Fee Dispute Hotline
(312) 907-7275

Assisting with High-Stakes Attorney Fee Disputes

The NALFA

News Blog

Category: Fee Request

NCAA Rips $45M Fee Request in Student Athlete Pay Suit

May 24, 2019

A recent Law 360 story by Dave Simpson, “NCAA Rips $45M Atty Fee Bid in Student Athlete Pay Suit,” reports that the $45 million attorney fee bid from the legal team whose March victory barred the NCAA from restricting student athletes' education-related compensation is unreasonable because it seeks pay for "excessive, redundant, and unnecessary" hours worked, the NCAA said in California federal court.  The NCAA and several of its conferences said that rather than multiplying the requested $30 million attorney fee lodestar by 1.5, as proposed by the student players, it should be reduced by 10% to exclude non-compensable hours from the fee application, and then hit it with a negative multiplier to reflect the fact that the attorneys only scored a partial victory for their clients.

"The district court rejected much of plaintiffs' demands, retaining the cost-of-attendance cap on financial aid and permitting defendants to limit the levels of non-education-based compensation that Division I schools may offer their student-athletes," the organizations said.  The bid for attorney fees stems from the key injunction the student athletes won in March.

U.S. District Judge Claudia Wilken rejected the NCAA's arguments that its compensation rules promote demand for college sports and justify its antitrust violations.  She prohibited the association from enforcing rules that she considered "overly and unnecessarily restrictive."

Following that major win, the players' attorneys sought a compensation package of $29.9 million plus the multiplier for what they said was the economic value of the injunction, and submitted an economist's declaration to bolster their argument.  But the NCAA says that the proposal is off-base, starting with the calculation for hours worked by the attorneys.

"Their refusal to provide detailed billing records, submitting instead evidence only of the total number of hours spent by various attorneys by year — or in one instance across all years of the litigation — without identifying the subject matter of any individual's time expenditures has made it impossible for defendants or the court to evaluate whether the time spent on particular tasks was reasonable," the NCAA said.  Likewise, the requested 1.5 multiplier is meritless, the NCAA said, because the players' attorneys don't argue that the lodestar is unreasonably low, nor do they show that they took on unreasonable risks or won an exceptional victory.

The organizations also claim that the $1.3 million sought in costs is "unsupported, inappropriate and unreasonable," saying that almost $1 million of it is not supported "with even a single invoice or document."  Instead, the NCAA claims, the players' attorneys are "simply listing vague categories of purported costs for which they claim reimbursement."  As for the remaining costs, which the NCAA says are accounted for through invoices, much of it is not compensable as a matter of law, the motion claims.

The NCAA says that among these costs are bills for expenses that have already been covered, bills for video services on days when no video services were used, and more than $200,000 in unspecified color copy printing costs, which the NCAA says should be reduced by at least 50% because they are excessive.  "I think the time has come to see what defendants spent to put this in perspective," Steve W. Berman, who is representing the students, said in an email to Law360.  "I have a bet in the litigation team pool that they are twice what we spent!"

The March ruling followed a landmark 10-day bench trial that kicked off in Oakland, California, on Sept. 4 over allegations by Division I college football and basketball players that the NCAA's rules illegally restrict what they can receive to play.  For years, the rules limited athlete benefits to cost-of-attendance scholarships; student assistance funds, which cover certain school-related expenses; some need-based grants, like Pell Grants; and bowl participation awards, which are typically capped around $450.

During the trial, sports economists, former athletes, university officials and NCAA administrators took turns testifying on the impacts of the NCAA's compensation rules.  Three former athletes who didn't play professionally after college recalled how they struggled as students to pay for meals, clothes and trips home, while they spent between 40 to 60 hours a week on their sports, leaving little time for academics.

The case is In re: National Collegiate Athletic Association Athletic Grant-In-Aid Cap Antitrust Litigation, case number 4:14-md-02541, in the U.S. District Court for the Northern District of California.

Uber Attorneys Seek $5M in Fees in Employment Action

May 23, 2019

A recent Law 360 story by Linda Chiem, “Uber Drivers’ Attys Seek $5M in Fees in Classification Deal,” reports that California and Massachusetts drivers who aren't bound by Uber’s arbitration agreement asked a federal judge to sign off on $5 million in attorney fees after they reached a $20 million deal to end long-running claims the ride-hailing giant wrongly classified drivers as independent contractors.

Nearly 14,000 California and Massachusetts drivers for Uber Technologies Inc. filed a request for attorney fees and costs with U.S. District Judge Edward Chen in the Northern District of California, seeking about $3.8 million in fees for lead attorney Shannon Liss-Riordan of Lichten & Liss-Riordan PC.  Five other attorneys and paralegals at the Boston-based firm would receive between $16,200 and $589,000 each based on the number of hours they put into the case, according to the filing.

The total $5 million request works out to nearly 25% of the settlement fund, which is in line with the benchmark for attorney fees that courts in the Ninth Circuit have approved in class deals.  Liss-Riordan said she had no additional comment beyond the court filing.  “This fee request is more than justified by the cutting-edge nature of this case, the skill and creativity used in litigating the issues, the case law made here that has assisted and will assist other workers challenging their mis-classification as independent contractors, the unusually high risk taken on by filing the case, and the significant monetary and non-monetary relief obtained for settlement class members,” the drivers’ attorneys said in the filing.

In addition to the $5 million in attorney fees, the drivers requested $7,500 service awards apiece for plaintiffs Elie Gurfinkel, Matthew Manahan, Mokhtar Talha and Pedro Sanchez, and $5,000 service awards apiece for plaintiffs Aaron Dulles and Antonio Oliveira for their work in representing the class in the litigation.  “These awards are reasonable and well within the range of approved incentive payments in class action litigation,” they said.  “Indeed, merely associating their names with such high-profile lawsuits created a tremendous risk of being blackballed in the ‘gig economy’ industry and beyond.  When searching for their names on the internet, potential employers will likely find reference to the O’Connor and Yucesoy cases.”

Judge Chen greenlit the overall $20 million settlement in March after getting the parties to provide additional information about various aspects of the agreement.  Under the deal, about 11,000 drivers in California and 2,600 drivers in Massachusetts who aren't bound by arbitration would receive average payments of $2,206 each after fees and other costs are deducted, according to court filings.  Uber also agreed to change some of its policies in both states to give drivers more job security, but it did not agree to classify the drivers as employees.

Specifically, Uber will no longer “deactivate,” or block from using the app, drivers who have a low rate of accepted rides.  It will also clarify and give advance warning before deactivating drivers, and will allow a formal appeal process for certain cases of deactivation as well as increased access to quality courses for drivers so they can become eligible for reactivation, according to court filings.

The drivers’ attorneys said they achieved “exceptional results” in nearly six years of hard-fought litigation over the classification issue, despite taking a big hit in September when the Ninth Circuit dismantled Judge Chen’s previous class certification orders covering hundreds of thousands of Uber drivers who claimed they were classified as independent contractors and shorted on tips and work expenses.

How Rohrmoos Ruling Could Change Attorney Fees in Texas

May 16, 2019

A recent Law 360 story by Michelle Cassady, “4 Ways Rohrmoos Could Change Fee Fights in Texas,” reports that the Texas Supreme Court's recent opinion laying out what evidence is needed to prove up attorney fees already is being called by some practitioners the seminal case on the topic and one that could have a major impact on fee fights in the state.

In its Rohrmoos Venture v. UTSW DVA Healthcare LLP ruling, issued, the court sought to dispel what it said was confusion on the part of lawyers and courts about two methods of calculating fees: the Arthur Andersen eight-factor test and the lodestar method.  It said the lodestar method — determining fees by multiplying the number of hours spent working on the case by a reasonable hourly rate — should be the starting point for calculating fees.

The state's high court intended the 56-page opinion to be a "big black-letter case," said Jadd Masso of Clark Hill Strasburger PLC, characterizing it as "the conclusion of an evolution on the part of the court" that encompasses its 2012 opinion in El Apple I Ltd. v. Olivas and its 2013 opinion in City of Laredo v. Montano.  Masso said the lengthy opinion amounts to a "treatise on attorneys fees in Texas."  "It is the way, the truth and the life, and the only way to get fees is through the lodestar method," he said.  The El Apple decision was a signal from the court it wanted to encourage the use of lodestar, Masso said.  And with Rohrmoos, there's no more question about whether there's more than one way to prove up fees, he said.

Here are four ways that the ruling could change fee fights in Texas.

Detailed Billing Records Will Become the Norm

The Rohrmoos opinion didn't mandate real-time billing records to prove up attorney fees, but the court said they are "strongly encouraged to prove the reasonableness and necessity of requested fees when those elements are contested."  While most defense attorneys already do keep such records, the ruling will likely have a bigger impact on plaintiffs attorneys and others who work on a contingent fee or flat fee basis, said Frank Carroll of Roberts Markel Weinberg Butler Hailey.

"I think they have put the final nail in the coffin that anything short of contemporaneous billing records is sufficient," he said.  "People need to avoid the idea that 'this doesn't apply to me.'"  Carrol said lawyers doing simple, flat-rate cases for small amounts of money may not need to worry about keeping those records.  "But for everyone else: Proceed at your own peril if you don't follow the mandate of El Apple, City of Laredo, and this case."

Some defense lawyers, like Michelle Hartmann of Baker McKenzie, already are being pushed by clients into alternative fee arrangements rather than the hourly rate model.  "But we still enter all of the hours that go toward the case.  Not because we're going to bill the client for them, but to double check profitability and see if that was a good fit for both the client and the firm," she said.  "I think most defense attorneys do it now, even with flat-fee arrangements.  But this is a reminder you still need to keep good billing records."

Lawyers Could Face Lengthy Cross-Examinations on Fees

The attorney who represented UTSW in the Rohrmoos case, Wade Howard of Liskow & Lewis, said he tried at oral arguments before the high court to stress that putting hundreds of pages of detailed billing records before the jury would "do nothing" to help them determine what costs are actually reasonable and necessary.  Other practitioners have said that while the jury panel might not be going through those documents page by page, it does provide the other side "better ammunition to cross examine a lawyer," said Kelli Hinson of Carrington Coleman Sloman & Blumenthal LLP.

"They can then ask the tough questions, like, 'Why did you spend 50 hours on a motion for summary judgment that never got filed?' or 'Why were three attorneys doing this when one would have been sufficient?'" she said.  "So the jury gets the advantage of that even if they themselves don't pore through the record."  The Texas Supreme Court seemed to understand that the new guidance could have unintended consequences and warned in its Rohrmoos ruling that it was not "endorsing satellite litigation as to attorney's fees."

But courtroom opponents could easily use the records "as an opportunity to try and make the burden that the claimant has to meet even harder than this decision intended it to be," Hartman said.  And finding that sweet spot could be a years-long process, Hinson said.

"They said we don't want attorneys on the stand for days going through the bills bit by bit," she said.  "I think that's going to be where we struggle over the next few years — trying to find that fine line between what's enough and what's too much."

Outside Experts Could Be Used to Back Up Fee Requests

The ruling could also mean that attorney fees — which in many cases are the largest element of damages — will stop being treated like the "stepchild" of litigation, said John W. Bridger of Strong Pipkin Bissell & Ledyard LLP.  Bridger said that for years he's been advising other attorneys on the value of having an outside expert testify to the reasonableness of requested fees rather than the attorney on the case taking the stand.

For one, it can keep defense lawyers out of the sometimes awkward position of attacking the plaintiffs' attorney fees in front of a jury, and secondly, he said, it would encourage attorneys to spend more time developing the evidence to prove fees.  "This case only pushes us more and more toward outside experts, particularly where the attorneys' fees are larger than the amount in controversy," he said.

And the increasing amount of fees being sought is another reason calling in an outside expert could be worthwhile, said Kurt Kuhn of Kuhn Hobbs PLLC.  "It's inevitable that you're going to see people develop that evidence more. It clearly can't be an afterthought," he said.  "To get an outside expert is going to give you, in front of a jury, a little more credibility."

Counsel-to-Counsel Fee Agreements Could Proliferate

Hinson also speculated that the guidance could cause an uptick in attorneys agreeing to their respective fees ahead of time, keeping that issue out of litigation entirely.  "I do think it will be interesting to see if attorneys veer more that way so at least they know they won't get overturned for not having enough evidence," she said.

In the Rohrmoos opinion, the court "hints at" and "suggests" that stipulating to fees before trial in an agreement with opposing counsel could be a way to avoid contentious fee fights, Masso said.  Because the ruling could be interpreted as requiring "more work" on the part of attorneys trying to prove up fees, Masso said it's possible you'll see more negotiation and agreement on fees.  "This opinion makes the litigation of attorneys' fees a little more complex than it was before," he said.  "And there's no way that it doesn't result in that litigation getting a little more complex, and a little more involved and lengthy."

The cases is Rohrmoos Venture et al. v. UTSW DVA Healthcare LLP, case number 16-0006, in the Supreme Court of Texas.

Milberg Wants New Look at $12M Fee Request in Argentine Bond Case

May 14, 2019

A recent New York Law Journal story by Jack Newsham, “Milberg Claims Firm Cheated Out of $12M Fee in Argentine Bond Case,” reports that, the plaintiffs firm Milberg has sued a group of European investors that it previously represented in years of Argentina bond litigation, alleging the investors fired the law firm to avoid paying an $11.9 million fee.  In the suit, the New York firm is asking a federal judge to throw out an arbitral award that left Milberg with a mere $87,000.

According to Milberg’s suit, filed in Manhattan federal court, money manager Hans Wilhelm Brand fired the firm shortly after receiving a $162 million settlement offer from Argentina and learning that Milberg would be entitled to an $11.9 million contingency fee if he accepted.  People and entities whose money Brand managed, called the HWB investors, switched lawyers and reached a nearly identical settlement a year later, according to Milberg’s suit against the investors.

Milberg said it initiated arbitration against the HWB investors in 2017 seeking legal fees, but received a stunning decision from a three-man disputes panel in February 2019 that found the investors’ payments to Milberg and its other lawyers, totaling $513,000, was sufficient.  The neutrals at the International Centre for Dispute Resolution acknowledged Milberg had done more work for the HWB group than the firm’s billing records might indicate, but said “qualitative considerations have their limitations,” and said no further fees were merited.

“Anyone with passing familiarity with complex litigation prosecuted on a contingency fee basis … would be shocked to learn that a hard-fought case lasting well over a decade, which resulted in a settlement recovery by plaintiffs of $162 million, could end with an award of fees to plaintiffs’ counsel of zero,” the law firm said in its petition. (The firm was paid $87,000 before the arbitration over legal fees began.)

Documents Milberg filed in its suit indicate that it took over the HWB entities’ claims from Marc Dreier by 2010, after Dreier admitted to orchestrating a massive investment fraud scheme and his law firm failed.  The clients had previously paid $110,000 to Dreier and around $300,000 to Argentine lawyer Patricia Rosito Vago and her nonlawyer husband, the arbitral award said in a footnote.

Michael Spencer was the lead Milberg lawyer on the Argentine bond cases, according to the arbitral award, and the firm said the HWB group was its biggest Argentine bonds client.  Milberg received between $5 million and $5.5 million from other clients for its work on those cases, the award said.

The arbitrators noted that Milberg clocked 172 attorney hours and 90 paralegal hours on the HWB entities’ cases, worth $142,900, but spent “more time on the representation of HWB than is reflected in its HWB-specific time records.”  Still, the panel declined to award Milberg any more than it had been paid, saying the $513,000 the HWB investors had paid to all their lawyers was “a reasonable total fee recovery.”

In its lawsuit, Milberg, which reorganized in 2018 and now does business through the firm Milberg Tadler Phillips Grossman, argued that the award should be vacated because it showed manifest disregard for the law.  After firing Milberg, the award said, the HWB clients hired the firm Wilk Auslander to go to bat for them; that firm was paid $1.6 million after billing $2.3 million, according to the award. Milberg argued that Wilk Auslander failed to secure a better settlement than Argentina offered in 2016 through its bond dispute settlement program known as the “propuesta.”

But Wilk Auslander partner Jay Auslander, a lawyer for HWB investors, said in an interview that Milberg had ridden the coattails of other law firms whose clients held much greater amounts of Argentine bonds.  It was those firms that did the heavy lifting, he said, not Milberg.  “That [Milberg] caused the propuesta is, in our view, absurd,” he said in the interview. “We had a highly qualified, highly experienced three-lawyer panel that had a very high level of juridical sophistication and heard a tremendous amount of evidence. … We believe their award will not reasonably be challenged.”

Judge Slashes Attorney Fee Request for Unnecessary Delays

May 7, 2019

A recent Law 360 story by Carolina Bolado, “Fla. Judge Slashes Atty Fee Request For Unnecessary Delays,” reports that a Florida federal judge slashed in half a request for over $130,000 in attorney fees, finding that a defendant's attorneys needlessly delayed ending litigation after they learned that their client had been wrongly sued by porn producer Malibu Media LLC for copyright infringement.  U.S. District Judge James S. Moody Jr. said defendant Roberto Roldan was entitled to some attorney fees and awarded him $69,084 after he was incorrectly named as a defendant in the case, which accused him of downloading copyrighted videos.

But the fees award was just over half of the $130,651 that Roldan’s attorneys had requested because the judge found that the number of hours they worked on the case was unreasonable.  Judge Moody determined that Roldan’s counsel collected information from their client and his friends, including affidavits making clear that he wasn’t a proper defendant in the case, but continued to litigate the lawsuit instead of revealing the information and ending the litigation against their client.

And when Malibu Media expressed concern to Roldan’s attorneys that he may not be a proper defendant in the lawsuit and asked to depose him, they objected and instead filed a motion for summary judgment a few days later, according to the order.  “None of these actions, among others discussed, demonstrate a good faith effort to resolve the case on the merits,” Judge Moody said.

The judge stood by a prior conclusion that Malibu Media bears some responsibility for failing to investigate simple facts about Roldan that would have ruled him out as a defendant.  But it was Roldan’s counsel that caused delays, he said.  “Ultimately, much of the work done in this case was unnecessary, and costly,” Judge Moody said.

Frequent litigant Malibu Media filed its copyright suit, one of many against users of file-sharing service BitTorrent, in November 2013.  The porn producer alleges the defendants downloaded at least 40 of its copyrighted videos.  Malibu Media asked for sanctions against Roldan’s attorneys, claiming they withheld key information, namely that Roldan, the person suspected of infringement, wasn’t home when it happened and that his father was.  The porn producer said the attorneys did it to drive up the company’s litigation costs in chasing the wrong target and said they filed a frivolous 281-page motion to dismiss.

In his order, Judge Moody declined to sanction Roldan’s attorneys, pointing out that he had already made an “across-the-board cut” in the attorney fees award and that further reduction was unnecessary.