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Category: Fee Dispute

Florida Justices: Attorney Fee Dispute Can Move Forward

September 1, 2022

A recent Law 360 story by Carolina Bolado, “Fla. Justices Allow Mintz Truppman To Pursue Fee Fight” reports that the Florida Supreme Court on Thursday reopened the way for Mintz Truppman PA to pursue a state court lawsuit against Lexington Insurance Co. and Cozen O'Connor over an attorney fee award, ruling that an intermediate appellate court improperly issued a writ prohibiting the suit.

The justices said the Third District Court of Appeal's decision barring a state court lawsuit — which sought damages based on claims that Lexington and Cozen O'Connor violated Florida's Mediation Confidentiality and Privilege Act by disclosing certain details from their mediation in federal litigation — was an improper use of the writ of prohibition because it was used to undo an action by the trial court in a matter within its subject matter jurisdiction.

"The Third District undid the trial court's exercise of jurisdiction in denying Lexington's and Cozen's motions to dismiss on the basis of an affirmative defense," the justices said in their opinion. "That matters because, were we to permit litigants to seek prohibition in every case in which a trial judge denies a motion to dismiss based on collateral estoppel, res judicata, or any other affirmative defense, the writ could be used to end-run our rules on appeals generally and interlocutory appeals in particular."

Justice John Couriel authored the decision, in which he was joined by five other justices. Justice Jorge Labarga concurred, though he declined to write a separate opinion.

The law firms and insurance company were fighting over a Third District decision that found that Mintz Truppman was essentially trying to augment a federal court's final ruling on an attorney fee award that came in well below its full request.

The Third District granted a writ of prohibition to Cozen O'Connor and Lexington, finding that the state circuit court lacks authority to hear Mintz Truppman's claims that Cozen O'Connor and Lexington violated Florida Statute 44.406, which provides for mandatory civil remedies against mediation participants who willfully disclose a mediation communication.

Mintz Truppman argued that the 44.406 claim is a new one separate from the federal court dispute, but Lexington's counsel argued that Mintz Truppman had deliberately ignored that claim in federal court because it wanted to take it to a different forum.

The dispute arose from Mintz Truppman's representation of Daphne Query in a 2014 suit against Lexington over a coverage claim for water damage caused by a broken pipe in her home. Query originally filed her suit in Miami-Dade County court, but Lexington, which was represented by Cozen O'Connor, removed the case to federal court.

The parties settled the property damage portion of Query's claim in June 2016 but were unable to reach a deal on attorney fees she was owed.

In her motion for attorney fees and costs, Query proposed a 2.0 contingency risk multiplier and sought a total award of about $828,000 for Mintz Truppman and Kramer Green Zuckerman Greene & Buchsbaum PA, the firm Mintz Truppman brought on as co-counsel when the case moved to federal court.

In October 2016, Cozen O'Connor filed Lexington's response, which argued for a fee award of $70,000 to $85,000. The response rebutted Query's assertion that she had obtained 100% of her property damage claim in their settlement, which was supported by an attachment of Mintz Truppman's premediation demand letter that the Third District said was not in the record but apparently showed Query had sought more than the $125,000 settlement amount.

Query did not move to strike Lexington's response or raise any mediation confidentiality objection with the federal court at the time, the Third District noted. However, in November 2016, Mintz Truppman filed the current suit in state court, raising its claims that Cozen O'Connor and Lexington violated mediation confidentiality.

The federal court ultimately entered a final judgment in March 2017 that found a fee multiplier was not warranted and awarded Query about $259,500 in attorney fees and costs, plus about $9,500 in prejudgment interest.

Neither party appealed the final judgment, and Lexington paid Query the property damage settlement and fee award amounts in full, the Third District said.

In their petition to the Third District for a writ of prohibition, Lexington and Cozen O'Connor conceded that a Florida circuit court would generally have jurisdiction to hear Mintz Truppman's mediation confidentiality claim, but they argued that the gravamen of the case was to recover additional attorney fees that Mintz Truppman claimed it was entitled to for its representation of Query in the federal case.

In April 2021, the appellate panel agreed, saying that Mintz Truppman "seeks to relitigate in state court a fee claim that the federal court determined with finality."

Chancery Approves $75M Fee Award in Williams Merger Dispute

August 29, 2022

A recent Law 360 story by Jeff Montgomery, “Chancery Oks $75M Cravath Fee in Williams Merger Dispute” reports that Cravath Swaine & Moore LLP nailed a nearly $75 million fee after a Delaware vice chancellor upheld its 15% contingent pay agreement with The Williams Cos. during much of a long battle with Energy Transfer LP and its affiliates over a $410 million deal-termination damage claim.

Vice Chancellor Sam Glasscock III also upheld a provision of the agreement that shifted Cravath's fees to Energy Transfer — the losing side of a $410 million battle with Williams over a termination fee triggered when Williams abandoned an earlier deal with one of its affiliates to pursue an eventually doomed, $38 billion Energy Transfer merger.

Energy Transfer, already required to pay Williams' $410 million break fee, fought the reasonableness of Cravath's fee, the 15% contingent arrangement as well as the court's decision to allow quarterly compounding interest for the fee, including a multiyear span while the case was stayed.  According to the decision and a transcript of earlier arguments on the dispute, Cravath's average or "lodestar" rate was $47.1 million for the same hours, compared with $74.8 million under the contingent fee arrangement.

"It is worth pointing out that these sophisticated parties surely were aware that post-merger-agreement litigation, seeking a break fee, could likely include representation on a contingent basis." the vice chancellor wrote in a decision that upheld the Williams side on all points.  Energy Transfer "had every opportunity, therefore, to contract against use of a contingent fee to determine the amount of fees shifted, if they so desired. This they failed to do," the vice chancellor wrote.

"The merger agreement contains no limitation on what kinds of attorneys' fees and expenses may be shifted to the losing party, other than a requirement, which is already implied under Delaware law, that the shifted fees and expenses must be 'reasonable,'" the vice chancellor wrote.  Williams had argued that a new general counsel secured the contingent agreement with Cravath in mid-2017, after Delaware's Supreme Court let stand the vice chancellor's finding that failure of a required tax-treatment for the $1.38 billion merger allowed Energy Transfer to walk away.

Energy Transfer argued that interest should have been suspended during a two-year period between 2019 and 2021 when a Williams' discovery vendor's error brought litigation to a halt. They also argued that litigation time over the interest rate and fees should likewise not count.

The decision also provided for interest at 3.5%, compounded quarterly, with the court observing other decisions that found compound interest "the standard form of interest in the financial market."  In all, according to a court brief filed, Cravath earned $4,358,372.70 prior to the start of the contingent fee terms, $4 million under a contractual fixed fee and $74,846,161 under the contingent fee.

Apple Urges Judge to Cut Fees in iPhone Class Settlement

August 26, 2022

A recent Law 360 story by Piper Hudspeth Blackburn, “Apple Urges Judge To Trim IPhone Class Atty Fees” reports that Apple Inc. has asked a New York federal judge to lower a $6.6 million fee request from attorneys who helped secure a $20 million class settlement for iPhone users over device updates, insisting that there is a lack of documentation supporting the price tag.  While attorneys from Pomerantz LLP and Bronstein Gewirtz & Grossman LLC have asked for one-third of the payout for their services, Apple wants the award shaved by $666,000 to 30% of the total settlement, or exactly $6 million. The reduction, Apple argued in a brief, would provide an additional $600,000 to the class and give each member a payment of $68.56, up from $62.94 at the current number of claims.

Apple also took aim at the plaintiff's counsel's billable hours, calling their submission "insufficient."  According to Apple's memorandum, the class's counsel failed to submit any documentation that "substantiates" the over 10,000 hours they billed for the suit that lasted more than six years.  "Class Counsel merely provide a chart listing the names of billers, their requested hourly rate, and an aggregate number of hours each worked, with no elucidation as to whom did what," the motion said.

In an Aug. 12 motion for attorney fees, the plaintiff's attorneys said the fee is warranted given the number of hours they spent working on the suit and the expenses they incurred in the process – as well as the favorable outcome they achieved.  "From the outset, class counsel understood they were embarking on a complex, expensive, and likely lengthy litigation with no guarantee of ever being compensated for the substantial investment of time and money the case would require," the attorneys wrote.

Apple also asked the court to reduce the requested $2.8 million in litigation expenses and service awards of $15,000 for each named plaintiff.  Apple contends that a reduction of the amount of the plaintiff's service award is warranted because the plaintiffs would receive an award one hundred times greater than the maximum recovery afforded to class members.  Apple also took issue with the reported costs for meals, taxis and online research, which they said were not recoverable.

NALFA Releases 2021 Litigation Hourly Rate Survey & Report

July 19, 2022

Every year, NALFA conducts an hourly rate survey of civil litigation in the U.S.   Today, NALFA released the results from its 2021 hourly rate survey.  The survey results, published in The 2021 Litigation Hourly Rate Survey & Report, shows billing rate data on the very factors that correlate directly to hourly rates in litigation:

City / Geography
Years of Litigation Experience / Seniority
Position / Title
Practice Area / Complexity of Case
Law Firm / Law Office Size

This empirical survey and report provides micro and macro data of current hourly rate ranges for both defense and plaintiffs’ litigators, at various experience levels, from large law firms to solo shops, in regular and complex litigation, and in the nation’s largest markets.  This data-intensive survey contains hundreds of data sets and thousands of data points covering all relevant billing rate categories and variables.  This is the nation’s largest and most comprehensive survey or study on hourly billing rates in litigation.

This is the second year NALFA has conducted this survey on billing rates.  The 2021 Litigation Hourly Rate Survey & Report contains new cities, additional categories, and more accurate variables.  These updated features allow us to capture new and more precise billing rate data.  Through our propriety email database, NALFA surveyed thousands of litigators from across the U.S.  Over 8,400 qualified litigators fully participated in this hourly rate survey.  This data-rich survey was designed to aid litigators in proving their lodestar rates in court and comparing their rates to their litigation peers.

The 2021 Litigation Hourly Rate Survey & Report is now available for purchase.  For more on this survey, email NALFA Executive Director Terry Jesse at terry@thenalfa.org or call us at (312) 907-7275.

NALFA Members Quoted in Bloomberg Story on Billing Rates

June 10, 2022

A recent Bloomberg Law story by Roy Strom, “Big Law Rates Topping $2,000 Leave Value ‘In Eye of Beholder’” quoted two NALFA members, John D. O'Connor of O'Connor & Associates in San Francisco and Jacqueline S. Vinaccia of Vanst Law LLP in San Diego, on a news story on hourly billing rates.  His story reads:

Some of the nation’s top law firms are charging more than $2,000 an hour, setting a new pinnacle after a two-year burst in demand.  Partners at Hogan Lovells and Latham & Watkins have crossed the threshold, according to court documents in bankruptcy cases filed within the past year.  Other firms came close to the mark, billing more than $1,900, according to the documents.  They include Kirkland & Ellis, Simpson Thacher & Bartlett, Boies Schiller Flexner, and Sidley Austin.

Simpson Thacher & Bartlett litigator Bryce Friedman, who helps big-name clients out of jams, especially when they’re accused of fraud, charges $1,965 every 60 minutes, according to a court document.  In need of a former acting US Solicitor General? Hogan Lovells partner Neal Katyal bills time at $2,465 an hour.  Want to hire famous litigator David Boies?  That’ll cost $1,950 an hour (at least).  Reuters was first to report their fees.

Eye-watering rates are nothing new for Big Law firms, which typically ask clients to pay higher prices at least once a year, regardless of broader market conditions.  “Value is in the eye of the beholder,” said John O’Connor, a San Francisco-based expert on legal fees.  “The perceived value of a good lawyer can reach into the multi-billions of dollars.”  Law firms have been more successful raising rates than most other businesses over the past 15 years.

Law firm rates rose by roughly 40 percent from 2007 to 2020, or just short of 3 percent per year, Thomson Reuters Peer Monitor data show.  US inflation rose by about 28% during that time.  The 100 largest law firms in the past two years achieved their largest rate increases in more than a decade, Peer Monitor says.  The rates surged more than 6% in 2020 and grew another 5.6% through November of last year.  Neither level had been breached since 2008.

The price hikes occurred during a once-in-a-decade surge in demand for law services, which propelled profits at firms to new levels.  Fourteen law firms reported average profits per equity partner in 2021 over $5 million, according to data from The American Lawyer.  That was up from six the previous year.

The highest-performing firms, where lawyers charge the highest prices, have outperformed their smaller peers.  Firms with leading practices in markets such as mergers and acquisitions, capital markets, and real estate were forced to turn away work at some points during the pandemic-fueled surge.  Firms receive relatively tepid pushback from their giant corporate clients, especially when advising on bet-the-company litigation or billion-dollar deals.

The portion of bills law firms collected—a sign of how willingly clients pay full-freight—rose during the previous two years after drifting lower following the Great Financial Crisis.  Collection rates last year breached 90% for the first time since 2009, Peer Monitor data show.  Professional rules prohibit lawyers from charging “unconscionable” or “unreasonable” rates. 

But that doesn’t preclude clients from paying any price they perceive as valuable, said Jacqueline Vinaccia, a San Diego-based lawyer who testifies on lawyer fee disputes.  Lawyers’ fees are usually only contested when they will be paid by a third party.

That happened recently with Hogan Lovells’ Katyal, whose nearly $2,500 an hour fee was contested in May by a US trustee overseeing a bankruptcy case involving a Johnson & Johnson unit facing claims its talc-based powders caused cancer.  The trustee, who protects the financial interests of bankruptcy estates, argued Katyal’s fee was more than $1,000 an hour higher than rates charged by lawyers in the same case at Jones Day and Skadden Arps Slate Meagher & Flom.  A hearing on the trustee’s objection is scheduled for next week.  Hogan Lovells did not respond to a request for comment on the objection.

Vinaccia said the firm’s options will be to reduce its fee, withdraw from the case, or argue the levy is reasonable, most likely based on Katyal’s extensive experience arguing appeals.  Still, the hourly rate shows just how valuable the most prestigious lawyers’ time can be—even compared to their highly compensated competitors.  “If the argument is that Jones Day and Skadden Arps are less expensive, then you’re already talking about the cream of the crop, the top-of-the-barrel law firms,” Vinaccia said.  “I can’t imagine a case in which I might argue those two firms are more reasonable than the rates I’m dealing with.”