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Category: Hourly Rates / Hourly Billing

Why Law Firms Struggle with Outside Counsel Guidelines

December 4, 2019

A recent the American Lawyer article by Dan Packel, “Why Firms Struggle With Outside Counsel Guidelines – and Pay the Price,” reports on a new survey that draws a straight line between lower realization rates and law firms’ failure to communicate the substance of outside counsel guidelines to billing attorneys.  The article reads:

Law firms are struggling to comply with clients’ outside counsel guidelines, leading to slower rates of realization and increasing write-offs, according to a recent report from timekeeping technology company Bellefield and the Association of Legal Administrators.  In the groups’ inaugural survey of respondents from nearly 200 law firms, they found that firms’ failure to communicate the substance of these guidelines to the attorneys who actually bill leads to invoices that are rejected or reduced.

“They’ve got to make that business case to attorneys,” said Patricia Nagy, a director at Proxy PR who helped write the report.  “Attorneys are being overwhelmed with new tasks, in terms of compliance and information governance, but this one hits directly and immediately to their pocketbooks if they don’t comply.”

While corporate legal departments have been probing the consequences of these outside counsel guidelines for several years, this is the first effort to gauge their impact on law firms.  The survey received participation from 198 firms, over 20% of which have over 300 attorneys.  Almost 35% had between 51 and 299 attorneys, and nearly 30% had between 10 and 50.

Nagy said that she was surprised to discover that nearly one-quarter of firms surveyed made no effort at all to communicate these guidelines to billing attorneys.  Over 52% of firms share these guidelines with attorneys via email, and 24% simply post them on the firm’s intranet, with the hopes that lawyers look at them.  “We weren’t surprised there were a lot of process failures,” Nagy said.  “What was surprising was the degree of the failures, and that a lot of them were using ‘hope’ strategies.”  Indeed, even among the firms that communicate these guidelines to billing attorneys, 82% do not require acknowledgment of receipt, and attorneys are only monitored to ensure they are following guidelines 55% of the time.

As a consequence, when navigating clients’ e-billing systems, firms are finding that an increasing number of invoices are being rejected, even as firms have managed to keep rates robust.  The ALA and Bellefield survey shows that 70% of firms believe that e-billing has not improved billing and collections, with billing and collection cycles expanding, for the most part by 30 days, according to 41% of respondents, or 60 days, per 29%.

Rejections are also a growing problem. Nearly half the firms surveyed experience 5% to 10% of their e-bills rejected or reduced.  And 15% do not appeal rejections, either because of inadequate staffing or because they treat them as a cost of doing business.  Nagy noted that as clients increasingly use metrics to evaluate outside counsel, firms that make less friction during the invoicing process are more likely to receive repeat business.

Asked how they would like to improve the process, nearly 60% of respondents asked for more visibility into what corporate law departments actually want.  This tracks with a conclusion that these guidelines have actually made it harder for firms to communicate with clients, a sentiment shared with 40% of respondents, compared to 11% who point to improved communications.  And 45% of respondents hoped for a technological solution that would help them make sense of these guidelines.  With different guidelines coming in from each client, automation becomes a particularly challenging task.

NALFA to Conduct 2020 Class Action Hourly Rate Survey

December 3, 2019

NALFA conducts hourly rate surveys for law firms, corporate legal departments, and government agencies.  Our surveys provide the most accurate and current hourly rates within a given geography and practice area.  We can design hourly rate surveys for specific cases.  Our hourly rate surveys assist state and federal courts in awarding attorney fees in large, complex litigation throughout the U.S.

Starting in 2020, NALFA will be conducting the 2020 Class Action Hourly Rate Survey, the nation’s most comprehensive survey of hourly rates in class action litigation.  This survey will show current, that is 2020, hourly rate data for class action litigators in the nation’s 16 largest legal markets:

1. New York, NY
2. Los Angeles, CA
3. Chicago, IL
4. Miami, FL
5. Washington, DC
6. Dallas, TX
7. Atlanta, GA
8. Boston, MA
9. Houston, TX
10. Philadelphia, PA
11. San Francisco, CA
12. Seattle, WA
13. San Diego, CA
14. New Orleans, LA
15. Tampa, FL
16. Denver, CO

This inaugural hourly rate survey will be conducted via email in early 2020.  The survey results will show the current average hourly rate range of class action litigators (plaintiff and defense) at senior partner, partner, senior associate, and associate levels in the nation’s top legal markets.  This billing rate survey may be the first ever to make a distinction between plaintiffs' rates and defense rates.  This survey will be available for purchase.

PA Appeals Court: No ‘Fees for Fees’ in Trust’s $2.9M Fee Request

November 27, 2019

A recent Law 360 story by Matthew Santoni, “Pa. Appeals Court Snuffs Trust’s $2.9M Bid for ‘Fees on Fees’,” reports that a trust that sought $4 million in legal fees over a $9,000 property condemnation was not entitled to another $2.85 million in "fees on fees" to cover the cost of fighting for the first fee award, a Pennsylvania appellate court ruled.  A Pennsylvania Commonwealth Court panel said an Erie County judge was right to slash the Angela Cres Trust's request for fees by 90% because the trust had not sufficiently justified its 2015 request for the $2.85 million, and state law said property owners were not guaranteed to have their legal bills paid in condemnation proceedings if they were not justified.

"The Eminent Domain Code does not require that a condemnee be made whole, as the trust seems to presume," wrote President Judge Mary Hannah Leavitt for the unanimous panel.  "It was the trust's burden to prove that its fees and costs in litigating the fee petition were reasonable, and it did not do so."

The panel upheld the Erie County Court of Common Pleas' award of $285,000 in costs and fees, agreeing that winning just $682,000 of the underlying $4 million request for fees and costs was a "limited success" for the trust, and ruling that there had been no error in the judge's findings that the large request for fees-on-fees had not been fully supported.

Millcreek, Pennsylvania, had sought to condemn a piece of trust-owned property valued at $9,000 in 2005, but after four years the court sustained the trust's preliminary objections on the grounds that the township lacked authority to condemn the land for a water channel.  Appeals and an amended declaration of taking kept the underlying dispute going through 2012, and by 2014, the trust sought to make the township pay $3.4 million in attorney fees and costs and another $650,000 for its experts' testimony and reports.  The trial court awarded only $682,000 in total, which the Commonwealth Court affirmed in 2016.  While that appeal had been pending, the trust made its request for the fees-on-fees in 2015, according to the opinion.

After a three-day hearing on the trust's petition for the additional fees, the court awarded just $285,000, citing work that was allegedly duplicated or done by expensive partners when it could have been handled by less expensive attorneys; hourly rates for attorneys and paralegals that were higher than the market rate for Erie County; and vague "block billing" where a single time entry on the record covered multiple tasks.  The trust had claimed the trial court's award of 10% of its request was arbitrary and capricious, but the appellate court disagreed.

"Simply, the award of 10 percent of the actual fee incurred was the best the trial court could do given the block billing practice of the trust's attorneys and its inability to provide the court with the expected 'amplification,'" the court said, referring to a term used by the township's expert in the trial phase.  "Because the trust's witnesses did not provide a clarification of each task and the time spent, the trial court lacked the evidence needed to conclude that the fees and costs paid by the trust were reasonable."

The trial court had also found that the trust was billed for a "speculative" motion for reconsideration, a "superfluous" post-trial motion and a mediation process that dealt with stormwater problems, not the underlying condemnation or fee dispute, so the Commonwealth Court deferred to the lower court's judgment on those proceedings being unnecessary and ineligible to be charged to the township.

"We agree with the trust that the Eminent Domain Code should be given a broad reading when determining whether a particular legal task was caused by the condemnor's action," the appellate court said.  "However, causation is a matter for the trial court to decide. It decides whether certain tasks constitute a reasonable legal response to a condemnor's action or have an attenuated relation to the condemnation."

The Commonwealth Court also said the Erie County judge made no error in giving more credit to the township's expert on legal billing than the trust's expert and had properly considered the factors for whether a fee request is reasonable as set forth by the Supreme Court of Pennsylvania's 1968 ruling In re: LaRocca's Trust Estate.

The trust complained that the court improperly weighed the trustee's wealth as part of the "client's ability to pay," one of the 11 LaRocca factors that also include the amount of work done, the complexity of the task and the amount of money or property value in question.  The Commonwealth Court said that factor was ultimately irrelevant to the finding that the fee request was not adequately supported.

"In the end, it was not the trustee's wealth that caused the trial court to reduce the trust's request ... it was the trial court's holding that the trust did not prove that any specific part of that $2.85 million was reasonable," according to the opinion.  "The real point is that not every LaRocca factor is relevant and required to be considered by the court."

The appellate court noted that while the township claimed the trust wasn't entitled to any fees at all for litigating its earlier fee petition, the trial court disagreed and gave the trust its 10% award.  "The trust was entitled to pursue all means and any cost to save its land and recover its attorney fees.  It does not follow, however, that all those fees, costs and expenses were reasonable, as required by the Eminent Domain Code before the condemnor must reimburse the condemnee for fees and costs," the court said.

Law Firms Awarded $10M in Fees After More Detailed Billing Entries

November 21, 2019

A recent Law 360 story by Hannah Albarazi, “Hagens Berman, Cohen Milstein Get $10M Fees on 2nd Try,” reports that a California federal judge approved $10 million in attorney fees sought by Hagens Berman Sobol Shapiro LLP and Cohen Milstein Sellers & Toll PLLC for securing a $50 million settlement over electronics industry price-fixing, saying they'd resolved concerns about "insufficient" billing explanations he'd raised earlier.  "Round two," U.S. District Judge James Donato said at the beginning of the hearing, referring to his fiery September order in which he ripped into the plaintiffs' attorneys, saying that no paying client would stand for their failure to explain their billing in a $10 million fee bid.

Compare with the first round, the second round went much more smoothly for counsel representing the direct purchasers.  Judge Donato said they had fixed the issues with their previous bid, which he had described as "a disservice to the class and the court."  Judge Donato granted final approval of the $50 million deal, the $10 million in attorney fees as well as $1.8 million in expenses, settling direct purchasers' allegations that Panasonic and three other electronics companies colluded for over a decade to artificially inflate prices of linear resistors.

In his September order, Judge Donato wrote that the firms' billing charts provided only an attorney's name and an associated billing amount, leaving out any explanation on how the billed time helped the proposed class members.  "The court will not award millions of dollars based on counsel's and the named plaintiff's say-so, especially when that money will be taken directly out of the hands of class members," Judge Donato said in September.  Judge Donato also tore into a proposed order submitted by the firms, in which they described their results as "exceptional."  The judge called the proposed order's "self-congratulatory" language "unwarranted and unhelpful."

"Statements like these are better suited for firm marketing materials than they are for orders proposed for the court's issuance," he said.  The firms initially requested a $25,000 bonus for the sole named plaintiff, Schuten Electronics, but Judge Donato blasted the bonus in September, saying it "equates to an eye-watering hourly rate of $455 for Schuten, which vastly exceeds anything the court has ever been asked to consider for a named plaintiff."

Class Counsel Seek Recommended Fees in Chipotle Data Breach Case

November 8, 2019

A recent Law 360 story by Joyce Hanson, “Chipotle Customers Want $1.2M Atty Fees in Data Breach Suit,” reports that customers in a class action suit over a 2017 Chipotle data breach that exposed their names and payment card numbers to hackers asked a Colorado federal judge for $1.2 million in attorney fees, saying a mediator proposed that figure as the parties were settling.

The Chipotle Mexican Grill Inc. customers' unopposed motion calls for fees of $1,165,782 after about $34,000 in expenses are deducted, based on class counsel's 2,406 hours of investigation, prosecution and litigation settlement, according to a brief filed.  Also under the fee proposal, six class representatives led by Todd Gordon and five other plaintiffs will each receive an incentive award of $2,500.

Settlement class members would be eligible for out-of-pocket reimbursement of up to $250, including an automatic payment for each affected card, payment for customers' time spent dealing with fraud issues and reimbursement for credit monitoring and identity theft insurance, the brief said.  In addition, class members who suffered other "extraordinary" unreimbursed monetary losses because of compromised information can make a claim for reimbursement of up to $10,000, according to the proposed settlement.

"Without these individuals' investment of time, and their courage to step forward and vindicate the class' rights against a large institution, the class would not have obtained the substantial relief offered by the settlement," the customers said.

Chipotle revealed in April 2017 that it had detected a data security breach in its electronic processing and transmission of confidential customer and employee information.  The burrito chain acknowledged at the time that it may be subject to lawsuits because of the breach that reportedly affected transactions from March 24 through April 18 of that year.

Financial institutions that sued over the breach told the court in March that the parties had reached a confidential settlement agreement.  On June 19, U.S. District Judge Christine M. Arguello granted the customers' June 13 unopposed motion for preliminary approval of the settlement, conditionally certifying the class.

Bennett G. Picker of Stradley Ronon Stevens & Young LLP served as a private mediator after the customers sent their settlement demand to Chipotle in November 2018, according to the brief.  The parties first held several phone calls with Picker before sitting down with him in a full-day mediation session in Florida, the customers said.

After agreeing on the data breach settlement's material terms, the parties turned to the question of attorney fees and costs, according to the brief.  When they reached an impasse and couldn't agree despite significant negotiation, Picker submitted a mediator's proposal that both sides finally accepted, the brief said.

The customers said the requested fee award is consistent with attorney fees approved in the court and in other data breach settlements.  Class counsel's lodestar of $1.44 million through Oct. 31 represents a 0.83 negative multiplier, which "supports the reasonableness of the fee requested," the customers said.