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Category: Fee Request

Judge Trims DC Hourly Rates in Employment Cases in Pennsylvania

September 21, 2018

A recent Legal Intelligencer story by Max Mitchell, “Judge Trims ‘DC Rates’ in Pittsburgh Employment Case, but Lawyers Still Land More than $2.2M in Fees,” reports that attorneys from Washington, D.C., may not have secured all of the fees they were seeking, but they are still set to receive more than $2 million for handling a series of employment lawsuits in the U.S. District Court for the Western District of Pennsylvania.  U.S. District Judge Mark Kearney awarded $2.26 million in attorney fees to attorneys from D.C.-based Williams & Connolly and Pittsburgh-based The Employment Rights Group who handled the case Mozingo v. Oil States Energy Services.  The litigation stems from claims by oil and gas workers that they were cheated out of overtime pay.

The employees’ attorneys had asked the court to award $2.43 million for the litigation, which started out with lawsuits for 29 separate employees.  According to Kearney, attorney Zachary Warren, the lead lawyer for the plaintiffs, started his representation of the employees while working at The Employment Rights Group in Pittsburgh, but, after he joined Williams & Connolly, Warren continued to lead the litigation, and brought on four colleagues from the Washington firm to help him handle the litigation.

Although Kearney granted much of the attorneys’ fee request, he declined to apply the hourly billing rates common to the D.C. area, and instead said billing rates more common to the Pittsburgh area would apply.  “We cannot simply accept Washington billing rates as being reasonable in Pittsburgh,” Kearney said.  “The employees’ counsel do not offer evidence allowing us to make this leap.  Exercising considerable discretion, we base the reasonableness of hourly rates upon blended rates for attorneys in this community.”

According to Kearney, the lawsuit began after 29 employees of Oil States Energy Services LLC opted out of a 2015 class action settlement in Texas.  The plaintiffs, which consisted of frac hands, grease operators and crane operators, contended that the energy company misclassified them as exempt from overtime laws.  The 29 plaintiffs, who filed suit in the Western District in early 2015, hired Pittsburgh lawyers from The Employment Rights Group, and the defendants hired attorneys from Texas.

Kearney said 14 plaintiffs settled their cases in mid-2016, and soon after Warren left The Employment Rights Group to join Williams & Connolly.  Warren remained on the case, and brought four colleagues from the D.C. firm to help continue the litigation.  The cases were eventually tried in two groups, and juries found in favor of the employees in both.

Regarding the request for fees, Kearney said the $375 hourly rate that Warren requested was “fair and reasonable.”  However, Kearney declined to apply higher rates for the attorneys from D.C., and said the hourly rate for partners should be $500, the rate for associates should be $300 and the rate for summer associates should be $145.

Although the energy company raised numerous additional challenges, Kearney dismissed much of those, saying instead that the court was “far more skeptical of vague time entries often imbedded in block billing, or billing by several lawyers on the same task.”  As a result, Kearney ended up deducting nearly $30,000 from the request for “vague entries.”

Over $1B in Attorney Fees in Madoff-Related Matter

September 14, 2018

A recent American Law story by Scott Flaherty, “Madoff-Related Fees Top $1B for Baker & Hostetler,” reports that when Baker & Hostetler partner Irving Picard, the trustee of funds recovered for victims of Bernie Madoff’s infamous fraud, announced earlier this summer that a recent settlement had pushed investor recoveries above the $13 billion mark, he and his firm also edged toward a milestone of their own—$1 billion in legal fees.  They’ve now surpassed that mark as they approach 10 years of work on the case.

Picard and his team, including lead counsel David Sheehan, secured an interim fee award worth some $33.5 million as a result of a Manhattan federal bankruptcy court order on Aug. 30.  That most recent award, which covered work completed between Dec. 1 and March 31, brought Baker & Hostetler up to a total of $1.026 billion in fees awarded in connection with the Madoff trustee work, according to court records.  Picard has served since late 2008 as the Securities Investor Protection Act trustee for Bernard L. Madoff Investment Securities LLC (BLMIS).

The Aug. 30 fee award follows an announcement in July of court approval for a $280 million settlement with Madoff “feeder funds”—investment funds that funneled money into Madoff’s Ponzi scheme—tied to money manager J. Ezra Merkin. Merkin and the funds, Ascot Partners LP, Ascot Fund Ltd. and Gabriel Capital Corp., had reached the deal with Picard in June.

The Merkin settlement brought Picard’s total recovery on behalf of Madoff victims to more than $13.26 billion.  That amounts to more than 75 percent of an estimated $17.5 billion in losses among Madoff customers that have filed claims, Picard and his team said in a July 5 statement.  The recovered money has gone directly to Madoff victims, while the Securities Investor Protection Corp. has covered administrative costs related to the recovery efforts, as well as trustee, legal and accounting fees.

As the trustee and his team have continued to recover money for Madoff’s victims, Baker & Hostetler has, in turn, benefited from a steady stream of income in connection with Picard’s role.  Picard joined the firm Gibbons shortly after a court in December 2008 appointed him to oversee funds recovered for Madoff victims and the liquidation of BLMIS.  While Baker & Hostetler will likely see that revenue stream dry up eventually—and may have to grapple, at that point, with its impact on the firm’s finances—it doesn’t appear that an end to the Madoff trustee work is imminent.

Even nearly 10 years in, Picard’s most recent semi-annual status report filed in May detailed hundreds of ongoing matters, including investigations and litigation outside of the U.S. in Austria, Bermuda, the Cayman Islands, U.K. and other countries.  Baker & Hostetler’s fee awards throughout the case also provide clues to how much work Picard and his team have taken on, since their fee applications are based in part on billable hours.  Including the most recent award approved on Aug. 30, the past seven awards—all of which covered a four-month period—have remained within a $33 million to $36 million range, indicating that the trustee’s work has not dissipated over the past couple years.

Those amounts are, however, lower than some of the four-month fee awards to Picard and his team made earlier in the Madoff engagement.  Looking back to 2014, for instance, interim fees awarded to Baker & Hostetler were often more than $40 million and, in 2012, some of the four-month awards were higher than $60 million.

Third Circuit: No Attorney Fees After ‘Outrageously Excessive’ Fee Request

September 12, 2018

A recent Legal Intelligencer story by PJ D’Annunzio, “3rd Circ.: Judge Was Right to Award Nothing After ‘Outrageously Excessive’ $1M Fee Request, reports that a federal appeals court has upheld the denial of a $1 million fee request by a Scranton attorney in an auto insurance case that produced a verdict almost a tenth of the requested legal compensation.  In its denial, the U.S. Court of Appeals for the Third Circuit, joining other circuit courts, also held that it is within a judge’s discretion to award no attorney fees at all, especially if the fee request is deemed “outrageously excessive.”

The ruling stems from plaintiff Bernie Clemens’ bad-faith case against New York Central Mutual Fire Insurance over its handling of his auto accident case.  The claims went before a jury and ended with a $100,000 punitive damages award.  The defendants had settled Clemens’ uninsured motorist claim for $25,000.

The case was handled by Mike Pisanchyn of the Pisanchyn Law Firm in Scranton.  After the case was resolved, Pisanchyn asked the court to award the seven-figure fee amount.  However, U.S. District Judge Malachy Mannion of the Middle District of Pennsylvania was taken aback by the sheer size of the number—so much so that he awarded Pisanchyn and his firm nothing and referred Pisanchyn for disciplinary review.

Reached for comment, Pisanchyn disagreed that his firm’s fee request was excessive.  “In essence, despite us obtaining a $100,000 award on a zero written offer case while we represented the plaintiff over eight to nine years of litigation, the court has determined the plaintiff’s attorney should be awarded nothing,” he said in an email.  “However, we do take comfort in the fact that our clients have been compensated and are extremely happy with our representation of them through this almost decade of litigation.”

James Haggerty of Haggerty, Goldberg, Schleifer & Kupersmith in Philadelphia represented Clemens on appeal.  “The decision is important in that it addresses an issue regarding the award of counsel fees which had not heretofore been considered by the Third Circuit,” Haggerty said, “The court issued a well-reasoned and well written opinion, finding that the district court did not abuse its discretion in refusing to award counsel fees to trial counsel following his successful recovery of bad faith damages from the defendant insurer.”

Mannion’s 100-page opinion went line-by-line through the request, slashing billed fees he deemed vague, duplicative and excessive.  Mannion also took issue with how the firm recreated its timesheets, saying that, while recreating timesheets is allowable if the attorneys did not make them contemporaneously, a number of the entries appeared to be based on guesswork.

The Third Circuit agreed with Mannion’s handling of the request, which found that Pisanchyn and his firm were entitled to recover only 13 percent of the fees they asked for.  “In light of that substantial reduction, the district court deemed Clemens’s request ‘outrageously excessive’ and exercised its discretion to award no fee whatsoever,” Third Circuit Judge Joseph Greenaway wrote for the panel, which also included Judges Luis Felipe Restrepo and Stephanos Bibas.

“Although it was unusual, we cannot say that this decision was an abuse of discretion,” Greenaway added.  ”Review of the record and the district court’s comprehensive opinion makes clear that denial of a fee award was entirely appropriate under the circumstances of this case.  Counsel’s success at trial notwithstanding, the fee petition was severely deficient in numerous ways.”  Mannion had said one of the most “egregious” requests included billing 562 hours for trial preparation, with the plaintiffs attorneys entering between 20 and 22 hours per day on some days.  The Third Circuit examined that figure in detail.

“All the more troubling is the fact that counsel’s (supposedly) hard work did not appear to pay off at trial.  As the district court explained, counsel had ‘to be repeatedly admonished for not being prepared because he was obviously unfamiliar with the Federal Rules of Evidence, the Federal Rules of Civil Procedure and the rulings of th[e] court,” Greenaway said.  “Given counsel’s subpar performance and the vagueness and excessiveness of the time entries, the district court did not abuse its discretion in disallowing all 562 hours.”

Greenaway continued, “Aside from the problems with the hours billed for individual tasks, counsel also neglected their burden of showing that their requested hourly rates were reasonable in light of the prevailing rates ‘in the community for similar services by lawyers of reasonably comparable skill, experience, and reputation.’”

Judge: Law Firm Granted Attorney Fees Despite Receivership

August 31, 2018

A recent Law 360 story by Lauraann Wood, “Firm Can Get Fees Despite Receivership, Judge Says, reports that an Illinois federal judge granted a law firm's bid to collect $20,000 in retainer fees for work performed leading up to and during a hearing in which he ordered a receivership over a real estate investment company accused of running a Ponzi scheme, saying the firm’s request is fair and reasonable.

U.S. District Judge John Lee granted Celiza Braganca’s motion to collect the money, which was transferred to Braganca Law LLC  in two $10,000 wire payments surrounding the hearing in which the judge temporarily restrained and ordered a receivership over Jerome and Shaun Cohen’s allegedly unlawful business conduct, over the U.S. Securities and Exchange Commission’s objection that the money she’d receive belongs to the investors the father-son duo allegedly defrauded. 

“Allowing reimbursement sought by Braganca Law for the work they performed is reasonable and appropriate here,” Judge Lee said.  “After all, the defendant should be entitled to legal representation for the defense in this case at least through the entry of a consent judgment.”  The commission asked for a temporary restraining order and receivership the day it filed suit against the Cohens and their company Equitybuild LLC, saying they wrongfully misled about 900 investors with promises of double-digit returns.

The two owners lied to their investors about essentially everything, from their failure to disclose that both had previously filed for bankruptcy to their falsehoods about the experience and technology they’d tap to identify undervalued but high-performing property, according to the SEC’s lawsuit.  The Cohens would represent to investors that those properties were generating returns between 12 and 20 percent, but in reality they were losing huge amounts of money and returns were being paid with other investors’ money, according to the suit.

However, the day after the suit was filed, Equitybuild sent a $10,000 wire to Braganca’s firm, the SEC said.  A day after that, while the court was conducting TRO proceedings, the firm received another $10,000 from Equitybuild’s investment vehicle, Equitybuild Finance LLC, according to the commission.  But during the hearing, Braganca noted to Judge Lee that she’d raised the issue of attorneys’ fees during the earlier TRO proceedings, and the motion he saw regarding her requested $20,000 is how he told her to approach the issue.

The case is U.S. Securities and Exchange Commission v. Equitybuild Inc. et al., case number 1:18-cv-05587, in the U.S. District Court for the Northern District of Illinois.

NJ Court: Attorneys Must Advise Clients of Billing Options in Fee-Shifting Litigation

August 30, 2018

A recent New Jersey Law Journal story by Michael Booth, “Lawyers Must Advise Clients of Other Options Before Billing Hourly on Fee-Shifting Case, Court Says,” reports that a New Jersey appeals court voided a retainer agreement between a lawyer and his longtime friend, saying he did not properly disclose hourly fees he would be charging for representing her in a discrimination case.  The three-judge Appellate Division panel, in a published ruling, said Somerville solo Brian Cige did not adequately explain the arrangement, which provided for an hourly billing rate and litigation costs, to his client, Lisa Balducci.

The panel said lawyers who wish to charge hourly fees for work on discrimination or other fee-shifting cases must explain to their clients that there are other competent counsel who will accept those cases on a contingency basis, and who also will advance any litigation costs.

“Ethically then, must an attorney whose fee for undertaking an LAD case that includes an hourly rate component explain both the consequences on a recovery and the ability of other competent counsel likely willing to undertake the same representation based on a fee without an hourly component?  We conclude the answer is yes,” Appellate Division Judge William Nugent said.

The lawsuit filed by Balducci claimed she never fully reviewed the retainer agreement offered by Cige but was shocked when she began receiving bills for hourly services and costs, which included a $1 fee for reviewing incoming emails and sending responses, the court said.  Balducci eventually fired Cige and hired another attorney to represent her and her son in a Law Against Discrimination claim.  The decision didn’t reveal the details of that matter,

Nugent, writing for the court, said a Somerset County Assignment Judge Yolanda Ciccone properly found that Cige violated his professional responsibility to explain the agreement’s material terms to Balducci so that she could reach an informed decision as to whether to retain him.  Thus the retainer agreement was void.  “The hearing recording in this case includes adequate, substantial, credible evidence support the court’s decision,” said Nugent.  Judges Carmen Alvarez and Richard Geiger joined in the ruling.  “There is no dearth of competent counsel attorneys willing to litigate LAD and other fee-shifting cases that do not include an hourly component.

Balducci retained Cige in September 2012 to represent her and her child in the LAD case.  Cige presented her with what he said was a standard retainer agreement stating he could charge up to $7,500 up front, plus $450 an hour.  Balducci signed the agreement despite having “concerns,” according to the decision.  Balducci began complaining when she began receiving bills from Cige for hourly services plus expenses.  He told Balducci to not worry about the bills, because he was using them for purposes of a future fee petition he would demand at the conclusion of what he believed was a successful case.

“We are friends,” Balducci, in depositions, quoted Cige as saying, according to the decision.  “I was at your wedding.  I would never do this to you.  Ignore that.  Don’t worry about.  It is standard info.”  Balducci also complained that she was devoting her time to preparing for depositions while Cige was away attending chess tournaments, the ruling said.  Balducci fired Cige after she complained that it would be impossible for her to advance tens of thousands of dollar for expert witnesses.  Balducci filed a lawsuit against Cige, and he filed a counterclaim seeking more than $286,000 in fees for work he already had done.

“The trial court properly found the agreement was unenforceable and void,” Nugent said.  “There is no dearth of competent, civic-minded attorneys willing to litigate LAD and other statutory fee-shifting cases under fee agreements that do not include an hourly component.  The number of such cases litigated in our trial courts and reported in the case law evidence this, as does—at least as to numbers—advertising on television and radio, in telephone books and newspapers, and on billboards and other media,” Nugent wrote, noting that Balducci’s current counsel in the LAD case is not charging hourly fees.

$58.4M Attorney Fee Award in LIBOR MDL

August 16, 2018

A recent Law 360 story by Bryan Koenig, “Hausfeld, Susman Awarded in $58.4M in Libor MDL Fees, Costs,” reports that Hausfeld LLP and Susman Godfrey LLP will decide how to dole out a nearly $60...

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