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Category: SCOTUS

Former AG’s Hourly Rate: $2,295

April 16, 2021

A recent Law.com story by Mike Scarcella, “Covington’s Eric Holder Bills at $2.295 Hourly, New Legal Services Contract Shows,” reports that Covington & Burling partner Eric Holder Jr., the Obama administration’s first U.S. attorney general and a veteran Washington lawyer, is billing at $2,295 hourly, according to a contract the law firm signed with a public university to conduct an internal investigation about workplace culture.  Holder is Covington’s lead partner on the legal services engagement with Oregon Health & Science University.  The school announced its retention of Covington in late March to lead a “comprehensive, independent investigation of institutional harassment, discrimination, retaliation and racism.”

Covington and other firms have long been hired to conduct internal investigations at companies and other institutions, but in many instances the engagement letters, revealing rates and the scope of legal services, are not matters of public record.  ALM obtained Covington’s contract through a public records request.  Holder’s $2,295 billing rate puts him at the high end of hourly figures.  Billing at other elite firms such as Weil, Gotshal Manges and Kirkland & Ellis have recently approached $2,000.

“Mr. Holder and Covington have conducted examinations of workplace culture and issues related to equity, diversity and inclusion for corporations including Uber, Starbucks and Airbnb,” the university said in announcing the retention of the Washington-based law firm.  The announcement noted that “Holder and the Covington team are also currently assessing race, equity, inclusion and diversity policies and practices at Seattle Children’s Hospital.”

Holder is working with Covington partner Nancy Kestenbaum, co-chair of the firm’s white-collar defense and investigations practice group and a former member of the firm’s management committee. Kestenbaum is billing at $1,445 an hour, the law firm’s engagement letter said.  Covington said it agreed to discount its rates by 10%.

“Hourly rates for other lawyers range from $595 for junior associates to $2,295 for senior partners; and for legal assistants from $290 to $545,” the firm said in its engagement letter.  The firm said it reviews and adjusts rates yearly as of Jan. 1, “although there are circumstances in which we may adjust rates at other times.”  Part of the contract contained information that the university would not release.  The information pertained to clients Covington is advising on clinical trials being conducted at the university.

“As you recognize, we are a large law firm with multiple practices in multiple offices throughout the world, and we represent many different clients in many different industries, including clients who are competitors of each other and sometimes adversaries in legal matters,” Holder wrote.  “In taking on this representation, we commit that we will not represent any other client in any matter adverse to you that is substantially related to this matter.”

A private law firm charging a public client is not rare.  Public records show major U.S. law firms have charged local or state government clients to take a case to the U.S. Supreme Court.  Not every engagement, however, is charged. Some work is done pro bono.

Ninth Circuit Doubles Fee Award in California Medicare Litigation

April 8, 2021

A recent Metropolitan News story, “Ninth Circuit Ups Attorney Fee Award Against California From $4 Million to $8.2 Million,” reports that the Ninth U.S. Circuit Court of Appeals has decided that a District Court judge, at the tail end of years-long litigation to bar slashes in California’s Medicare program, short-changed a law firm in her award of attorney fees by reducing its hours and declining to employ a multiplier, with the appeals panel declaring that the firm is entitled to nearly $8.2 million.

The action was brought in Los Angeles Superior Court on April 22, 2008, and the state removed it to the U.S. District Court for the Central District of California on May 19, 2008.  Plaintiffs are the Independent Living Center of Southern California, two branches of the Gray Panthers, and several pharmacies and pharmacists, along with individual Medicaid recipients.  “Litigation in this case spanned twelve years and included argument at every level of the federal courts,” the Ninth Circuit’s latest opinion in the case notes.

The case, which spawned a U.S. Supreme Court opinion in 2012, was settled in 2014.  District Court Judge Christina A. Snyder of the Central District of California ruled on July 6, 2015 that California Code of Civil Procedure §1021.5, the private attorney general statute, “cannot support an award of attorneys’ fees in this case”; the Ninth Circuit vacated her order and remanded on Nov. 21, 2018; on Jan. 24, 2020, Snyder awarded the Los Angeles law firm of Stanley L. Friedman $2,731,800, saying:

“This amount reflects the product of the $628/hour rate that the Court found to be a reasonable lodestar rate for the Friedman firm, and the 4.350 hours that the Court found to be a reasonable lodestar for the total number of hours spent by the Friedman firm litigating this case.”  The intervenors’ counsel did most of the work, she remarked, concluding: “The Friedman firm’s supporting role during the merits stage of this case simply does not support a fee enhancement.”

The Ninth U.S. Circuit Court disagreed.  “Here, the district court inadequately justified awarding Friedman only fifty percent of his requested hours, while awarding Intervenors’ counsel one hundred percent of theirs,” the opinion says.  It adds that in light of the usual factors militating in favor of a multiplier, “the need to ensure that, in the future, lawyers are not dissuaded from taking up claims that will benefit the public interest,” Snyder “erred by failing to apply a multiplier.”

The court, itself, set the amount the firm is to receive, saying: “Because of the district court’s thorough fact-finding, we are able to modify the attorney’s fees award on appeal, conserving judicial resources by avoiding the need to remand for further proceedings.  Pursuant to the foregoing, we hold that the Friedman Firm is entitled to payment for seventy-five percent of its billed hours, at the rates set forth by the district court.  We further hold that the Friedman Firm is entitled to a multiplier of 2.  The Friedman Firm billed 8.699 hours.  Seventy-five percent of this amount, multiplied by the hourly rate of $628 yields an award of $4,097.229.00.  With a multiplier of 2, the Friedman Firm is entitled to $8,194,458.00 pursuant to California Code of Civil Procedure § 1021.5.”

Class Counsel Earn $4.8M in Fees in $17M ERISA Settlement

December 2, 2020

A recent Law 360 story by Michael Angell, “Neuberger Workers’ Attys Get $4.8M in Fees in ERISA Deal,” reports that attorneys for a class of Neuberger Berman employees got the green light from a New York federal judge to collect $4.76 million in attorney fees for their work securing a $17 million settlement resolving claims that the investment giant put workers' retirement money into an underperforming fund.

U.S. District Judge Laura Taylor Swain approved the fee request from attorneys for Arthur Bekker, who sued Neuberger Berman for breach of fiduciary duty for offering him and others a laggard, in-house mutual fund in their 401(k) plans.  Judge Swain said the fees, which were lower than those earlier requested, were merited in a long-running, difficult case.

"Class counsel has pursued this matter since 2016 — over four years of research, investigation, briefing and settlement efforts. ... Class counsel were efficient and effective in securing this result for their client and the class," Judge Swain said in her order.  Bekker's attorneys secured $17 million for the class in June from the Employee Retirement Income Security Act suit.

Judge Swain said Bekker's representatives were able to get the award in the face of significant risks in bringing ERISA 401(k) actions, especially the risk of taking on a lengthy, complex case with the potential of zero recovery for their clients and themselves.

Judge Swain noted that Bekker's fiduciary breach claim was initially dismissed, prior to her reviving it in May 2019.  She also said the U.S. Supreme Court's February decision in Intel Corp. Investment Policy Committee et al. v. Christopher M. Sulyma, which established deadlines on when workers can file ERISA actions, could have time-barred Bekker's suit.

"Class counsel were able to leverage their expertise and experience with similar matters to achieve a positive, lasting and meaningful benefit to the class in this complex case," Judge Swain said in her order.  The fees request, which works out to 28% of the total award, is a discount relative to other awards in ERISA 401(K) cases across the country, which are typically one-third of the total award, Judge Swain said in her order.

The percentage-of-award calculation for fees is preferred in the Second Circuit over using an hourly rate multiplied by the number of hours worked on a case, according to her order.  But even based on an hourly rate method, the fees request seems reasonable, Judge Swain's order said.  Bekker's attorneys put in 1,386.5 hours of work on the case, which works out to $813,410 in "lodestar" fees earned for their time, Judge Bekker's order said. The fees request amounts to a lodestar multiplier of 5.85, which is on par with other fees requests, she added.

Bekker's attorneys requested they be given 28% of the award in October, saying that the percentage requested reflects the median amount given in 137 other ERISA cases from 1997 through 2013.  That request amounted to roughly $1 million less than they originally asked for.  However, Judge Bekker noted that the fee was not so low that it would disincentivize other attorneys from bringing forward similar complaints.  In addition to the fees, Bekker's attorneys will be reimbursed for $41,083 in expenses, and he will receive $20,000 for serving as lead plaintiff.

Class Counsel Seek $18.5M in Fees in LIBOR MDL

November 3, 2020

A recent Law 360 story by Dean Seal, “Class Atty Seek $18.5M in Fees for Libor Deal with 7 Banks,” reports that counsel for a class of bondholders asked a New York federal judge for an $18.5 million fee award for having negotiated settlements with seven financial giants accused of rigging the London Interbank Offered Rate (LIBOR).  Attorneys from Morris and Morris LLC Counselors At Law and Weinstein Kitchenoff & Asher LLC put the request before the court while seeking final approval for $68.6 million worth of settlements with JPMorgan Chase, Bank of America, RBS, Barclays, HSBC, UBS and Citibank.

According to the filings, class counsel has spent 34,743 hours representing the bondholders in their class action, which is part of sprawling multidistrict litigation launched over alleged rate-rigging coordinated by the world's largest financial institutions.  "Class counsel made this investment in vigorously litigating the bondholder action over more than eight years, with no assurance either of payment for their services or recoupment of their out-of-pocket litigation expenses," the bondholder attorneys said.

The bondholders' suit is one of many filed in connection with Barclays Bank PLC's 2012 admittance that it had been one of a number of banks lying about the interest rates it actually expected to pay in order to artificially influence Libor.  Investors contend the major financial institutions deliberately low-balled their submissions in the Libor rate-setting process to manipulate the benchmark.  As a result, the banks raked in hundreds of millions, and perhaps even billions, of dollars in ill-gotten gains, according to case filings.

Ellen Gelboim and Linda Zacher led the class of bondholders who owned U.S. dollar Libor-based debt securities between Aug. 1, 2007, and May 31, 2010.  Their highly complex antitrust action had already seen more than one dismissal, multiple appeals and even a trip to the U.S. Supreme Court by the time they announced settlements with Barclays, UBS AG and HSBC Bank PLC in 2017.

Under those deals, which received preliminary approval in July 2017, Barclays agreed to pay $7.1 million, UBS would contribute $17.9 million and HSBC would hand over $11.1 million.  Another deal that received preliminary approval in December 2018 stipulates that Citi will pay over $7 million to resolve bondholder claims.

Then last April, the bondholders announced three more settlements with JPMorgan Chase, Bank of America and Royal Bank of Scotland Group PLC that would recover a combined $25.5 million for the bondholder class.  The filings show that JPMorgan and BofA would each pay $6.25 million while RBS would turn over $13 million.  "Continuing to litigate against the settling defendants would likely last many years with the potential of no recovery for the bondholder class, and require the expenditure of significant resources of the court and the investment of hundreds if not thousands of hours of time and large sums of money," the bondholder class said.

Class counsel are asking for a 28% cut of the overall settlement fund net of roughly $2.5 million in expenses, resulting in a fee request of just over $18.5 million, along with another $817,237 in unreimbursed fees.  They noted that the settlements had been reached despite the fact that the bondholders' claims are currently dismissed and would rely on "an unpredictable appeal" to get reinstatement.

Second Circuit Rejects Fee Request After Landmark SCOTUS Ruling

September 30, 2020

A recent Connecticut Law Tribune story by Tom McParland, “2nd Circuit Blocks Attorney Fees for Troopers Who Recovered Union Dues After Landmark SCOTUS Ruling,” reports that a Manhattan-based federal appeals court rejected an appeal from a group of Connecticut state troopers who petitioned for attorney fees after securing a refund of collective bargaining dues in the wake of the U.S. Supreme Court’s landmark Janus decision, finding that it lacked jurisdiction to determine if they were “prevailing parties” to the litigation.

The ruling, from a three-judge panel of the U.S. Court of Appeals for the Second Circuit, left in place, for now, a district court’s ruling that the case was moot because the Connecticut State Police Union had refunded the current and former officers the full amount they had paid into collective bargaining, plus interest.  In a six-page summary order, the Second Circuit said the lower court’s ruling, which dismissed the case without prejudice, was not a final judgment that could be appealed, and noted that more litigation was likely in the U.S. District Court for the District of Connecticut.

“Having reviewed the record, we find that there has been no final, appealable judgment entered in the district court.  Therefore, we do not have jurisdiction over this appeal and must remand to the district court for further proceedings,” the panel wrote.

The plaintiffs, who declined to join the union, filed their lawsuit before the Supreme Court held in Janus that the First Amendment bars public employers from withholding agency fees from workers who opt out of a collective bargaining union.  Following the Janus decision, the union stopped collecting fees, and eventually provided a full refund after the officers moved for summary judgment.

U.S. District Judge Victor A. Bolden denied the motion as moot, and later found that the plaintiffs did not qualify as “prevailing parties” to the litigation.  Though the case was “administratively closed,” it did allow the plaintiffs to petition the court for post-judgment attorney fees and costs.

The Second Circuit panel said that its jurisdiction was limited, with few exceptions, to appeals from final judgments by a district court.  The administrative closure, however, did not meet that threshold, and the judges said Bolden would still need to rule on the plaintiffs’ motion for declaratory judgment on remand.  “In short, we see no indication that a final order has been entered in this case,” the court said.