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NALFA Hosts CLE Program with Sitting Federal Judges

March 24, 2017

Today, NALFA hosted the CLE program “View From the Bench: Awarding Attorney Fees in Federal Litigation”.  This program featured a panel of sitting federal judges.  This is the third CLE program NALFA has hosted with an all-judicial panel of sitting federal judges. 

The U.S. District Court Judges, the Honorable Frederic Block, Senior Judge from the U.S. District Court for the Eastern District of New York and the Honorable David R. Herndon, District Judge from the U.S. District Court for the Southern District of Illinois, discussed a range of attorney fee and legal billing issues in federal litigation.  The panel addressed fee shifting cases, prevailing party issues, and fee calculation methods. The panel also took questions from the audience.

This live and remote CLE program was approved for CLE credit hours in California, Florida, Illinois, and Texas.  CLE credit hours are still pending in Ohio and Pennsylvania.  Over 75 attorneys from across the U.S. registered for this multi-state CLE program.  This 120-minute CLE program was recorded and is available for purchase on-demand.

NALFA Podcast with Law Professor Charles Silver

March 17, 2017

NALFA hosts a podcast series on attorney fee issues.  We talk with thought leaders, attorney fee experts, and attorney fee newsmakers who’ve helped shape and influence the jurisprudence of reasonable attorney fees.  NALFA interviews members, faculty, judges, law professors, in-house counsel, and others on a range of attorney fee and legal billing issues.

NALFA’s second podcast featured an interview with Charles M. Silver, Professor of Law at the University of Texas at Austin School of Law.  The NALFA podcast with Professor Silver focused on his empirical research on the setting of attorney fees in securities class actions and economic principles at play in civil litigation.  The podcast discussion centered on fee calculation methods, judicial procedure for awarding fees, and private contingency fee agreements. 

Professor Silver also discussed the politics of class actions and the dynamics of the tort reform lobby.  In addition, Professor Silver also offered several recommendations for the class action world, including employing a more real world, market based approach to awarding fees in class actions.

“These podcasts are the perfect broadcast format to discuss attorney fee and legal billing issues,” said Terry Jesse, Executive Director of NALFA.  “In addition to his research, Professor Silver talked about a range of issues including the creation of a data set for judges to draw upon when awarding fees, fee allocation issues in MDLs, and setting attorney fees early in the class action process,” Jesse said.  Click on the link below to listen to the NALFA podcast:

https://soundcloud.com/thenalfa/nalfa-podcast-with-law-professor-charles-m-silver

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."

NALFA: Some Class Counsel Turn to Fee Experts When Seeking Fees

February 27, 2017

Attorney fees are often a bone of contention in class actions.  In fact, upon settlement, the only disputes usually to surface center around the attorney fees.  Upon settlement approval, class counsel file somewhat self-interested fee requests with the court.  Here, even when prepared with the proper standard of care, these fee requests appear bias and self-serving.  Indeed, these self-seeking requests for fees are a source of frustration for the courts and often contested by professional fee objectors.  These internal dynamics can drag class action litigation on for years.  Recently, some class counsel have even grudgingly low-balled their fee requests to avoid this confrontation and delay in payment (see Race to the Bottom: Class Action Lawyers are Low-Balling Fee Requests).  This self-reduction in fees is short-sighted and sets a bad precedent for future class action cases.

In order to break this stalemate, some class counsel are turning to attorney fee experts.  Attorney fee experts are fully qualified expert witnesses who provide expert declarations on the reasonableness of attorney fees and expenses in underlying actions.  They are skilled litigators with subject matter expertise and are highly qualified on a range of fee and billing issues like hourly rates, billing practices, fee award factors, litigation management, and lawyering just to name a few.  A qualified, outside fee expert provides a fee-seeking attorney with an independent, unbiased, and objective analysis of the attorney fees and expenses in the underlying class action.  Fee experts can manage the entire fee application process, provide an expert report/opinion, or advise and consult on fee matters.  Some fee experts include law professors and former judges.

Hiring a qualified fee expert during the settlement phase shows the court and would-be professional fee objectors that you are taking the setting of attorney fees in a constructive and impartial manner.  Retaining a fee expert shifts the focus from an internal and rather self-assured fee analysis to an outside, objective, and peer review-driven fee analysis.  By relying on a qualified fee expert, class counsel can defuse the existing tensions within the class action and speed up the recovery of attorney fees.  What is more, courts are more likely to rule in favor of a fee analysis provided by a qualified and disinterested expert, rather than someone with a financial stake in the outcome.

What are Best Practice in Legal Fee Analysis?

February 20, 2017

Legal fee analysis is the comprehensive review and analysis of attorney fees and costs in an outside legal matter.  Professionals who perform outside legal fee analysis include attorney fee experts, special fee masters, bankruptcy fee examiners, fee dispute mediators, and legal bill auditors.

The following best practices measures were developed over several years with input and consensus from thought leaders from across the legal fee analysis community.  These best practice measures promote values such as ethics, independence, and professional development.  These peer review driven standards help strengthen the legal fee analysis field by ensuring integrity in the process and and reliability in the results. 

This professional code of conduct is considered the professional mainstream of legal fee analysis.  All our members (i.e. fully qualified attorney fee experts, special fee masters, bankruptcy fee examiners, fee dispute mediators, and legal bill auditors) have pledged to follow Best Practices in Legal Fee Analysis:

  1. Adhere to the proper standard of reasonableness.
  2. Observe a consistent and reliable methodology.
  3. Keep updated on the latest jurisprudence of reasonable attorney fees and expenses.
  4. Keep updated on the latest scholarship on reasonable attorney fees and expenses (i.e. empirical papers, studies, surveys, and reports).
  5. Participate in professional development and CLE programs on attorney fees and legal billing topics.
  6. Do not advertise false or intentionally misleading information or offer any guarantee of outcome.
  7. Do not charge on a contingency basis (i.e. based on the results obtained).
  8. Do not accept a case or client where there is an inherent conflict of interest.
  9. Keep all fee, billing, and work product information in strict confidence.
  10. Utilize technology where possible.

Please note: You don't need to be a NALFA member to follow Best Practices in Legal Fee Analysis.