A recent Law.com story by Dan Roe, “What $1,000 an Hour Gets You in the Am Law Today,” reports that, inflation be damned, $1,000 is still a lot of money.  In exchange for $1,000, you can have a smokeless fire pit, an eight-person inflatable swimming pool or a drone quadcopter, according to thingsineedtobuy.com.

Last week, Legal Twitter users scoffed at the revelation that they could instead spend about $1,000 on one hour of lawyering performed by a second-year associate at Kirkland & Ellis, per a recent fee application in the bankruptcy of Voyager Digital Holdings surfaced by ex-Greenberg Traurig lawyer Robert Freund of Robert Freund Law.

The second-year in question turned out to be a fourth-year who was admitted elsewhere previously, but Freund’s tweet sparked a dialogue about the pace of Big Law rate hikes in recent years.  Even considering inflation, senior associates only began surpassing the $1,000-per-hour mark a few years ago, while partners have topped the $1,000 mark since the mid-2000s.

Nowadays, there may not be a second-year billing at $1,000 per hour—but Paul, Weiss, Rifkind, Wharton & Garrison comes close at $995 per hour.  That’s according to an American Lawyer review of bankruptcy fee requests from 10 firms in the Am Law 200, which included fees requested in the past six months for associates and partners with rates closest to $1,000 per hour.

Sullivan & Cromwell charged a similar rate of $960 an hour for second-year associates in its most recent fee application in the FTX bankruptcy.  Bankruptcy giants Kirkland, Latham & Watkins, and Weil, Gotshal & Manges offered more experience for roughly $1,000, charging that amount for associates with between three and five years of experience.

Getting out of the Am Law 50 gets you a junior partner at Katten Muchin Rosenman, but the Second Hundred is where a $1,000/hour lawyer’s years of experience reliably hit the double digits.  At 180-lawyer Cole Schotz, where profits per equity partner exceed $1 million, a 19-year partner recently billed at $950 per hour in the bankruptcy of Armstrong Flooring.  Equity shareholders at Jackson Walker, a frequent local counsel to Kirkland & Ellis in the Southern District of Texas, bill at a blended rate of $950.

However, the fast-approaching $1,000-an-hour first-year associate (conspicuously absent from the aforementioned e-commerce site) may not draw as much ire from clients as some observers would posit.  For starters, many clients decline to pay for first-years in general, said Laura Johnson, legal operations manager of Sterling Analytics, who helps legal departments draft billing guidelines for outside counsel.  And among the most elite firms, billing rates are of little consequence when the stakes are high.  Instead, billing analysts like Johnson instruct clients to concentrate on staffing, an area where firms can more easily rack up huge bills.

“If you’re hiring a top-tier firm you know you’re going to be charged really high rates,” Johnson said.  “We tell our clients to focus on staffing and how they’re billing for the task they’re performing—if a simple matter should take one partner and one associate and all of the sudden there are three partners and four associates, that’s what we’d focus on more than the rate.”

A recent Law.com story by Allison Dunn, “Following $1.94M Judgment, Federal Judge Slashes Plaintiff’s Requested Attorney Fees and Costs by 25%” reports that a federal judge in Maryland adopted a magistrate’s recommendation in full, awarding a plaintiff in a breach-of-contract action $786,565 in fees and costs, approximately 25% less than the requested amount due to apparent duplication of efforts between old and new counsel.

The combined request for $793,614 in attorney fees was made by current and former counsel of Byron W. Martz, who prevailed in a case against Day Development Co. in a dispute involving a consulting services agreement.  Under the agreement, DDC was obligated to pay Martz for securing Frederick, Maryland’s approval to amend a previously approved land development plan. DDC never developed nor sold the land, and it failed to compensate Martz for his services, according to the report and recommendation filed earlier this month by U.S. Magistrate Judge Matthew J. Maddox for the District of Maryland.

After a bench trial in 2019, Judge Catherine C. Blake entered a judgment in favor of Martz in the amount of $1.94 million on his claim for unjust enrichment.  At the time the case was filed in Frederick County Circuit Court in September 2015, Martz was represented by veteran Miles & Stockbridge attorneys Thomas E. Lynch III, who has since retired, and John E. McCann Jr., a principal in the firm’s commercial and business litigation practice group.  Additionally, Jeremy S. Scholtes, a mid-level associate with the firm, was assigned to the case.

The firm requested that Martz be granted an award of $394,299.50 in fees for 1,069.6 hours of work performed by the three attorneys in 2015 and 2016, which all contributed to the successful outcome for the plaintiff, the report said.  Specifically, the attorneys requested a total of $164,483 in fees for 445.7 hours of work performed on written discovery and production of documents. The defendants argued that the opposing counsel “spent excessive time drafting, revising, and reviewing answers to interrogatories and documents for production, and conferencing regarding the same,” and that its invoices reflect “over-lawyering and over-staffing by attorneys billing for unnecessary, duplicative work,” though Miles & Stockbridge countered that the defendants failed to identify a specific incident of when this occurred, the report said..

After reviewing Miles & Stockbridge’s invoices, Maddox said that he agreed with the defendants regarding the “excessive amount of time spent by multiple attorneys reviewing documents and revising written discovery responses,” and recommended a 25% reduction from the requested $160,877 to $120,657.75.

“I recognize that the Court’s Guidelines for Attorneys’ Fees permit more than one lawyer to be compensated for attending conferences among counsel ‘where justified for specific purposes[.]‘ One common type of meeting that justifies compensation for every participating attorney is a ‘periodic conference[] of defined duration held for the purpose of work organization, strategy, and delegation of tasks in cases where such conferences are reasonably necessary for the proper management of the litigation.’ For example, one such strategy conference among the three [Miles & Stockbridge] attorneys appears to have occurred on February 18, 2016,” Maddox wrote. ”However, following that date were several conferences and communications among counsel regarding discovery, which punctuate apparently duplicative rounds of written discovery response and document review by multiple attorneys. [Miles & Stockbridge] counsel requests fees for all participants of these frequent conferences.”

In 2016, Martz retained new counsel, Leslie A. Powell, who has 35 years of experience in complex litigation, and Paul D. Flynn, with more than 15 years of experience, both of the Powell Firm in Frederick. Attorneys Carla N. Clarke and Peter E. Ciferri, who had between five and eight years of litigation experience, as well as Clark S. Adams and Heath L. Schneibolk, with less than five years of experience, were also assigned to the case.

Once the Powell Firm took over the case, it had to repeat some work already accomplished by Miles & Stockbridge to become familiar with the case.  However, Maddox said such duplication of effort is not compensable in an award for reasonable attorney fees, citing the U.S. Court of Appeals for the Fourth Circuit’s 1992 opinion in Goodwin v. Metts. 

In total, the Powell Firm requested a total of $399,314.50 in fees for 1,543.7 hours worked by six attorneys since 2016.  For case development, background investigation and case administration, the firm argued that the fee award should not be reduced for duplicative work because these efforts contributed to counsel’s “success in obtaining summary judgment on liability and then a substantial monetary award at trial,” the report said..

“While I understand plaintiff’s position that these activities did not rely upon work previously done by his prior [Miles & Stockbridge] counsel, at least a significant portion of this work appears to have been also separately performed by [Miles & Stockbridge] counsel, according to their invoices, and is therefore duplicative,” Maddox wrote. “Given the apparent non-compensable duplication of services between Plaintiff’s prior [Miles & Stockbridge] counsel and his Powell Firm counsel shown in Powell Firm time entries attributed to case development, the undersigned recommends that Plaintiff’s fee request for case development be reduced by 25%.  A 25% reduction from $31,459.00 results in a fee award of $23,594.25 attributed to case development by [the] Powell Firm.”

Maddox recommended that the plaintiff be awarded a total of $786,565.13, with $344,070.25 in attorney fees for the service of Miles & Stockbridge counsel, and $391.449.25 in attorney fees for the Powell Firm counsel.  Additionally, $47,267 will go to the services of expert witnesses and $3,678 in other litigation expenses.

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.

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.

A recent Law 360 story by Daphne Zhang, “Insurer Overpaid For Policyholder’s Legal Bills, Judge Finds,” reports that a New York federal judge said that an insurer's decision to stop paying a GoPro accessory maker's attorney fees was reasonable, finding the policyholder's defense counsel billed administrative work at partner rates and logged excessive working hours.  U.S. District Judge Mae D'Agostino denied 360Heros Inc.'s motion for summary judgment against Main Street America Assurance Co., saying the carrier's payment of more than $2 million in attorney fees fully satisfied its defense obligations.

The judge sided with Main Street in finding that 360Hero's defense counsel, Gauntlett & Associates, repeatedly charged "unreasonable and excessive" legal fees in an underlying patent infringement suit with GoPro.  The camera company sued 360Heros alleging the harness maker used its copyrighted pictures and infringed two of its trademarks.  The suit was settled in May 2018. 360Heros sued Main Street in 2017 after the insurer stopped paying for its defense costs.

"Based on Gauntlett's repeated practice of billing excessive, redundant or otherwise unnecessary hours the court finds that a 15% reduction in Gauntlett's fees is warranted," the judge said.  According to the order, a Main Street attorney found in 2017 that the insurer overpaid for defense costs after retroactively reviewing the payment history.  Main Street subsequently stopped paying the policyholder's legal bills, which 360Hero claimed violated its insurance policy.  "The amount of unpaid fees is significantly less than the amount that the court finds were reasonably expended," Judge D'Agostino found, saying that Main Street was fully entitled not to pay because the defense counsel overcharged on legal bills.

Some of Gauntlett's invoices were billed without any tasks designated to a paralegal, the judge pointed out, and the firm repeatedly charged administrative work at partner rates. Gauntlett also charged full rates for travel, which should have been billed at half of their hourly rates, Judge D'Agostino said.  "For travel to a one-day out-of-town settlement conference, [one Gauntlett attorney] billed for $418.48 in meals," she said.

A recent ABI Journal article by Brittany B. Falabella and Allison P. Klena, “Actual and Necessary: A Guide to Keeping Time So You Get Paid,” reports on good billing practices in large Chapter 11...

Read Full Post

A recent Law.com story by Christine Simmons, “Both Law Firms and Clients Can Boast About Fee Wins,” reports that, several organizations have reported that, despite the Am Law 200’s worst fears,...

Read Full Post

A recent Law.com article by Nathan Wenzel of SimpleLegal Inc., “5 Cost-Cutting Strategies For Corporate Legal Department,” reports on legal cost measures for corporate legal departments.  This...

Read Full Post

A recent Law 360 article by Robert M. Fishman, “3 Tips For Working With Bankruptcy Fee Examiners” provides practice tips for working with outside bankruptcy fee examiners.  This article was...

Read Full Post