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Category: Hourly Rates / Hourly Billing

Federal Circuit: EAJA Fee Awards Must Use Local Rates

March 16, 2017

A recent Law 360 story by Chuck Stanley, “Fed. Circuit Says EAJA Legal Fees Must Use Local Costs,” reports that awards for attorneys’ fees under the Equal Access to Justice Act (EAJA) must be calculated based on the location where the work was done, a Federal Circuit panel said in a precedential ruling.

The federal circuit rejected a veteran’s widow’s claim that ambiguity in the statute allows her to adjust upward the hourly rate for calculating attorneys’ fees in a benefits suit based on the consumer price index (CPI) in Washington, D.C., where the case was heard but little other work was done.

Instead, the panel ruled that Paula Parrott should have provided individual rates for work done in Dallas, San Francisco and Washington in order to win an adjustment from the statutory rate of $125 per hour, rather than using the CPI for a single city or the national CPI to calculate a single rate.

The decision upheld the Veterans Court’s decision to award Parrott fees based on the statutory rate because she failed to provide rates for each city where work had been done on the case.

“We think the local CPI approach, where a local CPI is available … is more consistent with EAJA than the national approach.  We therefore hold that the Veterans Court did not err in ruling that the local CPI approach represented the correct method of calculating the adjustment in Ms. Parrott’s attorney’s hourly rate,” the decision states.

Parrott had claimed more than $7,200 in legal expenses in a suit over benefits for her husband, a deceased veteran, based on an upward adjustment from the statutory hourly rate based on the cost of living in Washington, D.C.  Language in the EAJA, which provides for an award of attorneys’ fees to victorious parties fighting agency action, stipulates that a $125 cap on hourly rates can be adjusted upward due to an increase in the cost of living.

But Parrott argued the statute is ambiguous regarding the method used to calculate such an increase.  She further claimed the Veterans Court was obliged to accept her cost estimate because ambiguity in a statute related to veterans benefits must be construed in favor of the veteran.

However, the panel ruled the EAJA is not ambiguous because using the national CPI rather than local numbers would incentivize more attorneys to accept cases challenging government agencies in low-cost areas rather than pricier areas.  Further, the panel found Parrott’s claim the Veterans Court was required to side with her is not applicable to the EAJA since it is not a veterans benefit statute, but applies to all litigants against executive agencies.

The case is Parrott v. Shulkin, case number 2016-1450, in the U.S. Court of Appeals for the Federal Circuit.

Judge Highlights Excessive Billing in Sprint Litigation

March 15, 2017

A recent Wall Street Journal story by Joe Palazzolo and Sara Randazzo, “One Lawyer, 6,905 Hours Leads to $1.5 Million Bill in Sprint Suit,” reports that, Alexander Silow, a contract lawyer for a Pennsylvania plaintiffs’ firm, clocked 6,905 hours of work on a shareholder lawsuit against former executives and directors of Sprint Corp. related to its 2005 merger with Nextel.  Averaging about 13 hours a day, Mr. Silow reviewed 48,443 documents and alone accounted for $1.5 million, more than a quarter of the requested legal fees, according to court documents.

“Unbelievable!” is how Judge James Vano in Kansas described the billing records.  And he meant it.  “It seems that the vast amount of work performed on this case was illusory, perhaps done for the purpose of inflating billable hours,” Judge Vano, who sits in Olathe, Kan., wrote in a Nov. 22 opinion.

Courts often slash what they see as excessive billing in securities and other litigation, but rarely are they so scathing, legal experts said.  Judge Vano’s ruling might have gone unnoticed but for a recent disclosure about Mr. Silow by the law firm where he worked: He was disbarred in 1987 and practiced law illegally for decades.

The revelation, contained in a February letter to Judge Vano, could ​rupture​ a settlement in the Sprint case, and provide grist for corporate groups and others that have highlighted alleged abuses in the civil-justice system, fueling current momentum for legislative change.

A Republican bill passed by the House of Representatives would make it harder to file class actions, curtailing lawyer-driven litigation that provides little benefit to shareholders and consumers, its supporters say.  Plaintiffs’ lawyers and consumer-rights advocates say the legislation would reduce access to the courts and blunt litigation that has improved corporate governance and forced companies to pull unsafe drugs and faulty products from shelves.

Courts regularly bless multimillion-dollar fee awards in recognition of the risk plaintiffs’ firms take by fronting the costs for litigation.  But fee experts said bill-padding is pervasive in class actions and shareholder suits because billing records aren’t reviewed by clients and are scrutinized only when a judge needs to approve a settlement or award fees after trial.

William G. Ross, a law professor at Samford University in Alabama who has written two books on attorney billing, said his most recent survey of lawyers showed that two-thirds were personally aware of bill-padding and more than half admitted they sometimes performed work they otherwise wouldn’t have done had they been charging a flat fee.

Mr. Silow had been working as a contract attorney for at least eight years when staffing agency Abelson Legal Search placed him at the Weiser Law Firm PC in Berwyn, Pa., in 2008, according to a Feb. 3 letter from the firm to Judge Vano.  The law firm was contacted last month by a third party it declined to name and learned that no one with Mr. Silow’s name was listed in a state database of licensed lawyers, Robert B. Weiser, co-founder of the firm, said in the letter.

Mr. Weiser said Mr. Silow presented himself to the firm as Alexander J. Silow, but “was in actuality named Jeffrey M. Silow” and confessed he had been disbarred when the firm confronted him, the letter said.  The firm has since ended its relationship with Mr. Silow and alerted authorities, it said.

Pennsylvania’s attorney discipline office confirmed Mr. Silow was disbarred in 1987 but could provide no additional information.  Mr. Silow didn’t respond to emails and calls seeking comment.  Abelson Legal Search didn’t respond to requests for comment.

Mr. Weiser said in the letter that his firm stands by the accuracy of Mr. Silow’s billing records in the Sprint lawsuit, which alleged the company directors and officers concealed problems created by the merger with Nextel.  The company posted a nearly $30 billion loss as a result of the deal.

The lawsuit sought to claw back profits from former Sprint directors and officers, who it accused of incompetence and self-dealing.  But a settlement reached last year was more modest.  Sprint agreed to changes to its corporate governance and the composition of its board of directors.

Judge Vano approved the deal in his November ruling but slashed the proposed legal fees for plaintiffs’ attorneys from $4.25 million to $450,000.  “The focus appears to have been upon an easy, cheap settlement in the first instance,” Judge Vano wrote.

The plaintiffs’ lawyers—Mr. Weiser’s firm, Florida lawyers Alison Leffew and Bruce G. Murphy and the Kansas City firm Dollar Burns & Becker LC—have appealed Judge Vano’s ruling on the fees.  They argued the results of the settlement, rather than the hours billed, justified the amount sought.

In court documents, Mr. Weiser and the other plaintiffs’ lawyers representing a Sprint shareholder said Mr. Silow’s “extensive document review” enabled them to make “well-informed decisions.”

Michael Hartleib, a Sprint shareholder who objected to the settlement, asked the Kansas appeals court last month to return the case to Judge Vano’s court so he can reconsider the deal in light of the new evidence showing Mr. Silow had no license to practice law.

London Arbitration Firm Recovers Costs from UAE Fee Dispute

March 13, 2017

A recent Law 360 story by Jimmy Hoover, “London Arbitration Firm Recovers Costs From UAE Fee Spat,” reports that a London-based international arbitration firm won back nearly all of the costs it spent pursuing around $2 million in legal fees from its representation of a wealthy United Arab Emirates (UAE) family in a commercial contract dispute, when a U.K. court found the family was drawing out the appeal process to delay payment of the fees.

The England and Wales High Court ruled that Shackleton and Associates Ltd., a firm founded by sole shareholder and solicitor advocate Stewart Shackleton, is entitled to 80 percent of the costs incurred from a proceeding to enforce the fee award against the Bin Kamils, a wealthy business family in Sharjah, United Arab Emirates.  The fee award, handed down by a London tribunal of the International Court of Arbitration in 2013, stems from Shackleton’s representation of the family in an earlier ICC proceeding over a cement plant joint venture gone bad in the Arab nation.

The evidence in the case suggests that “the defendants lacked any realistic defence to the enforcement of the [fee award] and that the steps they took in the proceedings were taken not in pursuit of a genuine defence but solely for the purpose of delaying payment to the claimant of the fees to which it had been held to be entitled,” Justice Nigel John Martin Teare said in a judgment.  “That takes the case out of the norm and is a very significant level of unreasonable conduct which undoubtedly justifies an order for indemnity costs.”

The underlying ICC arbitration involved a joint venture between the Bin Kamils and Cypriot company Terna Bahrain Holding Co. WLL involving a cement plant with a capacity of up to 1.8 million tons.  Terna, which purchased a 40 percent stake in an entity holding a 25-year lease of the property in Hamriyah Free Zone in Sharjah where the plant was being built, alleged that the Bin Kamils failed to procure permits to allow the construction of a cement import-export terminal.

A previous decision from the High Court maintained that Shackleton “had been most heavily involved in conducting the case on behalf of the Bin Kamils in the arbitration” but was “was not available to assist” with the Terna arbitration award after a falling-out with the firm Galadari & Associates in 2011.  On Monday, Shackleton disputed the court's characterization of a falling out with Galadri & Associates, insisting in an email to Law360 that the non-payment of fees was "the only reason" that his firm ceased acting in the summer of 2011.

Shackleton won an award for £1.4 million ($1.76 million) in fees plus interest from the ICC tribunal in 2013 after the Bin Kamils refused to participate in the proceeding other than to say that the tribunal lacked jurisdiction over the claims.  Challenging a Paris appeals court’s order granting “permission” to enforce the award, the family unsuccessfully applied to set aside the award, but the Cour de Cassation dismissed the application in March 2016.

“The impression one gains from this history is that the defendants were intent on delaying payment into court as long as was possible,” Justice Teare said.  The court did not assess Shackleton’s costs but noted that his normal hourly rate of £800, or roughly $1,000, was “more than double” of what appears to be the “guideline rate.”  Though the court can exceed the guideline rate for sufficiently complex cases, “proceedings to enforce an arbitration award do not fall into that category,” the judge said.

Read This Before You Go the Contingency Fee Route

March 3, 2017

A recent CEBblog article by Julie Brook, “Read This Before You Go the Contingency Fee Route,” discusses some of the pitfalls of contingency fees in California.  This article was posted with permission.  The article reads:

Among the several alternatives to the traditional hourly fee arrangement, contingency fees have been commonly used for decades.  Under a contingent fee agreement, the attorney and client agree that the attorney will receive a particular percentage of the client’s recovery or of the savings obtained for the client as a fee for legal services, if there is a recovery.  The attorney takes on the risk with the potential for significant reward.  Not surprisingly, there are statutory requirements for these types of agreements—and failing to comply with them is risky, too.

Follow these statutory requirements whenever you enter into a contingent fee agreement:

  1. Put it in writing. Contingent fee agreements must be in writing to be enforceable, except those for the recovery of workers’ compensation benefits or certain merchants’ claims. Bus & P C §§6147-6147.5.
  2. Include certain specific provisions.  In addition to a description of the contingencies entitling the attorney to a fee, the agreement must specify such matters as (Bus & P C §6147(a)):
    • The fee rate agreed on;
    • How the costs of prosecuting and settling the case will affect the fee and the client’s recovery (e.g., in the event of a structured settlement, whether the attorney is paid from first funds);
    • A statement as to what extent the client is required to pay compensation for related matters arising out of his or her relationship with the attorney that aren’t covered by the contingency fee agreement; and
    • A statement that the fee is negotiable.
  3. Follow additional requirements for medical malpractice claims.  If the claim is for medical malpractice and is subject to the maximum fee limits on contingent fees (see Bus & P C §6146), then the fee agreement must include a statement that the rates set out in §6146 are the maximum limits for the contingent fee arrangement and that the attorney and the client may negotiate a lower rate.  Bus & P C §6147(a)(5).  You may want to attach a copy of Bus & P C §6146 to the fee agreement to ensure that the client is informed of its content.
  4. Specify the contingent fee rate.  Contingent fee agreements must specify the contingent fee rate (Bus & P C §6147(a)(1)) and how disbursements and costs in connection with the prosecution or settlement of the claim will affect the contingent fee and the client’s recovery (Bus & P C §6147(a)(2)).  Unless the claim is for medical malpractice and the agreement is thus subject to Bus & P C §6146, the agreement must also include a statement that the fee isn’t set by law but rather is negotiable between the attorney and the client.  Bus & P C §6147(a)(4).
  5. Provide an hourly rate just in case.  The agreement should provide an hourly rate so that the attorney may establish a baseline to recover quantum meruit in the event the attorney is discharged by the client before the completion of the representation.  The hourly rate will also assist the attorney in providing a basis for attorney fee recovery in any potential attorney fee motion.
  6. Anticipate deferred payments or structured settlements.  Whenever payment of the recovery, or any part of it, may be deferred, the fee agreement should specify when the attorney fees must be paid and, when appropriate, how they should be calculated.  Otherwise, the agreement invites dispute and may be subject to being voided by the client for failing to fully comply with Bus & P C §6147.  If the award for future damages in an action for injury or damages against a health care provider is at least $50,000 and either party requests that the award be paid by periodic payments, then the court must order that the future damages be paid, in whole or in part, by periodic payments rather than by a lump-sum payment. CCP §667.7.  In that event, the court must also place a total value on the periodic payments and include that amount in computing the total award from which attorney fees are calculated for purposes of determining the statutory maximum fee. Bus & P C §6146(b).
  7. Provide for noncash awards.  When the award might be partially or entirely in a form other than cash (e.g., reinstatement in a wrongful termination action), the fee agreement should provide for that possibility.  This might be done by providing for a specified hourly fee if the award is not entirely in cash and a contingent fee if it is.  It may also be accomplished by providing for a method for valuing noncash awards.

Failure to include any of the required items makes the agreement voidable at the option of the client (but you would still be entitled to a reasonable fee). Bus & P C §6147(b).  See, e.g., Arnall v Superior Court (2010) 190 CA4th 360, 366 (failure to state in fee agreement that fees were negotiable rendered fee agreement void; fees recoverable by way of quantum meruit).

NALFA Quoted in ALM’s Daily Business Review

March 1, 2017

NALFA was quoted in the ALM’s Daily Business Review (DBR), the leading source of daily legal and business news in South Florida, in a news story by Monika Gonzalez Mesa, “Are Florida Billing Rates on the Rise? It Depends”.  The story reads:

At least six large Florida-based law firms raised their billing rates in 2016 and plan to do so again this year.  But the higher rates may not be typical for Florida firms across the board.

In a survey conducted by ALM, Akerman, Greenspoon Marder, Holland & Knight and Shutts & Bowen all projected that they will raise hourly billing rates by more than 3 percent in 2017, as they did in 2016.  Greenberg Traurig also said it raised billing rates by more than 3 percent in 2016 but expects the percentage increase to be lower this year.  And Carlton Fields reported that it, too, raised its billing rates in 2016, although the increase was not as high.  It says it plans to raise them again this year.

But many variables go into determining billing rates, and the upswing does not necessarily represent an overall trend for Florida law firms, lawyers say.  Billing rates vary widely with location, market competition, complexity of practice, demand for that practice and the individual lawyer's experience.  Firms strive to find the rate that covers overhead without turning off clients while still keeping the firm attractive to valuable existing talent and potential recruits.

"It's hard to get a general consensus on billing rates because they tend to be geography focused and practice driven," said Terry Jesse, executive director of the National Association of Legal Fee Analysis, a Chicago-based nonprofit.

Bankruptcy court records, however, can provide a snapshot of billing rates because attorneys are often required to list their rates when representing clients in bankruptcy.  ALM Legal Intelligence collected 2016's hourly billing rates for partners, associates, of counsel and paralegals from these published rates in the 20 largest federal bankruptcy jurisdictions.  The Daily Business Review compiled a Florida list based on this data, offering a view of billing rates in the state.

The largest group of Florida attorneys in the list reported rates in the $200 to $350 an hour range.  The next biggest block provided rates that ranged between $350 and $500 an hour.  A smaller but still significant tier billed $500 or more per hour.

Among the highest paid attorneys were Greenberg Traurig partner Paul Keenan, who billed $765 an hour, Paul Singerman, co-chairman of Berger Singerman, who reported a rate of $695 an hour, and Robert Furr, founding partner of FurrCohen, who listed his rate at $650 an hour.

"I know guys that charge even more than that—a lot more," said I. Mark Rubin, an attorney in Jacksonville, who was included in the top-tier of the list with a billing rate of $575.  "Our clients are willing to pay for our services because they can't get the type of representation we give anywhere else."

Rubin represents groups of small investors who were caught up in aggregated-investor building-purchase schemes in the early 2000s.  Many of the deals involved fraud and left seniors without access to their life savings.  Rubin said he was included in the 2016 ranking because he used bankruptcy court to keep a 30-story building from falling into the hands of a predatory lender.

Bankruptcy billing rates, however, don't necessarily reflect billing rates for other practice areas, lawyers say.  Often, bankruptcy cases involve limited funds and limited recovery, so when deciding what to charge, lawyers have to consider that their compensation—especially in trustee and debtor cases—will also be limited.

"Bankruptcy traditionally has higher hourly rates, not only because of the complexity, but because of the risk that lawyers have to take on," said Luis Salazar, managing partner at Salazar Jackson in Coral Gables.

Bankruptcies make up about 25 percent of Salazar's practice now, but seven years ago, when the economy was doing poorly, it was perhaps as much as 50 percent, he said.  "For our market I don't think you're seeing much increase in bankruptcy billing rates because the demand is not there," he said.

Salazar is listed as charging an hourly rate of $500 in 2016.  Now, he says, his hourly billing rate has gone up to $550.  But much of his work, he says, is now based on a flat fee or alternative fee agreement.

Another reason billing rates in bankruptcy cases may not accurately reflect the rates attorneys charge in other practice areas is that bankruptcy attorneys are not as constrained by the power and weight of market competition.  In bankruptcy court, it is judges who approve the billing rates.

"The [bankruptcy] rates tend to be a little higher than they would be in the market because you have a judge looking over the rate as opposed to the competitive market," said Gary Mason, founding partner at Whitfield Bryson & Mason in Washington, D.C.

Bankruptcy billing rates do offer a window into legal fees.  But they are a very small part of the market overall, lawyers say, making it difficult to extrapolate rates throughout the industry from that data alone.

In fact, legal billing rates vary significantly and depend largely on the practice area and the complexity of a case, attorneys say.

"If it tends to be very complex work, the rates are going to be higher—and generally the larger firms do that [kind of work]," Mason said.  "But you'll usually find smaller boutique firms that have similar high rates because they have specialized expertise."

In South Florida, lawyers say the highest hourly rates are in specialty areas: complex cross-border, mergers and acquisitions, antitrust litigation, project finance, international taxation and international arbitration.

"The highest rates we see in Florida pretty much max out at around $850 locally, but you do have a small cadre of Miami-based partners working on national major market matters who charge New York rates—over $1,000 per hour," said Joe Ankus, president of the Florida-based legal recruiting firm Ankus Consulting.

Ankus says that firms tell him what they expect their lawyers' rates to be when they hire lateral partners.  "While $765 is definitely in the top five-to-ten percent of rates for all of the South Florida legal market, it is not considered high for an AmLaw Top 25 firm with an office in Florida," he said.  "It would be closer to middle-of-the-road, depending on the practice area."

At the global firm Holland & Knight, a market analysis and information gathering process begins a few months before the firm implements a rate change.

"We try to gather as much information and market data as possible," said Holland & Knight Operations and Finance partner Douglas Wright.  "We use market data compiled by large accounting firms and other consultants to analyze and evaluate our rates.  We spend a lot of time poring over the data."

The distilled information is then shared with practice leaders, who further discuss current market considerations and demand for each lawyer in determining a rate, he said.

"From all of that process, we develop a rate for each individual lawyer, which is an attempt, again, to balance market considerations, client considerations, and to make sure the firm is in a position to demonstrate the value proposition that it brings to our clients," Wright said.

According to Jesse of the National Association of Legal Fee Analysis, antitrust litigation is generally the most expensive litigation, and white-collar defense also has a high hourly rate.  Bankruptcy tends to be more straightforward, he said, but the more complex the litigation, the higher the hourly rate.

"The lowest rates out there tend to be insurance defense rates because the insurance companies will give them a book of business," Jesse said.  "There tends to be a difference in how plaintiffs attorneys bill and defense attorneys bill.  Defense work tends to be on hourly-based, while plaintiffs attorneys can bill on a contingency."

Last month, the rates law firms charge for their services grabbed the public's attention in Florida when the state revealed that four law firms had billed $97.8 million since 2001 for their work representing Florida in a battle with Georgia over water rights.  According to a spreadsheet obtained by the Miami Herald and the Tampa Bay Times, Latham & Watkins charged $395 an hour for lawyers with three years or less experience, $575 an hour for lawyers with between three and ten years of experience and $825 an hour for work performed by partners.  Foley & Lardner charged $220 an hour for associates with five years or less experience, and $450 an hour for partners.

While hourly billing rates are not likely to disappear any time soon, lawyers say that over the past few years, clients have become savvier at looking for predictability, efficiency and good value.  For longer projects, they want to know what alternatives they have.  Salazar said his firm embraced the change and created a system based on project management methods from other industries to zero in on what clients are looking for.

"Most of the work we're doing now is either project billing-based or flat fee-based or some sort of alternative fee," he said, "For bankruptcy, there's still an hourly fee approach, but for nonbankruptcy matters, including commercial litigation, transaction and the compliance work we do, clients are really seeking some alternative billing basis."

Insurer Fights Fee Discovery in Texas

February 22, 2017

A recent Law 360 story by Michelle Casady, “Texas High Court Told to Nix Attys’ Fee Discovery Ruling,” reports that National Lloyd's Insurance Co. urged the Texas Supreme Court to upend a lower...

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