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Category: Fee Expert / Member

Article: What is a Legal Fee Audit?

October 7, 2021

A recent article by Jacqueline Vinaccia of Vanst Law LLP in San Diego “What is a Legal Fee Audit?,” reports on legal fee audits.  This article was posted with permission.  The article reads:

Attorneys usually bill clients by the hour, in six minute increments (because those six minutes equal one tenth of an hour: 0.1).  Those hours are multiplied by the attorney’s hourly rate to determine the attorney’s fee.  There is another aspect of attorney billing that is not as well known, but equally important — legal fee auditing.  During an audit, a legal fee auditor reviews billing records to determine if hourly billing errors or inefficiencies occurred, and deducts unreasonable or unnecessary fees and costs.

Both the law and legal ethics restrict attorneys from billing clients fees that are unreasonable or unnecessary to the advancement of the client’s legal objectives.  This can include analysis of the reasonableness of the billing rate charged by attorneys.  Legal fee audits are used by consumers of legal services, including businesses, large insurance companies, cities, public and governmental agencies, and individual clients.  Legal fee audits can be necessary when there is a dispute between an attorney and client; when the losing party in a lawsuit is required to pay all or part of the prevailing party’s legal fees in litigation; when an insurance company is required to pay a portion of legal fees, or when some issues in a lawsuit allow recovery of  attorneys’ fees and when other issues do not (an allocation of fees). 

In an audit, the auditor interviews the client, and reviews invoices sent to the client in conjunction with legal case materials to identify all fees and costs reasonable and necessary to the advancement of the client’s legal objectives, and potentially deduct those that are not.  The auditor also reviews all invoices to identify any potential accounting errors and assure that time and expenses are billed accurately.  The auditor may also be asked to determine if the rate charged by the attorney is appropriate.

The legal fee auditor can be an invaluable asset to parties in deciding whether to file or settle a lawsuit, and to the courts charged with issuing attorneys’ fee awards.  The court is unlikely to take the time to review individual invoice entries to perform a proper allocation of recoverable and non-recoverable fees leaving the parties with the court’s “best approximation” of what the allocation should be.  The fee audit provides the court and the parties with the basis for which to allocate and appropriately award reasonable and necessary fees. 

Audits are considered a litigation best practice and a risk management tool and can save clients substantial amounts of money in unnecessary fees.  It has been my experience, over the past two decades of fee auditing, that early fee auditing can identify and correct areas of concern in billing practices and avoid larger disputes in litigation later.  In many cases, I have assisted clients and counsel in reaching agreement on proper billing practices and setting litigation cost expectations. 

In other cases, I have been asked by both plaintiffs and defendants to review attorneys’ fees and costs incurred and provide the parties and the court with my expert opinion regarding the total attorneys’ fees and costs were reasonably and necessarily incurred to pursue the client's legal objectives.  While the court does not always agree with my analysis of fees and costs incurred, it is usually assisted in its decision by the presentation of the audit report and presentation of expert testimony on the issues.

Jacqueline Vinaccia is a San Diego trial attorney, litigator, and national fee auditor expert, and a partner at Vanst Law LLP.  Her practice focuses on business and real estate litigation, general tort liability, insurance litigation and coverage, construction disputes, toxic torts, and municipal litigation.  Her attorney fee analyses have been cited by the U.S. District Court for Northern California and Western Washington, several California Superior Courts, as well as various other state courts and arbitrators throughout the United States.  She has published and presented extensively on the topic of attorney fee invoicing, including presentations to the National Association of Legal Fee Association (NALFA), and is considered one of the nation’s top fee experts by NALFA.

The Nation’s Top Attorney Fee Experts of 2021

September 5, 2021

NALFA, a non-profit group, is building a worldwide network of attorney fee expertise. Our network includes members, faculty, and fellows with expertise on reasonable 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 outside 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 2021:

"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
 
"Excellent at Communicating Her Fee Analysis to Juries, Triers of Facts, and Clients"
Jacqueline S. Vinaccia
Vanst Law LLP
San Diego, CA

"Total Mastery in Resolving Complex Attorney Fee Disputes"
Peter K. Rosen
JAMS
Los Angeles, CA
 
"Understands Fees, Funding, and Billing Issues in Cross Border Matters"
Glenn Newberry
Eversheds Sutherland
London, UK

"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

Compare & Prove Hourly Rates with NALFA Survey

August 1, 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 billing 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 billing rates in litigation.  This data-intensive survey contains hundreds of data sets and thousands of data points covering dozens of relevant hourly rate variables.  The survey was designed to aid litigators in comparing billing rates within a litigation peer group and proving billing 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.

Judge Alsup Accepts Fee Recommendation from Former Alsup Clerk

July 27, 2021

A recent Law 360 story by Dave Simpson, “Alsup OKs $5.9M From Finjan, Slams Kramer Levin Attys,” reports that Finjan Inc. must foot a $5.9 million portion of Juniper Networks' legal bill but doesn't deserve sanctions, U.S. District Judge William Alsup ruled, while noting that "in no way" does his order vindicate three Kramer Levin Naftalis & Frankel LLP partners who represented Finjan in the patent infringement suit.  Judge Alsup adopted in its entirety the May recommendation from special master Matthew Borden of Braunhagey & Borden LLP, rejecting Finjan's bid to nix the fees and Juniper's bid to score sanctions against the patent-licensing company.  Borden had recommended that Finjan pay the networking infrastructure provider nearly $6 million in reasonable fees for work done that culminated in winning two summary judgment motions, defeating a summary judgment motion and prevailing in a five-day jury trial.

In addition to agreeing with Borden's recommendation, Judge Alsup singled out for criticism three Kramer Levin partners who'd previously represented Finjan in the case.  "In no way does this order vindicate attorneys James R. Hannah, Lisa Kobialka, and Paul J. Andre," the judge wrote.  "Their conduct was improper and frustrated the fairness of the proceedings.  Judges in the future should take this into account when dealing with them in future cases."

Juniper had argued that Finjan deserved sanctions for, among other things, flip-flopping on its patent infringement theory in an attempt to artificially boost damages, presenting its facts-only damages theory to the jury after its damages expert was excluded, and misrepresenting a previous court decision to the court.  "Finjan's misrepresentation of a district court decision was 'reckless' but, even if a finding of recklessness alone satisfies the ... standard, this order finds that act, by itself, would not warrant sanctions," Judge Alsup said.

Special fee master Borden's May report came after Judge Alsup in January ordered Finjan to pay a portion of Juniper's legal fees.  He said Finjan "flip-flopped" on the eve of trial when it sought to put forth a new infringement theory for one of its malware-detection patents after realizing its original one only covered a small part of Juniper's revenue.  "Finjan tried to sneak this theory in with its expert-damages report, but we caught it, and the Daubert order excluded that trick," Judge Alsup said in January.

Finjan, which sued Juniper in 2017 alleging it infringed nine patents covering technologies for storing and downloading security data, tried to claim $142 million in damages after Juniper provided evidence in discovery that, at most, it would owe less than $1.8 million if a jury found its products infringed the remaining patent in the case.  After the Federal Circuit affirmed Juniper's jury win on the only patent claim that had survived to trial, the company asked Judge Alsup to grant it attorney fees for fighting the nine patent claims.

At a hearing on Juniper's bid for attorney fees in January, Finjan pointed to its expert testimony, but Judge Alsup lamented the "standard patent BS by bought-and-paid-for experts." Finjan pushed back, saying it had a good-faith belief it wasn't altering its damages theory.  Judge Alsup appointed Borden, his former law clerk, to sort out the fee dispute and instructed Juniper to resubmit billing records distinguishing between time spent by its attorneys on the patents and time spent on other facets of the litigation.

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.