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Category: Hourly Rates / Hourly Billing

Judge Reduces Fees, Offers Primer on Legal Billing

September 13, 2017

A recent New York Law Journal story by Jason Grant, “Judge Slashes Fees, Offers Primer on Billing, in Cookbook Case,” reports that a New York federal judge has more than halved attorney fees due to an Ethiopian cookbook author who was wrongly sued for copyright infringement, finding that her defense counsel billed "excessive" hours for often straightforward work.

In July, U.S. District Judge Brian Cogan of the Eastern District of New York lambasted the plaintiff, author of a different Ethiopian cookbook, for bringing "unreasonable" claims in Schleifer v. Berns, 17-cv-1649. And he awarded an as-yet-undetermined amount of attorney fees to the defendant.

Cogan turned his sights to the defendant's counsel.  He criticized Berns' lawyers at Kushnirsky Gerber, calling their requested fees "excessive" and at times "redundant," and he chopped their itemized request for $29,365 in attorney fees down to $13,055 in attorney fees (plus $316.15 in costs).  He went through the categories and tasks billed, point by point, while explaining why the hours were often too high.  Underlying his reasoning was the notion—as explained in the July dismissal decision—that the plaintiff had brought a particularly flimsy action.

"The number of hours expended [by Kushnirsky Gerber]—83.9 hours—is too many in light of the weakness of plaintiff's case and counsel's experience with copyright cases," Cogan wrote before analyzing the amounts billed.  He also said, "the court continues to be guided by the overarching purposes of the Copyright Act, that is, compensation and deterrence," and noted that "the test is whether the plaintiff 'spen[t] the minimum necessary to litigate the case effectively,'" quoting Simmons v. N.Y. City Transit Auth., 575 F.3d 170, 174 (2d Cir. 2009).

Cogan wrote that, "First, it seems inherently excessive and redundant that defendant [counsel at Kushnirsky Gerber] expended 6.5 hours drafting the pre-motion conference letter in anticipation of the motion to dismiss, 33.7 hours on the motion to dismiss itself, and then 19 hours on the reply brief, for a total of 59.2 hours."

"The minimum necessary hours to have effectively litigated the motion to dismiss in this case cannot be nearly 60 hours when the case was so patently deficient," he continued, then added, "The research necessary to draft the pre-motion conference letter should certainly have transferred to the motion to dismiss and reply.  With much of the legwork already done ... the motion itself should not have taken more than 10 to 15 hours."

Continuing his breakdown, Cogan also wrote that "even though plaintiff filed an amended complaint after defendant filed her motion to dismiss, the changes to the amended complaint were so minimal that the court in fact saw no need to reinitiate motion practice.  Accordingly, the application for 19 collective hours on the reply is excessive."  In the end, Cogan ruled that "no more than 25 hours" total should be allotted to time spent on the pre-motion conference letter, motion to dismiss and reply.

He also wrote that "it is similarly unreasonable that counsel spent 3.5 hours conducting a 'Preliminary Case and Pleadings Review,'" when the complaint was only seven pages.  "Nor is it clear from the itemization which portions of time were preliminary 'case review' and which were 'pleadings review.'  Because the itemization fails to apprise the court properly … the court will not allow fees for this task," Cogan continued, adding, "Nor will the court permit fees for 1.2 hours of 'court correspondence,' as the only court correspondence on the docket (apart from the pre-motion conference letters) is a barely one-page letter asking the court to adjourn the initial status conference."

Cogan concluded by writing that Kushnirsky Gerber's final category of billing, 12 hours for preparing its fees application to him, was also too many.  "Half of the application is a general recitation of counsel's qualifications and a description of their firm and cases, and counsel's declarations … The remainder of the fee request includes the printouts of the itemizations and billing records, counsel's resumes, defendant's own declaration and her documented expenses, all of which would have (or certainly should have) been collated and put together by support staff," he wrote.

$925M in Fees in Madoff-Related Matter

September 10, 2017

A recent American Lawyer story by Roy Strom, “Madoff-Related Fees Grow to $925M for Baker & Hostetler,” reports that last month, a federal judge approved a nearly $36 million payment for four months of work by the firm, bringing Baker & Hostetler’s total fees for the matter to just shy of $925 million.

This week, Picard also reached the largest settlement related to the dissolution of Bernard L. Madoff Investment Securities LLC (BLMIS) since 2011—a $687 million payout from an Irish investment firm that will bring the total recovery for Madoff victims to about $12.7 billion, or about 72 percent of the $17.5 billion that Picard states that Madoff’s investors lost.

The settlement this week with Thema International Fund PLC amounts to 100 percent of the money the Dublin-based fund received from BLMIS for six years prior to the New York fraudster’s collapse, Picard said in a court filing.  It will raise the fund for victims by 5.7 percent.

Meanwhile, the Madoff matter has managed to bolster Baker & Hostetler’s finances for years.  The firm’s gross revenue has grown 15 percent since fiscal 2008, the year before the start of its Madoff work.  Profits per partner at the Cleveland-based Am Law 100 firm rose to $965,000 last year, up 42 percent from 2008.  And revenue per lawyer, at $700,000 last year, is up 22 percent since 2008.

Compared to its Am Law 100 peers, Baker & Hostetler has risen to No. 78 from No. 98 in revenue per lawyer for fiscal 2008.  The firm’s profits per partner ranking last year was No. 76, up from No. 96 almost a decade ago.  Baker & Hostetler’s partner profit numbers are somewhat difficult to compare over that timeframe, however.

Last year the firm restructured its partnership to provide some equity to all partners, which resulted in a slight uptick in the profits per partner metric by lowering the number of “equity partners” under The American Lawyer’s definition.  An equity partner is someone who receives 100 percent of compensation from shares in a law firm.

The latest payment to Baker & Hostetler in the BLMIS matter is for 68,341.3 hours worked by its lawyers, including 24,539.7 by partners and of counsel and 43,801.6 by associates.  The team bills at a blended rate of $515.81, with the highest hourly rates being the $998 earned by Picard and partners David Sheehan and David Rivkin.  Those rates, along with all others, are then discounted 10 percent.

Picard and Baker & Hostetler are not paid from the Madoff victims’ fund, but rather from the Securities Investor Protection Corp. In June, Picard’s team reached two other settlements totaling about $370 million, bringing the total recovery for victims in the past four months to over $1 billion.

“The Thema International settlement is the latest in a series of highly successful negotiations and mediations,” said a statement by Baker & Hostetler partner Oren Warshavsky, who along with Sheehan joined the firm’s New York office in 2008 from Troutman Sanders.

Sheehan’s hire, as previously noted by The American Lawyer, proved to be a critical factor in Baker & Hostetler getting the call for its Madoff work.  Sheehan had previously worked with Picard at another firm, and when Picard was appointed liquidation trustee for BLMIS in late 2008, he called on Sheehan to advise.  Baker & Hostetler hired Picard from New Jersey’s Gibbons shortly thereafter.

$32M More in Fees in Madoff Bankruptcy

September 4, 2017

A recent Law 360 story by Ryan Boysen, “Baker Hostetler Gets $32M More in Fees in Madoff Bankruptcy,” reports that BakerHostetler will receive $32 million for four months of work managing the liquidation of Bernie Madoff’s defunct investment firm after a New York bankruptcy court approved the fee request, bringing the firm’s total payout for its work on the Madoff case past the $900 million mark.  The latest fee request covers nearly 82,000 hours of work performed between the beginning of December and the end of March and was approved by U.S. Bankruptcy Judge Stuart M. Bernstein.

BakerHostetler partner Irving H. Picard serves as the liquidating trustee for Bernard L. Madoff Investment Securities LLC and his firm has received about $908 million all told since the case began in 2008, while recovering roughly $12 billion for victims of the $65 billion Ponzi scheme.

The legal costs in the case are paid by the Securities Investor Protection Corp., a member-funded organization that keeps a warchest stocked with roughly $2.5 billion at any given time to shell out for instances like the Madoff fraud.  SIPC covers investor losses directly in many types of financial frauds, and also works with law firms to recover funds for victims in bigger, more complex cases.

In addition to bearing the costs and fees to Picard, the organization has also paid about $555 million in legal expenses to special counsel, consultants and administrators that have worked on the case, according to the trustee.  The latest $32 million payout for BakerHostetler amounts to roughly 90 percent of the $35.7 million the firm was technically awarded for its work.  BakerHostetler and SIPC agreed to the discount early on in the case, and the firm typically receives about $435 an hour for its work, according to court documents.

"The reasonable value of the services for which the trustee and BH seek an allowance has been reduced significantly, based on consultation and review by SIPC, from the standard rates the trustee and BH charge," SIPC's general counsel wrote in a brief recommending the court approve the fee request.

The case is Securities Investor Protection Corp. v. Bernard L. Madoff Investment Securities LLC et al., case number 1:08-ap-01789, in the U.S. Bankruptcy Court for the Southern District of New York.

Creditor Questions Fees in La Paloma Bankruptcy

August 30, 2017

A recent Law 360 story by Rick Archer, “O’Melveny Blasted for $2.6M Fee Bid in La Paloma Chapter 11,reports that the senior creditor of California-based power producer La Paloma Generating Co. LLC objected to the legal fees submitted by the producer’s former counsel O'Melveny & Myers LLP, calling the $2.6 million request “exorbitant.”   LNV Corp. called for O'Melveny’s request for fees for its seven months of work on the case to be cut by more than a third, saying it was “bewildered” by how much O'Melveny was asking for compared to the progress made on the case during its tenure.

“This amount is exorbitant in light of the fact that (i) this is not a complicated case, (ii) there were virtually no contested hearings held while O’Melveny was debtors’ counsel, and (iii) the debtors made no progress towards exiting these cases during O’Melveny’s tenure,” it said.

The four-unit power plant sought Chapter 11 protection on Dec. 6, saying it had been driven into the red by price competition from alternative energy sources and difficulty in meeting California's demands for payments on carbon emissions under the state's cap-and-trade program to combat climate change.  In late July, the company said it had settled a control dispute with LNV and that a confirmation hearing on its $524 million Chapter 11 plan was scheduled for Oct. 12.

O’Melveny had asked for approximately $2.6 million for fees and expenses incurred between Dec. 6 and June 30, when it was replaced as counsel by Debevoise & Plimpton LLP and Richards Layton & Finger LLP.

LNV asked that the fee be reduced by at least $793,000, saying the firm submitted more than 1,300 excessive or unjustified hours.  It said this included 470 hours in fee applications, well exceeding the standard of 5 percent of all time billed for applications.

“Work related to the plan and disclosure statement was entirely wasteful, as O’Melveny never filed a plan and disclosure statement or even shared a draft with LNV,” it said.  “And the time spent on the use of cash collateral is indefensible given that there was never a contested hearing on the use of cash collateral or any related dispute that wasn’t swiftly resolved.”

LNV counsel Thomas E. Lauria said in a phone interview that while he usually considers fee disputes a “sideshow” in bankruptcy cases, in this case the large fee and the lack of benefits for La Paloma required a response.  “It’s unfortunate we find ourselves in the extraordinary situation that there are issues here we cannot ignore,” he said.

The case is In re: La Paloma Generating Co. LLC et al., case number 1:16-bk-12700, in the U.S. Bankruptcy Court for the District of Delaware.

New Jersey Legislation Would Mandate Fee Retainers

August 23, 2017

A recent New Jersey Law Journal story by Michael Booth, “Bill, Spurred by Wray Representation, Would Mandate Retainers,” reports that one of Gov. Chris Christie's most persistent critics in the state Legislature is sponsoring a bill that effectively would have barred Christie's apparent hiring of high-profile lawyer Christopher Wray—now the FBI director—without a written retainer fee agreement.

Assembly Deputy Speaker John Wisniewski, D-Middlesex, has introduced A-5179, which would require retainer fee agreements between any state agency and private counsel to be memorialized in writing within 30 days of the attorney's retention.  The bill, which has not yet been assigned to a committee, would prohibit a firm from being paid with public funds if the 30-day requirement is not met.

Wray, according to reports, was Christie's personal attorney for 11 months during the Bridgegate investigation, and while Christie was gearing up to run for the Republican nomination for president—before Wray and the administration signed a retainer agreement.

Wray, then of the Washington, D.C., office of King & Spalding, began representing Christie in September 2014 but did not sign a retainer agreement until August of the following year.  Ultimately, Wray and other lawyers at the firm, which charged a blended rate of $340 an hour, racked up about $2 million in fees and costs, reports said.

New York public radio station WNYC first reported the arrangement between Wray and Christie on July 24.  A day later, Wisniewski voiced his concern about the lack of a retainer agreement, which he pointed out would have been a document available to the press and public.

"This is highly unusual and raises questions about whether Gov. Christie was trying to hide this cost and legal representation from the public," Wisniewski said in a statement at the time.  "Mr. Wray and his colleagues ended up costing taxpayers $2 million, yet the governor did not even take basic steps to provide public transparency and uphold ethics standards.

Seventh Circuit Cuts Fee Award in Half

August 18, 2017

A recent NLJ story by Amanda Bronstad, “Fees in Class Action Over Moldy Washing Machines Nearly Halved,” reports that a federal appeals court has slashed plaintiffs' attorney fees by nearly half...

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