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Category: Fee Calculation Method

Article: Five Lessons for Recovering Attorney Fees in Texas

February 13, 2021

A recent article by Amanda G. Taylor, “Recovering Attorney’s Fees in Texas: Five Lessons” in BizLit News Blog reports on recovering attorney fees in Texas.  This article was posted with permission.  The article reads:

Obtaining an award of attorneys’ fees might be the final step in a long-waged litigation battle but to do so successfully requires careful planning and diligence from the outset of a case.  The Texas Supreme Court recently clarified the evidence required to obtain and affirm such an award.  Rohrmoos Venture v. UTSW DVA Healthcare, LLP, 578 S.W.3d 469 (Tex. 2019).  The Texas Supreme Court also recently confirmed that these evidentiary standards apply equally when fees are sought to be recovered as a sanction.  Nath v. Texas Children’s Hosp., 576 S.W.3d 707, 710 (Tex. 2019).  To best serve a client’s interests of recovering attorneys’ fees in Texas, whether as a prevailing party or as a sanction, lawyers should adhere to five lessons from Rohrmoos.

Lesson One:  Confirm a legal entitlement to recover fees.  “In Texas, as in the federal courts, each party must pay its own way in attorney’s fees … unless a statute or contract provides otherwise.”  Rohrmoos Venture, 578 S.W.3d at 484.  Certain claims, such as a breach of contract claim brought under Chapter 38 of the Texas Civil Practices and Remedies Code, entitle a prevailing party to recover attorneys’ fees.  Other claims, such as a common law fraud claim, do not afford such a remedy.  In establishing your initial case strategy, it is important to consider which claims will and will not allow for recovery of fees, and advise your client about the pros and cons of pursuing each claim accordingly.  Also, be aware of fee-shifting procedural tools (such a motion to dismiss under the Texas Citizens Participation Act) and various Texas statutes and rules that allow for recovery of fees as a sanction (such as Civil Practice and Remedies Code Chapters 9-10, and Texas Rule of Civil Procedure 215).

Lesson Two: Keep accurate, contemporaneous billing records.  Although billing records are not absolutely required to prove the amount of reasonable and necessary fees, it is “strongly encouraged” to submit such proof in support of attorneys’ fees.  Rohrmoos Venture, 578 S.W.3d at 502.  It is much easier to review, summarize, and testify about the work performed (often years later) if you have been diligent in your billing practices throughout.  Time should be kept in a manner that demonstrates the “(1) particular services performed, (2) who performed those services, (3) approximately when those services were performed, (4) the reasonable amount of time required to perform the services, and (5) the reasonable hourly rate for each person performing the services.”  Id.  It is also advisable to keep time in a manner that is specific enough to cover the topic but without legalese and without so much detail that heavy redactions become necessary.  Fact finders prefer to read invoices in plain English without the interruption of hidden text.

Lesson Three:  Your fee agreement does not control the amount awarded.  “[A] client’s agreement to a certain fee arrangement or obligation to pay a particular amount does not necessarily establish that fee as reasonable or necessary.”  Id. at 488.  Translation: even if you have agreed to handle the matter for a flat fee or contingency fee, you still must demonstrate that the amount of fees sought for recovery are reasonable and necessary based on the work performed and the time incurred.  Regardless of the fee arrangement with your client, keeping accurate and contemporaneous billing records is important.

Lesson Four: Remember to timely designate fee experts.   “Historically, claimants have proven reasonableness and necessity of attorney’s fees through an expert’s testimony—often the very attorney seeking the award.”  Id. at 490.  “[C]onclusory testimony devoid of any real substance will not support a fee award.”  Id. at 501.  Because expert testimony will be required, the attorney must remember to designate herself and any other attorney who will offer an opinion about the reasonableness and necessity of the fee amount(s) as an expert witness in compliance with the scheduling order or discovery control plan governing the case.

Lesson Five: Understand the “Texas two-step” calculation method.  At step one, calculate the “base” or “lodestar” amount by multiplying the “reasonable hours worked” by a “reasonable hourly rate.”  Id. at 498.  This is an “objective calculation” that yields a “presumptively reasonable” amount.  Id. at 497-98, 502.  The determination of what is a reasonable market rate and what is a reasonable amount of time will typically include consideration of the following factors: (1) the time and labor required, (2) the novelty and difficulty of the questions involved, (3) the skill required to perform the legal service properly, (4) the fee customarily charged in the locality for similar legal services, (5) the amount involved, (6) the experience, reputation, and ability of the lawyer or lawyers performing the services, (7) whether the fee is fixed or contingent and the uncertainty of collection, and (8) the results obtained.  Id. at 500.  At step two, “adjust[] the base calculation up or down based on relevant considerations … [that were not] subsumed in the first step.”  Id.  “If a fee claimant seeks an enhancement, it must produce specific evidence showing that a higher amount is necessary to achieve a reasonable fee award.”  Id. at 501. Remember that only “rare circumstances” justify such an adjustment.  Id. at 502.

Following these five lessons from the outset of a case will be beneficial to the expert testifying about the amount of fees at the end of a case.  More importantly, it will benefit your client’s best interest in obtaining a monetary award and being able to have that award affirmed on appeal.

Amanda G. Taylor serves as Practice Group Leader of Butler Snow LLP’s Appellate Group and practices from the firm’s Austin, TX office. As a Board-Certified Civil Appellate specialist, Amanda helps to shape successful case strategy from the outset of litigation through the end of an appeal.  Amanda is a detail-oriented lawyer who represents her clients with passion, stays current on emerging trends and issues, and brings a practical perspective to problem solving.  She has a broad range of experience handling complex civil disputes regarding contracts, fraud, tax, insurance, products, employment, real property, and trust and estates.  Amanda is also committed to community service through a number of positions in her State and Local Bar Associations.

Feds Urge Caution on $87M Fee Request in Apple Device MDL

December 3, 2020

A recent Law 360 story by Christopher Cole, “Feds Urge Caution on $87M Atty Fee Bid in Slow-IPhone MDL,” reports that the U.S. government has criticized a request by plaintiffs' lawyers for an $87 million cut of the half-billion-dollar deal reached with Apple over claims the company slowed down certain iPhones, telling a California federal court that such a large award would unfairly cut into consumers' share.

Apple's lawyers have already pushed back against the class counsel's request, arguing that it vastly overestimates how much time and effort the plaintiff's legal team put into the case.  The multidistrict litigation centers on classwide allegations that Apple designed its software updates to slow down some phone models, nudging consumers to buy newer iPhones.  Apple reached a deal in May to settle the case for up to $500 million, but has protested the $87 million fee bid.  The government made clear in a filing that it does not object to the proposed settlement itself, but views the fee request as over the top.

"While the United States does not share the participants' close knowledge of this litigation, class counsel's request for more than $87 million in fees is difficult to square with prior precedent and the Ninth Circuit's typical benchmark in megafund cases," the U.S. Department of Justice's Civil Division said.

"Because a windfall for the attorneys in this matter would work to the direct detriment of class members, the United States asks the court, on behalf of unnamed consumer plaintiffs, to take a close, second look at the lodestar analysis and the factors relating to a reasonable percentage-of-the-fund cross check," the agency said.  The government made its stance known through a statement of interest under the Class Action Fairness Act of 2005.

Class counsel has asked for $87.7 million in fees plus more than $1 million in costs, a total that Apple urged the court in October to slash by at least $7 million. The tech giant said then that the request would knock down the actual settlement amount by at least $23 per device, and possibly more, "taking money out of the pockets of the very group that plaintiffs' counsel represent."

The government said that the fee request alone amounts to 28.3% of the minimum $310 million that Apple has agreed to pay out under the settlement, and that "dozens of settlement class members and the defendant filed objections denouncing the requested fees as excessive."

The DOJ didn't suggest an alternative share for the attorneys but urged the court to "examine closely, in the context of its own extensive experience with the case, the attorneys' fees request and underlying documentation provided by class counsel.  Even where a settlement provides real value to the class, courts must also ensure that the attorneys' fee award is reasonable."

"A second look to evaluate attorney hours, rates, and the claimed lodestar multiplier is especially appropriate here, where small changes to the calculation necessarily would lead to large amounts of money being shifted between the attorneys and consumer plaintiffs," the government said.

Class Counsel Earn $4.8M in Fees in $17M ERISA Settlement

December 2, 2020

A recent Law 360 story by Michael Angell, “Neuberger Workers’ Attys Get $4.8M in Fees in ERISA Deal,” reports that attorneys for a class of Neuberger Berman employees got the green light from a New York federal judge to collect $4.76 million in attorney fees for their work securing a $17 million settlement resolving claims that the investment giant put workers' retirement money into an underperforming fund.

U.S. District Judge Laura Taylor Swain approved the fee request from attorneys for Arthur Bekker, who sued Neuberger Berman for breach of fiduciary duty for offering him and others a laggard, in-house mutual fund in their 401(k) plans.  Judge Swain said the fees, which were lower than those earlier requested, were merited in a long-running, difficult case.

"Class counsel has pursued this matter since 2016 — over four years of research, investigation, briefing and settlement efforts. ... Class counsel were efficient and effective in securing this result for their client and the class," Judge Swain said in her order.  Bekker's attorneys secured $17 million for the class in June from the Employee Retirement Income Security Act suit.

Judge Swain said Bekker's representatives were able to get the award in the face of significant risks in bringing ERISA 401(k) actions, especially the risk of taking on a lengthy, complex case with the potential of zero recovery for their clients and themselves.

Judge Swain noted that Bekker's fiduciary breach claim was initially dismissed, prior to her reviving it in May 2019.  She also said the U.S. Supreme Court's February decision in Intel Corp. Investment Policy Committee et al. v. Christopher M. Sulyma, which established deadlines on when workers can file ERISA actions, could have time-barred Bekker's suit.

"Class counsel were able to leverage their expertise and experience with similar matters to achieve a positive, lasting and meaningful benefit to the class in this complex case," Judge Swain said in her order.  The fees request, which works out to 28% of the total award, is a discount relative to other awards in ERISA 401(K) cases across the country, which are typically one-third of the total award, Judge Swain said in her order.

The percentage-of-award calculation for fees is preferred in the Second Circuit over using an hourly rate multiplied by the number of hours worked on a case, according to her order.  But even based on an hourly rate method, the fees request seems reasonable, Judge Swain's order said.  Bekker's attorneys put in 1,386.5 hours of work on the case, which works out to $813,410 in "lodestar" fees earned for their time, Judge Bekker's order said. The fees request amounts to a lodestar multiplier of 5.85, which is on par with other fees requests, she added.

Bekker's attorneys requested they be given 28% of the award in October, saying that the percentage requested reflects the median amount given in 137 other ERISA cases from 1997 through 2013.  That request amounted to roughly $1 million less than they originally asked for.  However, Judge Bekker noted that the fee was not so low that it would disincentivize other attorneys from bringing forward similar complaints.  In addition to the fees, Bekker's attorneys will be reimbursed for $41,083 in expenses, and he will receive $20,000 for serving as lead plaintiff.

$45M Fee Award in $187M LIBOR MDL Settlement

November 25, 2020

A recent Law.com story by Nadia Dreid, “NY Judge ‘Surprised’ By Fee Application in Libor Rigging Case,” reports that a New York federal judge wasn't happy with the amount of hours or law firms on the attorney fee bill she received in the wake of a $187 million deal with JPMorgan and other major financial institutions over claims of interbank rate rigging, but she granted $45 million in fees anyway.  U.S. District Judge Naomi Reice Buchwald said in her opinion that she was "to say the least, surprised to learn from their fee application that [exchange-based plaintiff] class counsel involved twelve additional law firms" and that the work from those firms made up nearly a fifth of the submitted hours.

"The court cannot divine any reason why it was necessary, efficient or in the best interests of the class to have twelve additional law firms litigate this case," the opinion read.  "If anything, the hours were claimed for work that was duplicative, unnecessary and easily could have been performed by the two appointed firms."

Those firms were Kirby McInerney LLP and Lovell Stewart Halebian Jacobson LLP, who were appointed as class counsel to the exchange-based plaintiffs in the multidistrict litigation accusing JPMorgan, Deutsche Bank and a handful of other big banks of conspiring to rig the London Interbank Offered Rate, or Libor.  Judge Buchwald preliminarily approved the $187 million deal in March and gave it her final blessing in September, but she had yet to come to a final decision on attorney fees.  Ultimately, she decided that none of the 15,000 hours of additional work done by outside firms would be used in the lodestar calculations.

The court also had issues with the amount of hours billed by class counsel themselves.  Although she agreed to accept all of the more than 65,000 hours of work from the two firms, the court noted that their bill listed 10,000 hours more than their sister counsel claimed "in support of their fee application for a case of similar magnitude."  It would take a four-person law firm working on the case full-time for roughly nine years — minus a month annually for vacation — to reach the 65,000 mark, according to the court.

"While the sheer quantum of hours suggests some amount of over-litigation, the court will credit [class counsel] the full amount of time they claim," Judge Buchwald said.  The fees that the firms will walk away with comes out to 25% of the $187 million settlement, after the deduction of around $5.6 million in expenses, according to the opinion.

Judge Cites New Ninth Circuit Ruling When Considering Fee Calculation

November 12, 2020

A recent Law 360 story by Dorothy Atkins, “Koh Rips Kellogg Attys ‘Kitchen Sink’ Litigation Tactics,” reports that U.S. District Judge Lucy Koh rejected a revised $20 million deal to resolve claims Kellogg falsely labeled its sugar-loaded cereals and slammed class counsel for their "kitchen sink" approach to litigation, saying "the way you've litigated this case throughout has been overly burdensome on the court."  At the start of a hearing held via Zoom, Judge Koh took issue with a lengthy, now-mooted motion to enforce the settlement that class counsel filed after Kellogg purportedly threatened not to cooperate with a renewed bid for preliminary approval.

If approved, the proposed deal would resolve lead plaintiff Stephen Hadley's August 2016 lawsuit that alleges Kellogg Sales Co. falsely advertises its sugar-loaded Raisin Bran, Frosted Mini-Wheats and Smart Start cereals and Nutri-Grain breakfast bars as healthy.  Judge Koh told class counsel, Jack Fitzgerald, that she spent considerable time deciding the motion to enforce the settlement, which had 64 exhibits attached and included confidential information from the settlement negotiations, which Judge Koh repeatedly said isn't allowed.

But Kellogg ultimately did not oppose the class's renewed motion for preliminary settlement approval, so now the motion to enforce is moot, Judge Koh said, and the work and time she spent deciding it was a waste.  She added that she would have denied the motion.  Judge Koh noted that the motions to dismiss in the case were over 65 pages long "each time" and the lengthy motions practice is "a constant problem."  She also warned repeatedly that she'll remember how the attorneys overburdened the court if she decides to award attorney fees.

The discussion came during an hours-long hearing on the second attempt by the parties to get the deal preliminarily approved in hotly contested litigation over Kellogg's labels. For example, the Frosted Mini-Wheats and Smart Start labels say "lightly sweetened" and the Nutri-Grain bars say "wholesome goodness," which Hadley said implies those products are low in sugar, even though they contain 18% to 40% added sugars.

In February, Judge Koh rejected an initial $31.5 million class action settlement, finding the deal contained several troubling provisions and outright legal errors.  The parties went back to the negotiating table, but in July, class counsel filed a renewed motion for preliminary approval along with a motion to enforce the settlement, which Kellogg opposed.  But during the lengthy hearing on the motions, Judge Koh pointed out that the motion to enforce attached privileged mediation communication between defense counsel, class counsel and the mediator.

Judge Koh also took issue with the "mechanics" of how the proposed deal calculates attorney fees. The judge pointed out that as it is proposed, fees would need to be approved before a cash settlement is distributed, but the fees depend on how many class members choose to redeem coupons compared to those who choose cash payments, and class members need to know how much they would receive in a cash payment in order to decide whether to opt for a coupon or cash.

"It seems a bit circular," she said.  Judge Koh added that in light of the Ninth Circuit's ruling earlier this week in Chambers et al. v. Whirlpool Corp. et al., she is "more confident" that this deal qualifies as a coupon settlement for the purposes of determining attorney fees.  But Fitzgerald argued that even under Chambers, the court has the discretion to award fees and he proposed to base the fee award on using a lodestar that's calculated after they determine how many class members will redeem a coupon versus cash payment.