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Category: Fee Calculation Method

Sixth Circuit Tosses Hourly Rates Citing ‘Community Market Rule’

August 12, 2020

A recent Law 360 story by Emily Field, “6th Circ. Wipes Out Atty Fee Award in Vita-Mix Blender Deal” reports that the Sixth Circuit vacated a nearly $4 million attorney fees award in a class action settlement over plastic flecks in Vita-Mix Corp. blenders, finding that a lower court used the wrong billing rates to determine the award.  The appeals panel said that in its circuit, a "community market rule" is used to calculate a reasonable billing rate.  Under that rule, the billing rate should not be more than what than what competent lawyers in the relevant community charge.  However, the lower court departed from Cincinnati rates, saying that the practice of law is increasingly more national, according to the opinion.

Attorneys have to show why they deserve to recover fees equivalent to those charged by out-of-town specialists, the panel said.  "And here class counsel would be hard-pressed to make such a showing since they are very much in-town attorneys," the panel said.  "Local lawyers litigating a case in a local courthouse should receive local billing rates.  The district court erred when it concluded otherwise."

The rates used by the lower court were based on both local rates and rates requested by the class counsel, attorneys from Markovits Stock DeMarco LLC, Finney Law Firm LLC and Goldenberg Schneider LPA, according to the opinion.  "As a result, a majority of the attorneys received rates of around $500 per hour and the most senior attorneys received rates exceeding $600 per hour," the panel said.

The appeals court also noted that class counsel attorneys with similar experience levels often requested very different billing rates, with some attorneys with less experience reporting significantly higher rates.  "An attorney with twelve years of experience reported a billing rate $450 per hour, while an attorney from the same law firm with nine years of experience reported a billing rate of $530 per hour," the panel said.  "Neither class counsel nor the district court explained these discrepancies — i.e., by unique expertise or the like."  The panel directed the lower court to recalculate the billing rates.

NALFA Releases 3 Models of Growth for Litigation Hourly Rates

August 10, 2020

NALFA conducts custom hourly rate surveys for law firms, corporate legal departments, and government agencies.  Our hourly rate surveys provide our clients with the most current and accurate hourly rates within a given geography and practice area.  Starting this year, 2020, NALFA is conducting hourly rate surveys in 5 key practice areas.  These billing rate surveys show the current average hourly rate range for both plaintiffs' and defense counsel at partner and associate levels.

NALFA has released 3 different models of growth (linear, logarithmic, and logistic) for hourly rate ranges in litigation.  These growth curves are based on the universally accepted principle that hourly rates increase with experience (i.e. partner rates are greater than associate rates).  Linear growth is consistent straight-line growth.  Generally, logarithmic growth rises sharply then levels off.  Generally, logistic (S-shaped) growth starts slowly, rises sharply, then levels off.  We did not use exponential (J-shaped) growth because an ever-increasing, very steep curve does not fit hourly rate billing economics.

“These growth models do not account for the factors that effect hourly rates such as geography, practice area, party to litigation, complexity of case, size of law firm, and economics that our surveys do,” said Terry Jesse, Executive Director of NALFA.  "Those variables were not a part of this purely mathematical exercise," Jesse emphasized.

From these growth curves, we learn 2 key concepts:

1.  Logarithmic growth seems to represent the economics of hourly rates and the career span of litigators the best.  Generally, the growth starts rapidly, then increases slower, then eventually levels off.  Here, the highest rate of billing growth takes place in early-career.

2.  Logistic growth is another model that has some appeal to the economics of hourly rates and the career span of litigators.  Generally, the growth starts slowly, then increases rapidly, then eventually levels off.  Here, the highest rate of billing growth takes place in mid-career.



The parameters of these models include the number of years continuously practicing litigation (12 data points), plotted along the x axis and hourly rate ranges (20 data points) along the y axis.  The litigation experience data sets range (less than 2 Years-35+ years) has a variance of 1 year to 5 years.  The hourly rate ranges (less than $200-over $1,200) include a variance of $50 and $100.

$23M in Attorney Fees in Yahoo Data Breach MDL

July 22, 2020

A recent Law 360 story by Dorothy Atkins, “Yahoo Data Breach MDL Attys Get $23M in Cut Fee Award” reports that a California federal judge approved a $117.5 million deal to resolve multidistrict litigation involving 194 million class members over Yahoo's multiple data breaches and awarded class counsel $23 million in fees, declining to award the full $30 million they requested.  In an 86-page opinion, U.S. District Judge Lucy Koh signed off on the settlement allotting class counsel $23 million in fees and $1.48 million in costs, while class representatives received between $2,500 and $7,500 in service awards.

In rejecting class counsel's bid for $30 million in fees, Judge Koh recognized that their requested fee amount met the 25% benchmark typically awarded in class action settlements.  But the judge said calculating fees based on a percentage of the total deal isn't appropriate in this "megafund" case involving more than a hundred million class members.  "Having overseen this case for four years, the court finds that justice would be best served by applying the lodestar method — i.e., tying the fee awards for class counsel to the actual hours they reasonably expended on this litigation and then selecting a multiplier," the order says.

During a hearing held via Zoom last month, Judge Koh heard multiple objections to the settlement and fee request.  At the time, the judge told class counsel she wanted more detailed billing information — including the "markup" on work by first-year law students — on the 31 law firms and 204 attorneys and paralegals who worked on the MDL and related litigation consolidated in state court, as well as total costs for hiring experts.  After reviewing the supplemental information, Judge Koh said in her order that class counsel's hourly billing rates — which ranged from $450 to $900 for partners, $160 to $850 for non-partner attorneys and $200 for summer associates — is reasonable.

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.”

FL Appeals Court Orders Reconsideration of “Fees on Fees’ Ruling

July 9, 2020

A recent Daily Business Review story by Michael Mora, “Appeals Court Orders Reconsideration of $115K Legal Award for ‘Fees on Fees’ Litigation” reports that a Florida appeals court said a Miami law firm’s $115,000 fee award, already reduced from $200,000, must be reduced further because that award improperly encompassed the law firm’s work in asking for fees.  The ruling by the Third District Court of Appeal on cross-appeal ultimately stated the Silver Law Group is entitled to fees for its work in the underlying litigation, but ordered the Monroe County Circuit Court to reevaluate that amount.

The main takeaway lawyers should get from the ruling, said John W. Annesser, a partner at Annesser Armenteros in Miami, is that “fees on fees would not be awarded as a sanction” under Florida Statutes Section 57.105.   Annesser represents Silver Law, which saw its fee reduced in the ruling.  Annesser is planning to appeal the Third DCA’s decision to the Florida Supreme Court.  He said the ruling, if allowed to stand, would encourage needless litigation that is expensive to challenge.

According to the amended complaint filed in the circuit court, Silver Law sought fees for work that took place between June 2009 and December 2014 for “numerous legal matters” in which it represented Paul Bates and Coconut Cove Resort & Marina.  Silver Law eventually sued Bates and the resort for attorney fees amounting to nearly $203,500.  Bates, through his original counsel, Chepenik Trushin, filed a counterclaim alleging malpractice by Silver Law, according to the amended complaint.

The Circuit Court found the counterclaim was “malicious and frivolous,” which formed the basis for the sanctions award against Bates, the resort and their counsel.  Lawyers for Bates and the resort argued that the lower court abused its discretion by awarding any fees at all to Silver Law.  The Third DCA cited its 1995 decision in Eisman v. Ross, which found no statutory basis for a lower court to grant a portion of an award that represented cost and attorneys’ time spent litigating the amount of fees.

Annesser disputed that ruling, and cited to Florida Statutes Section 57.105, which states that when the “moving party proves by a preponderance of the evidence that any action taken by the opposing party … was taken primarily for the purposes of unreasonable delay,” the court should award damages for the reasonable expenses, including attorney fees and “other loss resulting from the improper delay.”  “As the court pointed out in oral arguments in the case, the effect for not rewarding the attorneys’ fees for litigating the amount of fees when it comes to a sanction,” Annesser said, “is to dilute the sanction itself and to encourage more litigation arising from the underlying sanctionable activity.”