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Former Enron Unit Failed to Justify Fee Request

June 29, 2017 | Posted in : Billing Record / Entries, Defense Fees / Costs, Expenses / Costs, Fee Agreements, Fee Calculation Method, Fee Request, Hourly Rates / Hourly Billing, Interest on Fees, Legal Bills / Legal Costs

A recent Law 360 story by Natalie Olivo, “Nigeria Knocks Ex-Enron Unit’s Fee Bid in $21M Award Row,” reports that a former Enron subsidiary has failed to justify its request for hundreds of thousands of dollars in legal fees for the solo practitioner who netted the company confirmation of a contract breach arbitral win against the Nigerian government now topping $21 million, the country told a D.C. federal court.

In pushing for the fees this month, Enron Nigeria Power Holding Ltd. — sold off by Enron in the wake of its 2001 scandal and collapse — said the $276,752.64 in attorneys’ fees and $4,025.69 in costs was well-earned by Texas attorney Kenneth R. Barrett, who overcame stiff opposition from experienced opposing counsel who put up a complex legal defense.  Legal fees are appropriate, ENPH said, in part because Nigeria refused to abide by the underlying award and because the underlying agreement requires compensation by “the party resisting enforcement.”

But the Nigerian government pushed back, arguing that instead of using the Washington, D.C., rate to calculate his fees, Barrett should have used the lower rate of Houston, Texas, because that was mainly where he worked.  In addition, the government said, while Barrett has nearly three decades of legal experience, he has not provided any evidence to show that he has experience regarding international arbitration award disputes with foreign governments.

“The fact that plaintiffs’ counsel has been licensed as an attorney for almost 30 years, does not necessarily translate to 30 years [of] experience in every area of law,” Nigeria said.  “Plaintiffs’ counsel has not shown that he has the requisite experience and reputation in international arbitration enforcement to justify the billing rate and hours spent on this matter.”

ENPH’s total award was up to more than $21.2 million after a D.C. federal judge added on exchange rate fluctuations and interest in April.  The International Chamber of Commerce arbitration award of $11 million plus fees had already been confirmed, and in December the D.C. Circuit also rejected Nigeria’s appeal of that ruling.

Nigeria had argued that it could cancel its deal with ENPH because of then-parent company Enron Corp.’s accounting scandal, and said enforcing the award would endorse fraudulent conduct and conflict with U.S. public policy, despite ENPH rebuttals that Nigeria failed to provide any evidence of wrongdoing on the subsidiary's part.

But the D.C. Circuit noted the courts’ tendency to defer to arbitration.  It also found that while the public policy issue of award enforcement was a question for the courts, interpreting the agreement between Nigeria and ENPH was a question for the ICC.  The panel also remarked that Nigeria began trying to back out of the deal in 1999 out of apparent economic convenience — before the Enron scandal broke.  As of the April judgment Nigeria still had not paid any of the award to ENPH.

ENPH in March asked the court for the $18.7 million in award and award interest as well as for exchange rate consideration and post-award/prejudgment interest on legal fees and arbitration costs.  The final judgment confirmed the $18.7 million and added $1.1 million based on ENPH arbitration legal fees and costs — converted from pounds at the November 2012 rate — along with $870,000 for ICC fees and $529,000 in prejudgment interest.

ENPH followed up with the court this month, noting that due to an “oversight,” prejudgment interest should actually be about $33,000 more.  The company first sought compensation for its legal costs late last month, asking for more than $630,000 total when combining its U.S. and United Kingdom court enforcement efforts.

In a June 3 brief, ENPH argued the rates charged by Barrett are reasonable, with the attorney having performed work both as lawyer and legal assistant.  For the attorney work, Barrett charged between $770 and $820 an hour, while he charged between $175 and $185 an hour for legal assistant efforts, for a total of 413.57 hours in all.

Hitting back against ENPH’s fee request, the Nigerian government said Barrett should actually be using the average Houston rate for comparable attorneys of about $300 an hour for attorney work and about $127 per hour for legal assistance efforts.  During the four years of the dispute, ENPH’s counsel made only two trips to Washington, D.C., the government said, one for mediation and the other for oral arguments before the circuit court.

The government also argued Barrett’s fee request should be reduced due to its documentation.  “The plaintiffs’ counsel in the matter has presented invoices rife with serial or blocked bill entries that impermissibly intermix time spent on multiple activities,” Nigeria said.  “It renders the task of determining how much time plaintiffs’ counsel reasonably spent on particular activities difficult.”

The case is Enron Nigeria Power Holding Ltd. v. Federal Republic of Nigeria, case number 1:13-cv-01106, in the U.S. District Court for the District of Columbia.