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Category: Fee Dispute

Compare & Prove Hourly Rates with NALFA Survey

July 20, 2021

Every year, NALFA conducts an hourly rate survey of civil litigation in the U.S.  NALFA has released the results from its 2020 Litigation Hourly Rate Survey.  The survey results, published in The 2020 Litigation Hourly Rate Survey & Report, shows hourly rate data on the very factors that correlate to hourly rates in litigation:

  • Geography / Location / Jurisdiction
  • Years of Litigation Experience / Seniority
  • Practice Area / Complexity of Case
  • Law Firm / Law Office Size

This empirical survey and report provides macro and micro data of current hourly rate ranges for both defense and plaintiffs’ litigators, at various litigation experience levels, from large law firms to solo shops, in routine and complex litigation, and in the nation’s largest legal markets and beyond.  This is the nation’s largest and most comprehensive survey or study on hourly rates.  This data-intensive survey contains hundreds of data sets covering all the relevant hourly rate variables.  The survey was designed to aid litigators in comparing rates within a litigation peer group and proving rates in court and ADR.

The 2020 Litigation Hourly Rate Survey & Report is divided into two parts, a free public portion and a private portion.  The public portion contains only the survey totals.  The data-rich private portion has the complete survey results including the raw data responses with percentages.  The private portion is free to members of our network (i.e. members, faculty, and fellows) and the 2020 litigation survey respondents.  The private portion is available for purchase to others.     

This 2020 Litigation Hourly Rate Survey & Report is now available for purchase.  For more information on this, email NALFA Executive Director, Terry Jesse at terry@thenalfa.org or call us at (312) 907-7275.

Law Firms Set for Fee Allocation Dispute in CytoDyn Action

June 22, 2021

A recent Law 360 story by Rose Krebs, “Fight on Tap Over Firms’ $4M Fee Bid in CytoDyn Suit Deal,” reports that as a Delaware vice chancellor is set to consider a proposed stockholder suit settlement that will require five directors of life sciences venture CytoDyn Inc. to forfeit certain awards, three firms have come under fire for seeking $4.1 million in fees for their work on the case.  In a letter to Vice Chancellor Paul A. Fioravanti Jr., attorney Mark Richardson of Labaton Sucharow LLP argued that a special litigation committee set up by CytoDyn's board is being unreasonable in proposing that the firms representing shareholders only receive $1 million in attorney fees and expenses.

In the letter, Richardson told the vice chancellor that the committee's proposal is "well outside the range of reasonableness, lacks support under Delaware law, and is not the product of a 'logical deductive process' that is helpful to the court."  In a March court filing, Labaton Sucharow, Faegre Drinker Biddle & Reath LLP and Purcell Julie & Lefkowitz LLP asserted they are entitled to the $4.1 million award for successfully challenging "fiduciary malfeasance that was blatant and egregious in equal measure, and, thus, entirely unfair to CytoDyn."

Earlier this year, the CytoDyn special litigation committee asked the Chancery Court to approve the settlement, which would require five directors to forfeit some or all of the 7.2 million shares they were granted in 2019.  The committee said it could find no "meaningful" justification for the compensation.  The recommendation followed Vice Chancellor Fioravanti's decision in 2020 granting the SLC's request to stay the litigation so it could investigate the December 2019 and January 2020 stock awards that were flagged by the suing stockholders in their 2020 derivative suit.

The three firms asserted that the rescission of December 2019 awards and additional stock options from CytoDyn's CEO, Nader Z. Pourhassan, "represents an economic benefit for the company valued at approximately $15,647,828."  The firms also argued the plaintiffs "deserve at least partial credit" for the forfeiture of January 2020 awards that were valued at roughly $41 million.  The firms argued that the six suing stockholders obtained a roughly $13.6 million benefit for the company through their challenge of the 2020 stock awards.

The firms said the suit also led to important corporate governance reforms by CytoDyn, including considering the addition of a new independent director within the next year, a reconstituted compensation committee that will have at least three independent directors and strengthened compensation policies.

The fee award the firms are seeking amounts to roughly 10% of the nearly $27.2 million "economic benefit achieved for CytoDyn as a result of this lawsuit" and is "appropriate and reasonable," they said in a court filing.  But the committee is unhappy with the fee award being sought with its attorney Andrew D. Cordo of Wilson Sonsini Goodrich & Rosati telling the vice chancellor in a recent letter that "a $1 million fee award to plaintiffs' counsel would be reasonable."

The committee takes issue with the way the firms calculated the monetary value for the benefit achieved as a result of the lawsuit and asserts that "there is no factual basis for plaintiffs (or anyone) to take credit for the expiration of the January awards."

Those awards "lapsed on their own due to the failure of a vesting condition unrelated to this litigation," the committee said.  "Removing the value incorrectly attributed to the January awards and otherwise applying plaintiffs' methodology yields a fee of $1.875 million," the committee asserted.  However, the committee also argued the amount still needed to be reduced to take into account that the plaintiffs' firms only played a "relative role in bringing about the settlement."  "The SLC conducted the investigation and negotiated the settlement," Cordo's letter contended.  The committee also argued that a $4.1 million award "would be damaging to the company's financial condition."

Small Law Firm Accused of Overbilling in Bribery Case

June 19, 2021

A recent Law 360 story by Kevin Penton, “Cognizant Says Firm Overbilled It In Ex-CLO’s Bribery Case,” reports that a small New York law firm is facing allegations that it overbilled Cognizant Technology Solutions Corp. for representing the technology consulting company's former chief legal officer in several underlying cases related to an alleged foreign bribery scheme.  Jeremy Bohrer and his namesake firm charged Cognizant $23.3 million for representing Steven Schwartz from January 2019 to last April, outpacing co-counsel Paul Weiss Rifkind Wharton & Garrison LLP's nearly $20 million bill for the same period, despite the smaller firm lacking expertise in white collar defense and having a total of four lawyers, according to the complaint by the company in the Southern District of New York.

The complaint says that Bohrer and his firm, Bohrer PLLC, charged Cognizant a 600% markup for document reviews conducted by contract attorneys, that the attorney hired vendors in which he has an ownership stake to work on the Schwartz cases without disclosing the conflict, and that Cognizant was charged millions of dollars for work that was either not performed as invoiced or that was performed at a fraction of the cost of what was billed, according to the complaint.

Cognizant told the court that it was contractually obligated to pay Bohrer and his firm after Schwartz retained them in July 2018 to work together with Paul Weiss — and later Gibbons PC — on several related matters connected to the alleged scheme.  But Cognizant has balked at the fees charged by Bohrer and his firm, noting that they are nearly double the $13 million that Jones Day and a smaller firm charged Cognizant for representing Gordon Coburn, the company's former president and Schwartz's co-defendant in the criminal proceeding.

"Defendants' conduct is unethical, unconscionable, criminal, and has caused Cognizant significant harm," the complaint read.  "Even though Cognizant was contractually required to advance fees and costs for Schwartz's defense, Bohrer and Bohrer PLLC took advantage of that obligation in the extreme."

Federal prosecutors in February 2019 accused Schwartz and Coburn of conspiracy and multiple Foreign Corrupt Practices Act violations for allegedly approving a $2 million bribe to secure a construction permit for the IT company's campus in Chennai, India, in 2014.

Cognizant wants the Southern District of New York to order Bohrer and his firm to repay all the money they have charged the company, according to Wednesday's complaint. The company is also seeking punitive damages, pre- and post-judgment interest, and its attorney fees and costs, according to the complaint.

In a statement, Bohrer blasted the legal action.  "This is a malicious lawsuit filled with outrageous and false allegations and represents another attempt to interfere with Mr. Schwartz's defense against a prosecution that should never have been brought," Bohrer said in a statement.  "Bohrer PLLC is honored to represent Steven Schwartz and will remain focused on his defense."

Lack of Jurisdiction Dooms Billing Suit Against K&L Gates

June 7, 2021

A recent Law 360 story by Justin Wise, “Lack of Jurisdiction Dooms Billing Suit Against K&L Gates,” reports that a federal judge has dismissed a health center's lawsuit alleging K&L Gates LLP and one other firm engaged in deceptive billing practices during a South Carolina bankruptcy action, ruling the lawsuit is not sufficiently related to a bankruptcy matter to justify federal jurisdiction.

In a three-page order handed down, U.S. District Judge Jill N. Parrish rejected arguments from Chicora Life Center, a Utah-based subsidiary of Chicora Garden Holdings, that the court could hear the dispute since it arose and was related to Chicora Life's prior bankruptcy.  Federal courts only have jurisdiction over such cases when it can affect the administration of an estate, Judge Parrish wrote, something that's impossible in this matter since the bankruptcy proceeding was terminated in 2017.

"The outcome of this action cannot 'conceivably have any effect on the estate being administered in bankruptcy' because the bankruptcy proceedings terminated over two years before this action was filed," Judge Parrish wrote.  "In short, this court lacks jurisdiction because this lawsuit cannot have any impact 'on the handling and administration of the bankruptcy estate,' nor can it affect 'the estate of the debtor' in a closed bankruptcy case."

Douglas Durbano, a Utah lawyer and developer who manages Chicora Life and also served as counsel for Chicora Life in the current case, told Law360 that he'd seek to move forward with the claims in a different venue.  "The matter will be refiled in a court that does have jurisdiction," he said, adding that he's "studying" possible new venues based on the ruling and previous court admissions from the firms.

Chicora Life Center sued K&L Gates and South Carolina law firm McCarthy Reynolds & Penn LLC in August, alleging that its attorneys engaged in, among other things, fraudulent billing practices and malpractice during its representation in a South Carolina bankruptcy proceeding.  According to the lawsuit, K&L Gates used several tactics to increase its billing in the Chapter 11 proceeding against Charleston County over a lease termination dispute.  The billing practices resulted in about $1.6 million in fees between May and October 2016.

The health center also alleged that actions from K&L Gates and McCarthy Reynolds attorneys caused the bankruptcy court to approve a "cramdown" plan against its own interests.  The "cramdown" plan called for the county to purchase a Chicora Life property to satisfy its obligations to creditors, a scheme that it claimed led to a $3 million tax liability, according to Friday's ruling.

In a court filing this year, K&L Gates said it secured an "extremely favorable" settlement for Chicora Life where Charleston County agreed to purchase the property in question for $30 million.  It also said a fee examiner appointed by the bankruptcy court determined the firm was entitled to all of its requested fees.

Ninth Circuit Strikes Down $7M Fee Award in ConAgra Class Settlement

June 2, 2021

A recent Law 360 story by Emily Field, “9th Circ. Strikes Down $7M Atty Fees in ConAgra Label Deal,” reports that the Ninth Circuit overturned a judge's approval of a class action settlement with ConAgra Food Inc. over its labeling on oil products, saying the parties crammed into the deal "a squadron of red flags" including attorney fees of nearly $7 million that are much larger than what consumers were awarded.  The panel in a published opinion said the agreement includes a number of questionable provisions and "reeks of collusion," particularly the attorney fee award of $6.85 million that is seven times higher than what class members received.

ConAgra and class counsel contended the deal could be worth more than $100 million, but ultimately, ConAgra paid out less than $8 million, with just $1 million going to the class.  Large counsel fees comparative to the payout for class members raises the possibility that counsel colluded with the defendant to lower class compensation in exchange for a larger fee, the panel said.  A defendant would go along with this kind of conspiracy because it only cares about how much it's paying in total, not how it's divided up, they added.

The panel said district courts must scrutinize attorney fee award arrangements when deciding whether a class action settlement is fair, following revisions to the Federal Rules for Civil Procedure that introduced the requirement in 2018.  Specifically, that requirement also applies to settlements that were reached after a class was certified, the panel held for the first time.  "[A] post-class certification settlement only ensures that the parties litigated aggressively to arrive at an adequate total fund size; it does not, however, address the inherent incentives that tempt class counsel to elevate his or her own interest over those of the class members," the panel said.

The panel's decision reverses the 2019 approval of the deal and sends the case back to California federal court.  In the suit, the buyers alleged ConAgra mislabeled its Wesson oil products as "100% natural" even though they contain genetically modified ingredients.

The deal also included a stipulation that ConAgra not advertise the Wesson brand of essential oils as "100% natural" anymore, which was supposedly worth tens of millions of dollars but now appears worthless since ConAgra no longer owns the brand, the panel said.  "That is like George Lucas promising no more mediocre and schlocky Star Wars sequels shortly after selling the franchise to Disney.  Such a promise would be illusory," the panel wrote in their opinion.

Objector and University of Chicago law professor M. Todd Henderson brought the appeal last year, arguing the lower court did not take into account the deal's value to the class when it granted the fees.  The panel also found other red flags in the settlement, such as a "clear sailing arrangement" under which ConAgra agreed not to challenge the class counsel fees.  "A clear sailing provision signals the potential that a defendant agreed to pay class counsel excessive fees in exchange for counsel accepting a lower amount for the class members," the panel said.