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Category: Hourly Rates / Hourly Billing

Jenner Wins Fees in Contingency Agreement

May 23, 2017

A recent the NLJ story by Marcia Coyle, “Skadden Loses a Tax Dispute, and Jenner Wins Fee Fight,” reports that Jenner & Block won fees in a case, Parallel Networks v. Jenner & Block, that stemmed from a 2007 contingency fee arrangement in which Jenner agreed to represent Parallel Networks in two patent cases.

The fee arrangement contained a provision that allowed the law firm to withdraw from the representation and still get fees whenever it “determine[d] at any time that it is not in its economic interest to continue the representation.”  If the firm withdrew, Parallel Networks was to pay “an appropriate and fair portion of the Contingent Fee Award” at “the conclusion of any” patent lawsuit.  The agreement also called for arbitration of any disputes.

Jenner & Block did withdraw.  New counsel entered and settled the two patent cases.  In 2011, Jenner submitted a $10 million fee request that Parallel Networks would challenge.  The dispute went to arbitration and Jenner was awarded $3 million and a 16 percent future contingent stake.  On appeal, Parallel Networks argued the withdraw-and-still-pay provision was prohibited under Texas law.  Texas state courts upheld the award.

In the high court, Parallel Networks, represented by Daniel Geyser of Stris & Maher, argued the circuit courts were divided over whether public policy challenges are viable under the Federal Arbitration Act and also are confused about the permissible grounds for vacating arbitration awards following the Supreme Court’s 2008 decision in Hall Street Associates v. Mattel.  “There is simply no indication that Congress intended to intrude on the power of state courts, acting under settled state law, to resist arbitration awards that violate core state public policies,” Geyser wrote.

Jenner & Block waived its right to respond to Parallel Network’s petition.  In earlier litigation, the law firm had argued that it had invested 24,000 hours in the patent litigation, which formed the basis for the later successful outcome.  The firm said it had reason to withdraw because Parallel Networks was habitually late reimbursing litigation expenses.

“We’re obviously disappointed,” Geyser said.  “There was an acknowledged conflict on an important issue that has caused substantial confusion in the lower courts.  This case was an appropriate vehicle, and we wish the court had decided to take it up.”

Pfizer Settles Fee Dispute in $785M FCA Deal

May 10, 2017

A recent the Law 360 story by Brian Amaral, “Pfizer Settles Fee Dispute in $785M FCA Deal,” reports that Pfizer Inc. and a relator who blew the whistle on false claims have agreed to resolve their dispute over how much in attorneys’ fees the company should pay after its $785 million settlement.

Details of the arrangement between the company and Dr. William St. John LaCorte in Massachusetts federal court were not made public; on Tuesday, Senior U.S. District Judge Douglas Woodlock signed a stipulation dismissing LaCorte’s motion for attorneys’ fees because of a settlement.

LaCorte had asked for $7.7 million for his attorneys at the Sakla Law Firm for thousands of hours of work on the case, which alleged that Pfizer unit Wyeth had overbilled Medicaid for the heartburn drug Protonix.  Pfizer said previously that LaCorte’s lawyers were not intimately involved in the development of the suit, in which the government intervened, and that LaCorte’s attorneys therefore didn’t need $7.7 million.  The fees are called statutory fees, paid out by Pfizer to a successful qui tam plaintiff as part of the False Claims Act.

The suit alleged that Wyeth, in a scheme that ended three years before Pfizer acquired it, misrepresented to the government how much it gave in discounts to hospitals to buy Protonix.  Wyeth had to tell the government its “best prices” and would pay rebates to state Medicaid programs for the difference so that the program for poor and disabled people would get the best price possible.  Wyeth avoided paying hundreds of millions of dollars between 2001 and 2006 by misreporting the discounts it gave hospitals, the government said.

The government stepped into the case and settled it.  Lauren Kieff, a former hospital sales representative for AstraZeneca Pharmaceuticals LP, and LaCorte, a frequent qui tam plaintiff who practices medicine in New Orleans, split $100 million in service awards for their help blowing the whistle.

That set the table for another fee dispute, separate from the one that was settled Tuesday.  LaCorte and his attorneys agreed to split their service awards, with 62 percent going to LaCorte and 38 percent going to his attorneys.  But the three firms that represented him are still fighting it out over how to split the 38 percent, with two of them — LaCorte's former lawyers at Vezina & Gattuso LLC and Boone & Stone — arguing that the fees should be split evenly, and a third, the Sakla group, saying that the other two firms didn’t do enough to justify an even split.

The most recent filings show that the firms are asking Judge Woodlock for summary judgment on that dispute.  The statutory fees from Pfizer, at issue in Tuesday's order, were for work that the Sakla firm had done. 

The case is U.S. ex rel. LaCorte et al. v. Wyeth Inc., case numbers 1:03-cv-12366 and 1:06-cv-11724, in the U.S. District Court for the District of Massachusetts.

Over $5M in Disputed Legal Fees Resolved in NALFA’s Mediation Program

May 1, 2017

NALFA’s Fee Dispute Mediation Program is the nation’s only program devoted exclusively to resolving attorney-client fee disputes.  NALFA’s Fee Dispute Mediation Program reached a milestone recently: Over $5 million in disputed legal fees resolved between parties.  Since its inception, NALFA’s Fee Dispute Mediation Program has settled over $5 million in disputed attorney fees and expenses between parties in over 35 cases.  The over 35 cases were brought by both law firms and clients ranging from fee dispute matters of $37,000 to $975,000 from across the U.S.  One fee dispute case was from the UK.

Attorney fee disputes are the result of a breakdown in the attorney-client relationship.  This breakdown may be a misunderstanding in the fee agreement or confusion over the law firm billing records.  Whatever the cause, mediation is the quickest, simplest, and most cost-effective way to resolve these attorney fee disputes.  NALFA offers a private mediation service specifically designed to resolve attorney fee disputes of all types and sizes.

NALFA's fee dispute mediators are uniquely qualified to resolve fee disputes between parties in a cost effective and confidential manner.  These fee dispute mediators are trained neutrals who understand the underlying issues in fee and billing dispute matters.  Their fee dispute mediators include former judges, seasoned litigators, and in-house counsel. 

NALFA's fee dispute mediators are highly knowledgeable on reasonable attorney fees and proper legal billing practices.  They understand the array of issues in fee dispute cases such as fee agreements, hourly rates, tasked performed, fee entitlement, attorney fee ethics, and fee award factors.  These mediators can often provide each side with an unbiased assessment of the strengths and weaknesses of their case.  They can also discuss with the parties what might happen if the fee dispute does not settle. 

Since the program began, NALFA’s Fee Dispute Mediation Program has achieved a 86% success rate—parties who mediate in a session are resolved six out of every seven times.  This rate is significantly higher than most bar-administered fee dispute programs.

NALFA is dedicated to providing parties a mediation process that offers flexibility, a level playing field, and time and cost savings.  Parties control when and where the mediation will occur, who will serve as the mediator, and whether they will accept a settlement offer.  Unlike most bar-administered programs, NALFA stays with the fee dispute matter as long as necessary to bring it to a resolution.

"This achievement belongs to the outstanding work of our members, the nation's best fee dispute mediators," said Terry Jesse, Executive Director of NALFA.  "Their understanding of fee issues and their mediation skills are the reason we're celebrating this milestone," Jesse concluded.

Question: When Is a $3 Million Attorney Fee Award Painful?

April 19, 2017

Answer:  When your fee request was $25 million higher.

And so it was in In Re: Volkswagen “Clean Diesel” Marketing, Sales Practices, and Products Liability Litigation, pending in federal court in San Francisco.  The case arose, in the court’s words, from VW’s “deliberate use of a defeat device – software designed to cheat emissions tests and deceive federal and state regulators – in nearly 600,000 Volkswagens- and Audi-branded turbocharged direct injection diesel engine vehicles sold in the United States.” 

Here’s how the software worked, per the court:  the “defeat device” would sense when the vehicles were being tested and would then produce regulation-compliant results.  But when the vehicles were driven under normal circumstances, they’d use a less effective emissions control system.  “Only by installing the defeat device on its vehicles was Volkswagen able to obtain” the requisite governmental approvals “for its 2.0- and 3.0-liter diesel engine vehicles,” even though those vehicles actually emitted “nitrogen oxides at a factor of up to 40 times over the permitted limit.”

Franchise dealers of VW-branded vehicles sued VW, claiming they were damaged by this “emissions scandal.”  Class certification was sought, and a settlement was reached, encompassing a nationwide class consisting of “all authorized Volkswagen dealers in the United States who, on September 18, 2015, operated a Volkswagen branded dealership pursuant to a valid Volkswagen Dealer Agreement.”  Under the settlement, VW was required to pay $1.19 billion in cash and provide various non-cash benefits to the class.

All told, a good deal for the class.  As the court noted, the settlement “had multiple cash and non-cash components, and … ultimately will provide franchise dealer class members with a recovery of nearly all of their losses attributable to Volkswagen’s disclosure of its use of a defeat device.” 

High fives in plaintiffs’ camp!  Crack open the Veuve Clicquot! 

Class counsel then moved for attorneys’ fees, stating in their motion that their “intense negotiations with Volkswagen led to the second largest class action settlement in automotive case history … and likely one of the top 20 largest class settlements in history in any arena.  In fact, the over $2.1 million average payment to Franchise Dealer Class Members may be the highest average payment to members of a class in any class action settlement.” 

They asked the court to award them “$28.56 million in attorneys’ fees, inclusive of costs.”  And they described their request – which represented, they said, “a fee of 2.0% of the constructive settlement fund of $1.39 billion” – as a “historically miniscule fee” which was “unquestionably fair, reasonable and appropriate compensation in relation to the exceptional results achieved for the” class.  “This remarkably small request,” they declared, “is likely the second-smallest fee amount ever requested in a large common fund case.”

So why did the district court cut their requested fee by nearly ninety percent? 

Because it found that under “the unique circumstances leading to the Settlement,” the “lodestar method, as opposed to the percentage method, is the appropriate method for determining fees,” and the lodestar amount was far lower than the amount they’d requested in their fee application. 

Under the “lodestar method,” fees are calculated by multiplying the number of hours reasonably expended by reasonable hourly rates.  Computing fees by this method tends to yield lower fee awards than does the percentage method, especially in cases like this one where the settlement fund is large.

The court found that using the percentage method in this case “would overcompensate” class counsel “for its work.”  Class counsel, it reasoned, “did not expend significant additional time procuring the Settlement, nor did it undertake significant additional risk, given Volkswagen’s incentive to settle quickly.”

What does that mean, “significant additional time” and “significant additional risk?”  And why did VW have an “incentive to settle quickly?”

Well, as it happens, before settling the franchise dealer case, VW had settled another emissions-related case; that one between VW, on one hand, and consumers, dealers, securities plaintiffs and government agencies, on the other.  That case settled for $10.033 billion, and class counsel in that one were awarded $167 million in fees. 

That case, in other words, was the main event.  Given that the franchise dealer settlement followed on the heels of that larger settlement, the court reasoned that the former “flowed naturally and necessarily” from the latter.  It calculated class counsels’ lodestar sum in the franchise dealer case as being “only $1.48 million,” meaning that their requested $28.56 million fee “would be a 19x lodestar multiple.”  That didn’t fly.  But a 2x multiplier did, given the risks class counsel assumed in the litigation, and so class counsel were awarded $2,954,455 in fees for work performed relating to that settlement, plus $87,538 in costs. 

And so class counsels’ fee request was mightily reduced by the court.  But they could still take solace in the praise their efforts elicited from the court.  Class counsel “achieved a great result for the franchise dealer class members, even in the face of uncertain risk and litigation length.” “The result” they “achieved is excellent.”  Words like those endure long after the fees have evaporated.

Wouldn’t you say?

The case is In Re: Volkswagen “Clean Diesel” Marketing, Sales Practices, and Products Liability Litigation, United States District Court, Northern District of California, MDL No. 2672 CRB (JSC), and the decision was rendered on April 12, 2017.

This article, “Question: When Is a $3 Million Attorney Fee Award Painful?”, was written by Jeremy Gilman, a partner at Benesch based in Cleveland.  He has been litigating complex business cases for both plaintiffs and defendants nationwide for the past 34 years.  He is a prolific writer on legal topics, and his fiction has been nominated for a national literary prize.  He is also a musician whose first album is due out this summer.  This article was posted with permission.

Fee Request Reduced 90 Percent in VW Dealer Case

April 13, 2017

A recent Courthouse News story by Nicholas Iovino, “Judge Whacks 90% of Attorney Fees in VW Dealer Case,” reports that a federal judge cut more than $25 million from attorneys’ fees in a $1.2 billion settlement between Volkswagen and its U.S. dealerships.  U.S. District Judge Charles Breyer reduced the award to $2.9 million, finding a request for $28.5 million too high, given that “much of the groundwork for the settlement was laid in negotiations” for a previous deal.

Breyer lopped off $1.5 million in billable hours deemed as “hybrid time,” or hours spent negotiating both the dealership settlement and a larger, $10 billion deal for owners of 2.0-liter diesel engine vehicles.  He found that attorneys already had been compensated for those hybrid hours in a $175 million fee award approved in March.

The $2.9 million fees award is the latest Volkswagen must pay to make amends for its installation of emissions-cheating software in 11 million vehicles worldwide, including nearly 600,000 diesel-powered vehicles sold in the United States.  The defeat device software kicked in to hide emissions during tests, while allowing cars to spew up to 40 times more nitrogen oxide on the road than allowed under federal law.

Under the $1.2 billion deal approved in January, 644 U.S. dealerships will each receive an average $1.85 million to cover losses precipitated by the German automaker’s diesel-gate scandal.  Although the requested $28.5 million makes up a mere 2.8 percent of the $1.2 billion deal, granting it would allow the lawyers to pocket more than 14 times the value of hours they actually worked, Breyer wrote.

“Dealer class counsel did not expend significant additional time procuring the settlement, nor did it undertake significant additional risk, given Volkswagen’s incentive to settle quickly,” Breyer wrote in the 10-page ruling.  He cut an additional $560,000 in anticipated billable hours, finding Volkswagen has already started paying dealerships and no further hours are needed to execute the deal.

Breyer recalculated the total value of billable hours at $1.47 million and applied a 2.0-multiplier, for a total of $2.95 million to be split between two law firms.  Hagens Berman Sobol Shapiro will receive $2.3 million; Bass Sox & Mercer will get $622,000.  The judge also granted the firms $87,538 in litigation costs.