the results achieved.  The jury was asked to determine the value of Shamoun’s services, and the fee the jury came up with should stand up in court, he said.

Justice Debra Lehrmann asked whether it matters if the underlying oral agreement had a contingency or not.  And she said to Hill’s counsel that it seems to her the whole point of quantum meruit recovery is that it applies when there is an unenforceable contract like the alleged oral contingency agreement.

Arguing for Hill, Jim Ho of Gibson Dunn said “of course” quantum meruit applies to the case, and Shamoun & Norman could have sought fees for its work on the settlement, so long as those fees were based on an hourly rate for the time it spent working on the case, or some other theory of recovery that doesn’t have a contingency component.  Ho said the fee the firm is seeking here is “obviously contingent on the outcome of the case,” as evidenced by its “bragging” about the value of the case’s outcome to try to justify the fee award.

And he argued the firm simply can’t rely on evidence of the alleged oral contingency agreement to support its claim for fees because state lawmakers made the judgment call that they want contingency agreements to be written.  Failing to get a fee agreement in writing means lawyers proceed at their own peril, Ho said.  “What Shamoun is asking you to do today is to eviscerate the Legislature’s judgment,” he said.

The state of Texas argued as an amicus in the case, siding with Hill’s position.  Texas Solicitor General Scott Keller told the court the lower appellate decision “effectively nullifies the state statute of frauds.”  Keller said the fee Shamoun & Norman seeks is clearly contingent on achieving a certain result and that the evidence presented to the jury was based entirely on the unenforceable contingency agreement — but that an unenforceable contract cannot be given any weight or effect or legally be considered as evidence.

Justice Paul Green said the point of quantum meruit recovery is to avoid unjust enrichment.  He asked if a lawyer who has done a lot of work that helps resolve the case, yet gets fired before the case winds up, would be entitled to any recovery at all.  Keller said recovery could be available in that kind of a scenario, but only if the award isn’t contingent on achieving a certain result.

Justice Boyd posed a question about an agreement in which the parties agree to a fixed hourly rate, but with payment of that hourly rate only required if the lawyer wins.  Keller said even though the amount is fixed, that payment is still contingent and would be barred unless the parties had reduced it to writing.

The case is Hill v. Shamoun & Norman LLP, case number 16-0107, in the Supreme Court of Texas.

Know the Statutory Limits on Attorney Fees

October 5, 2017

A recent CEB blog article, “Know the Limits on Attorney Fees” by Julie Brook explores the statutory limits on attorney fees in California and federal statutes.  This article was posted with permission.  The article reads:

Attorneys can’t always get what they want in attorney fees.  There are statutory limitations, fees subject to court approval, and fee agreements that violate public policy.

Statutory Limitations on Fees. In many instances the ability to negotiate attorney fees is prohibited or limited by statute.  For example:

  • Probate proceedings. Attorney fees in a probate proceeding are strictly statutory and don’t arise from contract.  See Prob C §§10800, 10810, 13660.  An attorney can’t charge more than the statutorily-permitted amount, but may agree to charge or receive less than that amount.
  • Indigent defendants. Attorney fees for counsel assigned to represent indigent criminal defendants are set by the trial court (Pen C §987.2) or by the court of appeals in appellate matters (Pen C §1241).
  • Judicial foreclosures. Attorney fees in judicial foreclosure matters are set by the trial court, regardless of any contrary provision in the mortgage or deed of trust. CCP §730.
  • Workers’ compensation. Attorney fees for representation in Workers’ Compensation Appeals Board matters are set by the Appeals Board (Lab C §5801) and by a court or Appeals Board in third-party matters (Lab C §3860(f)).  But fee agreements for a reasonable amount will be enforced if the amount agreed on coincides with the Appeals Board’s determination of a reasonable fee. Lab C §4906.
  • Contingent fees under federal law. An attorney-client agreement with a plaintiff under the Federal Tort Claims Act calling for a contingent fee in excess of 20 percent of any compromise, award, or settlement, or more than 25 percent of any judgment is not only void, but is an offense punishable by a fine of $2000, or 1 year in jail. 28 USC §2678. See also 42 USC §406 (maximum fee for representing plaintiff in Social Security Administration proceedings is 25 percent of past due benefits; attempt to collect fee in excess of maximum is misdemeanor).
  • Contingent fees in medical malpractice cases. Maximum fee limits have been set under Bus & P C §6146.

This is just a sampling—many statutes limit attorney fees.  When you take on a matter in an unfamiliar area of law, investigate possible limitations on the ability to negotiate fees.

Fees Subject to Court Approval. Court approval of fee agreements is required in some instances. For example:

  • fees for the compromise of the claim of a minor or a person with a disability (Prob C §3601(a));
  • fees for representing a special administrator (Prob C §8547); and
  • fee agreement in workers’ compensation third-party actions (Lab C §3860(f)).

Agreements Violating Public Policy or Ethical Standards. Attorney-client fee agreements that are contrary to public policy, even if not explicitly in violation of an ethical canon or rule, won’t be enforced.  Similarly, fee agreements that violate California Rules of Professional Conduct aren’t enforceable.  The Rules include prohibitions against charging an unconscionable fee (Cal Rules of Prof Cond 4–200), agreeing to share fees between an attorney and a nonattorney (Cal Rules of Prof Cond 1–320), and nonrefundable retainer fees that fail to meet the classification of a “true retainer fee which is paid solely for the purpose of ensuring the availability of the [Bar] member for the matter” (Cal Rules of Prof Cond 3–700(D)(2)).