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Category: Fee Statute

CA Appeals Court: Cutting Fee Award By 28 Percent Was Warranted

April 2, 2020

A recent Metropolitan News story, “Slashing Fee Award to 28 Percent of Amount Claimed Was Warranted,” reports that the Court of Appeal for this district has affirmed Los Angeles Superior Court Judge Randolph Hammock’s award of $95,900 in attorney fees to the successful plaintiff in a “lemon law” case, holding that there was no abuse of discretion in spurning the trial lawyers’ request for $344,639.

Plaintiff Lorik Mikhaeilpoor was represented in the trial court by Strategic Legal Practices, APC (“SLP”), a Century City firm that is headed by Payam Shahian and specializes in actions under the Song Beverly Consumer Warranty Act.  Its telephone number is 888-SLP-LEMON and the firm promotes itself as providing services of “Lemon law attorneys for the toughest cases.”  Mikhaeilpoor sued BMW of North America LLC and Finchey Corporation of California alleging failed efforts to repair her 2013 BMW 328i and a refusal to replace the vehicle or make restitution.

A jury on Feb. 28, 2018, awarded her $17,902.54 in compensatory damages, which was doubled, as provided for by the Song Beverly Act, for a total of $35,805.08.  The act also mandates an award of attorney fees “reasonably incurred”—although, under case law, an award may be denied where the amount sought is unconscionable.  In his Sept. 21, 2018 order granting $95,900 in attorney fees—reduced to $94,864 in light of awards of attorney fees and costs to the defendants—Hammock said “that the amounts billed” by SLP “are unreasonable, including dual billing of attorneys when the work of only one (at times) was reasonably required.”

The SLP attorneys sought fees at rates ranging from $325/hour to $595 an hour.  Those rates, the judge found, are “reasonable in the community,” but added that attorneys who bill at such rates “should not need to research routine issue of law and should resort to boilerplate when it will serve the client’s purposes.”

Hammock commented:  “This was not a complicated case. Plaintiff was lucky, in this Court’s opinion, to win anything.  This Court will not compound the generosity of the jury.”  He added: “Plaintiffs attorneys should be forewarned: This Court did seriously consider denying the motion for fees in its entirety, since the request of almost $350,000 was quite shocking and ‘unreasonably inflated.’

“This Court is aware of the substantial fees and costs which are incurred in bringing a case to trial before a jury.  It is also aware of the pro-consumer rationale of the Song Beverly Act in liberally awarding such fees and costs….A request of almost $350,000 in fees for this particular case— which this Court has essentially handled from beginning to end—is simply unacceptable.  Indeed, the request for a multiplier was specious.”

Mikhaeilpoor argued on appeal that Hammock  acted arbitrarily in setting the fee award and had neglected to begin his analysis by setting a lodestar amount.  “In finding that $95,900 was the reasonable amount of attorney fees in this case, the trial court expressly invoked the lodestar method.”  White wrote.

The order says: “In light of the foregoing, the Court finds that the lodestar amount of attorney’s fees is $95,900.00, which includes the fees incurred in connection with bringing the instant motion.  This was calculated by finding a total amount of 274 hours which were reasonably incurred to  date, at the average rate of $350 per hour.”

White remarked: “Despite the trial court’s clarity, Mikhaeilpoor mischaracterizes the analysis the court employed in order to create the illusion of error where there is none.”  The jurist pointed to Hammock’s findings and declared, in agreement with him: “Plaintiff ’s counsel spent an unreasonably excessive amount of time dealing with this non-complex case.”

Rejecting Mikhaeilpoor’s contrary contention, she said Hammock did not impermissibly tie the attorney fee award to the amount of compensatory damages that were recovered.  The $344,639 award proposed by Mikhaeilpoor was comprised of $226,426 in fees allegedly earned, with a .50 multiplier enhancement—or $113,213—plus $5,000 for work in connection with the defendants’ objection to the amount that was sought.  Hammock’s award included recompense for time spent on the fee motion but there was no enhancement.

“While the court’s rationale for the lodestar reduction also  influenced the denial of a multiplier, the court went further as to  the multiplier issue, emphasizing that this was ‘not a complicated  case,’ and the ‘request for a multiplier was specious,’ ” White wrote.  This, she said, has a bearing on the issue of whether an enhancement is warranted based on the “novelty and difficulty of the  questions involved.”  That the case was a simple one, White noted, is borne out by evidence that Shahian only becomes personally involved in a case if it’s complex, and there was no billing for his time.

Christine Haw was lead counsel in the case. Haw, who is no longer with SLP, had been an attorney for only about five years, but, it was claimed, she had handled “hundreds of automotive defect cases involving Song-Beverly.” Hourly rates were sought for her at $365 and $375.

White said that despite that experience, Hammock “reasonably found that Haw did not leverage her experience to produce efficient litigation,” noting: “Haw personally billed more than 240 hours, and required the help of nine other attorneys at various points in the litigation.”  She said Hammock was in the best position to determine the reasonableness of the amount sought, substantial evidence supported his decision, and there was no abuse of discretion.

Article: The Need For Attorney Fee Expertise

February 20, 2020

A recent AI article by John D. O’Connor, “The Need For Attorney Fee Expertise (pdf),” reports on the need for attorney fee expertise to prove reasonable attorney fees and proper billing practices in underlying litigation.  This article was posted with permission.  The article reads:

Most corporate clients today have access to excellent litigation counsel in each particular area of concern.  However, as attorney fee disputes are increasingly becoming a by-product of the main litigation event, few clients and few otherwise excellent litigators truly understand when and how to use attorney fee experts.

Although the “American Rule” provides that each litigating party bears its own fees, there are exceptions to this rule.  Successful class actions; employment and governmental discrimination cases; eminent domain suits; RICO claims; and other cases result in legally-sanctioned attorney fees claims.  Promissory notes, guarantees, real estate purchase agreements, and corporate acquisition contracts often contain attorney fee clauses.  High-stakes insurance coverage litigation usually features a battle over fees incurred in the underlying case(s).  It is common for a case with a small monetary award to result in an extremely high request for fees.

Typically in fees proceedings, the party with a claim to fees files a motion detailing the amount it requests, accompanied at a minimum by a Declaration of the main litigating attorney attaching a statement of his billings, detailing hours and rates for which payment is sought.  The main billing attorney will normally justify the requested billing rate, which can be his actual rate or a rate claimed to be prevailing in the community for one of similar skill and experience. The motion, usually accompanied by a brief summarizing the law of fees in that type of case, includes the statutory or contractual authority for same.

When the responding party files its submission, the contours of the ultimate dispute take shape.  It is common for the respondent to challenge the billing rates as unduly high; the number of lawyers assigned as excessive; the hours spent as inefficient; the number and length of conferences and meetings as unnecessary; the billing form as improperly “blocked” and “vague” in description; many of the tasks billed as being unwisely or improvidently chosen; certain work as not related to prevailing claims; and generally excessive fees for the type of litigation involved.  Often this opposition is accompanied by a request for limited discovery regarding fees.

As objections are detailed in various cases, the challenging lawyer is usually able to write an impressive brief in support.  These objections can be made without an expert witness, except as to prevailing billing rates, which the responding lawyer is qualified to opine.  The responding party will have made a serious mistake, however, if it did not bolster its objections with a detailed opinion of an experienced fee expert.  Often, the reviewing Court has witnessed the work of the petitioning lawyers and formed a positive opinion of them. Indeed, the reviewing Court in the underlying case would often have ruled in favor of the petitioner and against the respondent.  Even if not, the respondent must labor against the human assumption that established, competent lawyers have billed in accordance with community standards.

However, surprisingly, it is common for responding parties to put forth objections without an expert.  We have seen cases where fees sought into eight figures, where no expert has been retained, with unenviable results. Most experts have the capability of presenting a computer analysis isolating hours and tasks, which can claim to isolate amounts of “block” entries, incompensable “clerical” time, and other practices.  Such a presentation, though, is often superficial, and may not impress a reviewing Court seeking a principled basis upon which to reduce fees for the prevailing party.

Whatever the case, any attack on the requested fees should call for a rebuttal by a qualified attorney fee expert on behalf of the petitioner.  However, this guideline is frequently observed in the breach.  Even if the Court had been inclined to a favorable opinion of the petitioning firm, even a superficial attack on the petitioning lawyers’ fees can be facially effective, and thus the petitioner would need to blunt effectively any such attack.

A qualified expert can help by suggesting needed discovery from the responding party of information regarding that party’s billings which supports the petitioner’s request.  More importantly, an expert employed correctly will go beyond the glittering generalities put forth in these disputes.  They would show why a particular billing rate is justified with specific reference to specific firms doing nearly identical work or why a particular task was necessarily and properly time-consuming.

Most reviewing Courts are experienced at resolving factual disputes based on a presentation of specific compelling facts.  A wise litigation party, in short, should employ an expert to do just that. 

John D. O’Connor is a NALFA member and the Principal of O’Connor & Associates in San Francisco.  For more on John D. O’Connor, visit www.joclaw.com.

When Must the Federal Government Pay Attorney Fees?

February 11, 2020

A recent NLJ article by Marcia Coyle, “When Must the U.S. Pay Legal Fees? A Vietnam Vet Turns to the Supreme Court,” reports on attorney fee recovery from the federal government in an EAJA case.  The article reads:

Alfred Procopio Jr.’s decades-long fight with the U.S. Department of Veterans Affairs changed the law, forcing the agency to provide potentially billions of dollars in benefits for thousands of Vietnam War veterans.  But his dispute with the government hasn’t ended, as his lawyer presses an appeal in the U.S. Supreme Court to collect $35,000 in legal fees.

The petition tests a key element of the Equal Access to Justice Act, or EAJA, a federal law that allows private parties who prevail against federal agencies in certain circumstances to recoup the cost of litigation.  An award of fees under the EAJA is mandatory when a court concludes that the government’s position was not “substantially justified.”  Procopio’s case challenges how courts determine whether the government’s arguments were “substantially justified.”

The septuagenarian Procopio, represented by retired Navy Cmdr. John Wells of Slidell, Louisiana, is asking the justices to review a decision by the U.S. Court of Appeals for the Federal Circuit that said he is not entitled to any compensation. The en banc court in September sided with the U.S. Justice Department in ruling against Procopio’s fee request.  “The Supreme Court takes about one veteran’s case a year,” Wells said in an interview.  “When I filed [the petition], I said, ‘OK, it’s worth a try,’ but given the success rate [in granting review], I didn’t hold out much hope. It’s a very good, legitimate issue.”

In 2010, a dozen federal agencies paid out more than $50 million in court and administrative cases via the EAJA, according to one government report.  The Department of Veterans Affairs tab of $15.5 million was among the highest.  The U.S. Court of Appeals for Veterans Claims in 2017 reported receiving nearly 3,000 applications under the EAJA.

The original statute capped fees at $125 hourly, an amount that is now $200 adjusted for inflation.  Awards are limited to individuals with a net worth of $2 million or less, or the owner of a business or other organization worth $7 million or less and with no more than 500 employees.  Lawyers at major U.S. law firms that have served pro bono sometimes ask courts to award EAJA fees.

‘The Government’s Position Here Was Plainly Wrong.’

Wells argues that the Federal Circuit took an “inelastic and rigid approach” in its conclusion that the government’s position was substantially justified in the case.  The government resisted Procopio’s arguments that so-called Blue Water veterans, who served in the waters of Vietnam, but not on land, were entitled to certain benefits after being exposed to the chemical Agent Orange.

Procopio’s petition relies in part on a concurring opinion from Federal Circuit Judge Kathleen O’Malley, who sympathized with Procopio but ultimately said the court’s hands were tied because of Supreme Court and circuit court precedents.  O’Malley said, “this is the very type of case for which Congress enacted the EAJA.  The government’s position here was plainly wrong.”

O’Malley continued: “Mr. Procopio is the very type of prevailing party, moreover, for whom Congress enacted the EAJA.  Mr. Procopio changed the law for all Vietnam War veterans who served in the Republic of Vietnam’s territorial waters.  And his financial burden in doing so was only increased by the government’s failure to codify its tenuous position into a type of rule whose validity we may review on its face rather than as applied to any individual case.”

O’Malley wrote separately, she said, “to express my belief that the governing interpretation of ‘substantially justified’ sets the bar far too low for the government in a way that is contrary to the plain text of the EAJA and its underlying purpose.”  She implored the judiciary to adopt a standard that she said “breathes life back into the text and purpose of the EAJA.”  The word “substantially,” O’Malley said, “must do some work in defining precisely how justified the government’s position must be.”

In the 1988 case Pierce v. Underwood, the Supreme Court said “substantially justified” means that the government’s position, in both its underlying conduct and its litigating posture, must have a “reasonable basis” in law and fact.  But O’Malley said there is no reasonableness standard in EAJA’s text.  The statutory text, she said in Procopio’s case, “requires that the government’s position be justified by a considerable amount or, at least, that it have a solid foundation in substance.”  And that was not the case with the government’s position in Procopio, she concluded.

Procopio’s fee request stemmed from his victory in January 2019 in Procopio v. Wilkie.  The Federal Circuit, ruling 9-2, said for the first time that the Agent Orange Act of 1991 and its presumption of exposure to the chemical herbicide applies to Navy veterans who served on ships within the 12-mile territorial sea of Vietnam.  The Veterans Affairs department and the Justice Department had argued for years that the 1991 act covered only those veterans who served on the ground or inland waterways of Vietnam.  Six months after the appellate decision, the Justice Department told the Supreme Court that it would not appeal the ruling.  The benefits potentially owed to roughly 90,000 vets have been estimated to cost the government more than $1 billion over 10 years.

In reaching its 2019 decision, the majority, led by Federal Circuit Judge Kimberly Moore, said Congress was clear from its use of the term “in the Republic of Vietnam” that “all available international law unambiguously confirms that it includes its territorial sea.”  The majority overruled the 2008 decision in Haas v. Peake.  The Haas court, Moore wrote, “went astray” when it found ambiguity in the law.  Mel Bostwick, a partner in Orrick, Herrington & Sutcliffe, argued pro bono on behalf of Procopio.

Justice Department’s Opposition

In opposing Procopio’s subsequent fee application in the Federal Circuit, the Justice Department’s civil division, led by Assistant Attorney General Jody Hunt, argued that a 1988 decision benefited the government’s argument that its litigation position was substantially justified.  The Federal Circuit’s ruling in Owen v. United States said that the government’s position can be deemed substantially justified when the government relies on a binding, precedential court of appeals decision that is later overturned.

“Our position relied on this court’s 2008 precedential decision in Haas v. Peake to defend [the] VA’s denial of Mr. Procopio’s presumptive disability compensation claim and the Veterans Court’s decision on appeal,” the Justice Department lawyers told the Federal Circuit.  In the Supreme Court petition, Wells said the justices’ “reasonable person” test for substantial justification “flies in the face of the plain meaning of the statute.”  He contends the Federal Circuit in a 2015 decision had placed the government on notice that its “boots-on-the-ground” position was wrong but it persisted in defending it.

FL Legislation Would Cut Attorney Fees, Aid Insurers

January 28, 2020

A recent Daily Business Review story by Raychel Lean, “Proposed Florida Law Would Cut Attorney Fees, Aid Insurance Companies,” reports that a bill working its way through the Florida Legislature would curb the use of attorney-fee multipliers—bad news for plaintiffs counsel who represent clients on a contingency basis, but a boon for the insurance industry, which claims attorneys often charge three times their hourly rate for routine property cases.

Senate Bill 914 has jumped its first hurdle, gaining approval from the Florida Senate Committee on Banking and Insurance.  It reflects a conflict between attorneys—who say the proposed law would prevent homeowners from suing insurers—and insurers, who say some lawyers take advantage by tripling their fees for routine cases.  Fee multipliers are meant to protect homeowners who can’t afford to bring suit unless attorneys agree to take on difficult and high-risk litigation on a contingency basis.  Lawyers bear the cost of the litigation, but if they win, their clients could apply a contingency risk multiplier.

The proposed law would prevent this.  The bill by Republican Sen. Jeff Brandes would cap attorney fees for plaintiffs.  It would award fees through the lodestar method, which multiplies a reasonable hourly rate by the number of hours attorneys worked.  Tallahassee attorney Michael Carlson agrees it should be more difficult for plaintiff counsel to seek fee multipliers.  “It is too common now, throughout Florida, for courts to award a fee multiplier on what we would call a relatively simple case,” said Carlson, who represents insurance companies and is president and CEO of the Personal Insurance Federation of Florida.

Critics suggest fee multipliers were meant to have a narrow scope.  They say the measure was introduced decades ago to encourage attorneys to take on complex or controversial federal civil rights and environmental torts cases because potential clients were struggling to find representation. The U.S. Supreme Court eventually limited its use, they argue.  And in the 1992 case City of Burlington v. Dague, former Justice Antonin Scalia wrote a majority opinion rejecting the contingency fee model.

Carlson claims multipliers are no longer necessary for property insurance cases in Florida, because there’s no shortage of competent counsel.  “If you have a tree fall on your roof, and you have a dispute with your insurance company over that tree having fallen on your roof and you need to hire a lawyer anywhere in Florida, you will not have a problem,” he said.

‘Army’ of lobbyists?

Plaintiffs attorney William F. “Chip” Merlin of the Merlin Law Group in Tampa argued against the bill at a hearing, claiming that although it was “well-intentioned,” it will hurt some policyholders who won’t be able to find competent lawyers to handle declined insurance claims.  “The insurance companies do not ever want to be held accountable for wrongfully denied claims and claims that they are slow to be paid, and certainly do not like to be sued at all, even if their competitors are committing illegal actions,” Merlin said.  “So there is always an army of insurance lobbyists claiming that a new crisis exists to reduce policyholder rights or make it easier to skirt consumer protection laws and regulations.”

Merlin notes that while insurance companies have teams of lobbyists, policyholders “have jobs and are working on their own life, and simply do not show up in Tallahassee.”  “People do not buy insurance to have their claims turn into lawsuits,” Merlin said.  “They just want to be paid fairly.”

In most instances, Merlin claims policyholder’s attorneys don’t get a multiplier but says in certain small cases where upfront costs outweight the amount in controversy there’s no other incentive for attorneys to take them.  William Large of the Florida Justice Reform Institute stressed the personal injury field has survived without fee multipliers, and claims there’s already “an extraordinary advantage” under Florida’s one-way attorney fee statute, allowing recovery for plaintiffs who prevail against their insurer.

“That is fair,” Large said. “That’s a real incentive for insurance companies to make sure they’re settling cases appropriately for insureds. But then to get a multiple on top of that isn’t fair, so we’re trying to make sure that the multiplier is not used except in the most extraordinary and exceptional circumstances.”  However, a 2019 law has already restricted the use of assignment-of-benefit agreements, which allow policyholders to sign over their insurance rights to contractors — some of whom claim would give homeowners “the monumentally short end of the stick.”

Carlson said he sees this bill as restoring the law to its original purpose, and claims its passage could reduce insurance rates for consumers.  “The lawyers are making their hourly rate, they’re getting paid for representing their client when they win,” Carlson said.  “What’s become much more commonplace in the 2017 period forward is lawyers in these same cases, when they win and they’re having their lodestar amount calculated, they ask for a separate amount as well.”  He points to a 2017 Florida Supreme Court case, Joyce v. Federated National Insurance Co., which made it easier to obtain fee multipliers.  In it, Justice Charles Canady wrote a dissent that said the court had overreached, because the fee multiplier should only be used in rare circumstances. 

But as Merlin sees it, the focus should be on the fact that policyholders are having to sue their insurers in the first place.  “The insurance lobby points to a few cases about how much the winning policyholder attorney made, rather than talk about why the claim should never have been denied in the first place, and that the insurance companies’ attorneys fought and fought the payment to the policyholder because that is the only way a case can generate large fees,” Merlin said.  “Instead, they fight with their own attorneys whom are paid on an hourly basis, win or lose, often to wear down the policyholder.”

Federal Circuit: Attorneys Lack Standing to Recover Attorney Fees for Veteran

January 13, 2020

A recent Law 360 story by Kevin Penton, “Fed Circ. Won’t Let Attys Get Fees From Feds on Vet’s Behalf, reports that attorneys lack standing under federal law to sue the federal government on their own to recover fees for work they performed on behalf of a veteran, the Federal Circuit held in a precedential opinion.  The appellate panel rejected arguments by attorneys Meghan Gentile and Harold H. Hoffman III of the nonprofit Veterans Legal Advocacy Group that they could collect over $4,000 in fees after their former client, Matthew Shealey, prevailed in his case, even though he had fired them and had opposed their attempt to collect the money.

The Federal Circuit noted that in a 2010 case known as Astrue v. Ratliff, the U.S. Supreme Court held that under the Equal Access to Justice Act, the “prevailing party” is the actual party in a case, not the individual’s attorneys.  “The fact that the statute awards to the prevailing party fees in which [its] attorney may have a beneficial interest or a contractual right does not establish that the statute ‘awards’ the fees directly to the attorney,” the Federal Circuit said, quoting the Supreme Court.

The Federal Circuit also rejected an alternative argument by Gentile and Hoffman that they had a right to the money under the fee agreement that they had inked with Shealey, as “the fee agreement on its face does not purport to assign Mr. Shealey’s [Equal Access to Justice Act] claim to intervenors, and the intervenors expressly disclaimed such a theory at oral argument.”  The appellate panel also rejected the argument that the attorneys had so-called third party standing to sue for fees on their former client’s behalf, as Shealey revoked his authorization for them to apply for the fees and costs, according to the opinion.

“The interests of a client such as Mr. Shealey — including the ability to resolve their fee claim by settlement with the government and the ability to decline pursuing an [Equal Access to Justice Act] claim at all — would be impaired if their attorneys were afforded standing to file a claim on their behalf when that authority has been revoked,” the Federal Circuit wrote.