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Category: Staffing Issues

Judge Properly Awards Regular Hourly Rate for Clerical Tasks

February 12, 2021

A recent Metropolitan News Enterprise story, “Judge Properly Awards Attorney’s Fees, at Lawyer’s Normal Rates, for Clerical Work”, reports that the Court of Appeal for this district ruled yesterday that a judge did not abuse his discretion for including in an award of attorney fees recompense, at the lawyer’s usual rate for legal services, for the time he spent in performing clerical tasks.  Justice Halim Dhanidina of Div. Three wrote the opinion which affirms a $84,107.50 award by Los Angeles Superior Court Judge Michael L. Stern, except for a $552.50 component.  Plaintiff Albino Ojeda, who was the prevailing party in his action over Labor Code violations against Michelle and Eric Azulay, had agreed to that amount being remitted but it somehow wasn’t.

The Azulay’s complained that Ojeda should not paid for amounts charged by Encino labor lawyer Seth E. Tillmon, at his regular hourly rate of $425, for performing purely administrative chores.  Dhanidina said these tasks included “scanning, printing, and downloading documents; preparing proofs of service; preparing mailings; formatting documents; calendaring dates; and traveling to mailboxes or postal centers to mail documents.”

He wrote: “As an initial matter, necessary overhead support services that secretaries and paralegals provide to attorneys may be included in an attorney fees award….Therefore, so-called administrative tasks are recoverable in the trial court’s discretion.”

Dhanidina continued: “Although charging for purely clerical tasks at an attorney’s hourly rate is questionable, the trial judge nonetheless was the best judge of the value of the services rendered, and to reverse that judgment we must be convinced it is clearly wrong….Especially in the absence of the reporter’s transcript, which may have shed light on the time spent on so-called administrative tasks, we are reluctant to second guess the trial court.”

He noted that Tillmon is a sole practitioner, without support staff “and had to do everything himself.” The jurist observed: “His detailed time records largely show that when arguably clerical tasks were combined with clearly legal ones, the total time charged would not have been facially unreasonable for the legal task alone. 

On February 14, 2018, for example, counsel drafted 15 sets of discovery, printed copies of each, drafted proofs of service, printed mailing labels, and stuffed manila envelopes.  To do all this he spent 5.4 hours.  Spending that time on drafting discovery alone would be facially reasonable.  Further, it is possible that the trial court denied Ojeda’s request for a 1.5 multiplier, which the trial court might have otherwise awarded, as a way of ensuring that Ojeda was not compensated for performing clerical tasks.”  The Azulays also argued that fees amounting to $84,107.50 were impermissibly disproportionate to the $30,929.94 in damages Ojeda obtained.

“Azulay cites no authority for the proposition that a fee award that exceeds the client’s recovery is per se unreasonable or that California imposes a proportionality rule,” Dhanidina responded.  The case is Ojeda v. Azulay, B302440.  Armen Shaghzo of the Glendale law firm of Shaghzo & Shaghzo represented the Azulays.  There was no appearance for Ojeda.

Virtu Financial Fights for $3.2M Fee Award in Trade Secret Case

January 7, 2021

A recent Law 360 story by Adam Lidgett, “Virtu Fights for $3.2M Fee Award Against Ex-Worker” reports that a unit of high-frequency trading firm Virtu Financial has shot back at a recommendation that it should only get about $401,500 in attorney fees and costs after scoring a win in a trade secret case against an ex-employee, arguing it should be able to collect millions of dollars.

KCG Holdings Inc., which prevailed in its trade secret misappropriation case in March against Rohit Khandekar, filed an opposition to U.S. Magistrate Judge Gabriel W. Gorenstein's recommendation that it only get about $401,500 in fees and costs.  KCG said it should get more than $3.18 million in fees and costs — less than the nearly $3.6 million it initially asked for.  The firm said it wasn't challenging every reduction in the recommendation, but it did have issues.  While the magistrate judge said that "the relief KCG ultimately obtained was 'limited as compared to the relief sought,'" KCG said it actually was quite successful, for instance.

"This result was not the inevitable conclusion of a routine breach-of-contract lawsuit, as the report contends," KCG said.  "It was the exhausting finish to a hard-fought legal battle wherein Khandekar employed every litigation tool available to him."  Khandekar also hit back at the magistrate judge's recommendation, saying the court should cut the recommended amount down to something more "reasonable."  That $401,500 figure accounts for 80% of his entire wealth, and the court should reduce what is recommended so "Khandekar does not need to sell his home," he said.

In his early December report and recommendation, Judge Gorenstein said the rates KCG proposed were out of step with precedent requiring the court to consider rates in relation to attorneys of "average skill and ordinary competence."  Judge Gorenstein also found that the amount of hours KCG billed for was "vastly excessive," as was the number of attorneys on the case.

In opposing KCG's June motion for attorney fees, Khandekar had argued it should be rejected in its entirety for being "so outrageously excessive and unreasonable that it could not possibly have been made in good faith."  But Judge Gorenstein had rejected that argument, saying a case Khandekar relied on to support it involved a party that made repeated misrepresentations to the court.

Attorney Fee Request Cut in Virtu Class Action

December 4, 2020

A recent Law 360 story by Britain Eakin, “Virtu Can’t Get $3.2M in Fees for ‘First Class’ Attys,” reports that a magistrate judge has recommended that a unit of high-frequency trading firm Virtu Financial get only a fraction of the $3.2 million in attorney fees it sought for its win against a former employee, saying that $344,000 was a reasonable fee award.

KCG Holdings Inc., which prevailed in its trade secret misappropriation case in March, retained attorneys from Baker McKenzie and Seyfarth Shaw LLP and argued that the rates it was seeking were in line with — and in some cases lower than — comparable firms.  But U.S. Magistrate Judge Gabriel W. Gorenstein said in a report and recommendation that the rates KCG proposed were out of step with precedent requiring the court to consider rates in relation to attorneys of "average skill and ordinary competence."

The judge said KCG had not even tried to argue that its proposed rates were in line with that criteria.  "Certainly, in its choice of attorneys, a party may understandably choose to undertake the equivalent of flying first class," Judge Gorenstein said.  "But when it comes time to shift 'reasonable' fees to another party under New Jersey law, it may only collect the equivalent of an economy-class ticket."

In March, U.S. District Judge Alison J. Nathan found that KCG's former employee, Rohit Khandekar, misappropriated trade secrets by reviewing and copying trading codes developed by other quantitative strategists to his personal files before leaving for KCG's competitor, Two Sigma Securities. KCG had sued Khandekar in 2017 after he left for Two Sigma.  In June, KCG moved for fees and costs, arguing that it should get $3.2 million in attorney fees with costs on top of that for a total of nearly $3.6 million.

In opposing the motion, Khandekar had argued the demand should be rejected in its entirety for being "so outrageously excessive and unreasonable that it could not possibly have been made in good faith."  But Judge Gorenstein rejected that argument, saying the case he relied on to support that argument involved a party that made repeated misrepresentations to the court.  "Here, no such circumstances are present, and Khandekar's attack consists merely of the usual elements of an opposition to a fee application: an attack on the reasonableness of the hours sought and of the hourly rates," the judge's report said.

However, Judge Gorestein found that the amount of hours KCG billed for was "vastly excessive," as was the number of attorneys on the case.  That included 13 partners, 22 associates, seven contract attorneys, and 10 other members consisting of paralegals, counsel and a summer associate, which the judge said "undoubtedly caused inefficiency and contributed to the vast number of hours expended."

The judge went on to say that, while courts often reduce billing hours because of overstaffing, "this case stands alone."  "It is exceedingly rare, if not unprecedented, to see an application for fees in a single-plaintiff/single defendant case with the number of attorneys involved here," the report said.  Judge Gorenstein therefore reduced the number of billable hours by 70% and then cut the total fees in half to account for the financial disparities between the parties, noting that the full fee award would bankrupt Khandekar and would only marginally improve KCG's financial position.

Law Firm Billing Tips For Good Client Relations

December 1, 2020

A recent Law 360 story by Aebra Coe, “Law Firm Billing Tips For Avoiding An Irate Client,” reports that a recent lawsuit filed against K&L Gates LLP by a client unhappy with a legal bill highlights some common pitfalls that law firms face when it comes to billing practices, but there are ways to avoid a similar situation, experts say.  The lawsuit against K&L Gates, which was filed in August by Chicora Life Center LC, accuses the firm of using several tactics to increase its bill for representing the bankrupt medical center in a Chapter 11 proceeding over a lease termination dispute.

Some of the alleged billing practices are not entirely uncommon among law firms, according to two experts who declined to comment directly on the lawsuit but provided their thoughts on client billing more generally.  The alleged practices include "block billing," where a lawyer "blocks" together a number of tasks over a set amount of hours; "hoarding," when an overqualified lawyer with a high billing rate retains work rather than passing it on to someone with a lower billing rate; and "multibilling," which occurs when multiple attorneys are tasked with performing the same work.

"All of those things mentioned have been going on for years and years.  This is not at all new," said James Wilbur, an expert on law firm billing at consulting firm Altman Weil Inc.  Regardless of how the K&L Gates suit shakes out in court, other law firms are likely looking for ways to avoid being in a similar position.  While such situations are not entirely preventable because clients can sometimes file bad-faith suits, there are steps firms can take to ensure clients are as happy as possible with a bill at the conclusion of a matter, Wilbur said.

He suggested firms rely on three things to accomplish this: technology, training and collaboration.  E-billing software can often catch double billing and block billing, he said, as well as phrases that might irk a client, like "reviewed phone notes," that may not indicate that the time spent added any value to the matter.

And that leads to training, which should be conducted at all levels on a regular basis so that any attorney or paralegal who puts together a bill is aware of best practices and is skilled in conveying the value brought to the client via the time the individual spent working, he said.  Senior attorneys billing for work that could be done by someone more junior is another beast, Wilbur said, and one that law firm management must work to dissuade by encouraging collaboration and the sharing of work.

Clients have many different rules when it comes to fees, but "no surprises" is a big one, said Toby Brown, chief practice management officer at Perkins Coie LLP.  "The bottom-line answer is more transparency.  And more real-time updates about what's going on," Brown said.  "The lawyers are uncomfortable talking about these things, and so they don't talk about them head-on."

He said lawyers and clients can often get wrapped up in the legal issues at hand, with fee issues taking a back seat.  For example, if the volume of discovery in a major case increases substantially, a conversation on cost might not always occur, but it should, he said.  Real-time sharing of information on the cost of a matter is vital, Brown said.  He said his firm has worked to incorporate the help of its project management team to flag when the scope of a matter has changed so that the attorney on the matter is aware a conversation is needed.

The firm has also implemented technology that goes beyond basic e-billing software to allow attorneys to better monitor their budget on a matter, he said.  Ultimately, according to Wilbur, having a strong relationship with a client to begin with will go a long way.

"Even in a firm that's highly ethical and has training around these issues, mistakes are going to happen. Something is going to creep through," he said.  "The first thing is you have to have a good enough relationship with the client so they know they can text or email you, pick up the phone and point out a problem in the bill, and you will deal with it without arguing."

When contacted by Law360 for comment about its case, K&L Gates described Chicora's claims as "a transparent attempt to re-litigate issues that were raised and rejected years ago through final orders in a concluded bankruptcy."  A third-party fee examiner, it said, expressly found that the fees requested by the firm were reasonable and should be recoverable, and then the bankruptcy court adopted that determination.  "We are confident the present claims also will be rejected," the firm said.

The Nation’s Top Attorney Fee Experts of 2020

June 24, 2020

NALFA, a non-profit group, is building a worldwide network of attorney fee expertise. Our network includes members, faculty, and fellows with expertise on the reasonableness of attorney fees.  We help organize and recognize qualified attorney fee experts from across the U.S. and around the globe.  Our attorney fee experts also include court adjuncts such as bankruptcy fee examiners, special fee masters, and fee dispute neutrals.

Every year, we announce the nation's top attorney fee experts.  Attorney fee experts are retained by fee-seeking or fee-challenging parties in litigation to independently prove reasonable attorney fees and expenses in court or arbitration.  The following NALFA profile quotes are based on bio, CV, case summaries and case materials submitted to and verified by us.  Here are the nation's top attorney fee experts of 2020:

"The Nation's Top Attorney Fee Expert"
John D. O'Connor
O'Connor & Associates
San Francisco, CA
"Over 30 Years of Legal Fee Audit Expertise"
Andre E. Jardini
KPC Legal Audit Services, Inc.
Glendale, CA

"The Nation's Top Bankruptcy Fee Examiner"
Robert M. Fishman
Cozen O'Connor
Chicago, IL

"Widely Respected as an Attorney Fee Expert"
Elise S. Frejka
Frejka PLLC
New York, NY
"Experienced on Analyzing Fees, Billing Entries for Fee Awards"
Robert L. Kaufman
Woodruff Spradlin & Smart
Costa Mesa, CA

"Highly Skilled on a Range of Fee and Billing Issues"
Daniel M. White
White Amundson APC
San Diego, CA
"Extensive Expertise on Attorney Fee Matters in Common Fund Litigation"
Craig W. Smith
Robbins LLP
San Diego, CA
"Highly Experienced in Dealing with Fee Issues Arising in Complex Litigation"
Marc M. Seltzer
Susman Godfrey LLP
Los Angeles, CA

"Total Mastery in Resolving Complex Attorney Fee Disputes"
Peter K. Rosen
Los Angeles, CA
"Understands Fees, Funding, and Billing Issues in Cross Border Matters"
Glenn Newberry
Eversheds Sutherland
London, UK
"Solid Expertise with Fee and Billing Matters in Complex Litigation"
Bruce C. Fox
Obermayer Rebmann LLP
Pittsburgh, PA
"Excellent on Attorney Fee Issues in Florida"
Debra L. Feit
Stratford Law Group LLC
Fort Lauderdale, FL
"Nation's Top Scholar on Attorney Fees in Class Actions"
Brian T. Fitzpatrick
Vanderbilt Law School
Nashville, TN
"Great Leader in Analyzing Legal Bills for Insurers"
Richard Zujac
Liberty Mutual Insurance
Philadelphia, PA