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Category: Billing Practices

IBA Panel: Narrow The Gender Hourly Billing Rate Gap in Law

November 4, 2022

A recent Law 360 story by Carolina Bolado, “Start With Fixing Gender Billable Rate Gap, IBA Panel Says” reports that law firms looking to retain their female talent need to start by narrowing the billable rate gap, which experts at the International Bar Association conference in Miami called the "Rosetta Stone" of the gender gap issue.  At an IBA panel on how to keep women in the profession, Michael Ellenhorn, CEO of Decipher, a data intelligence firm focused on the lateral legal market, said the data show women routinely bill more hours than their male counterparts but recover less money for that work.  Addressing this gap in billable rates is where firms need to start, he said.

"It's the baseline where this problem can be solved," Ellenhorn said.  "At a minimum, women partners need to be compensated and remunerated at the same rate as their male counterparts.  From an objective standpoint, that is one way we can move the ball down the pitch."  The panelists, a global group gathered together at the IBA conference to discuss the gender inequality problem, said part of the issue is that many managing partners don't even realize that there is a problem.

Hilarie Bass, the former co-president of Greenberg Traurig LLP who now runs the Bass Institute for Diversity and Inclusion, said that a study conducted during her tenure as American Bar Association president in 2017-2018 found that 91% of law firm leaders believe they are advocates of gender diversity.  The study found three-quarters of leaders believe that they are completely objective and committed to elevating women to equity partner status and that they are successful in retaining women.

But the female respondents to the survey did not agree.  A majority of women in the survey said they were overlooked for advancement and were compensated at a lower level than comparable male colleagues, Bass said.  Many also felt they were treated as a token representative for diversity, which Bass said is becoming more of an issue as clients demand diverse legal teams.  Bass said women reported being brought in to pitch the client but being sidelined not long afterward.

Ellenhorn said firms need to start by measuring data, in particular the comparison between average realized rates for male and female partners and how the firm apportions origination credit.  "It's very simple to do," Ellenhorn said.  "Those two data points will get you a long way to understanding what the mix is in each of your firms."  He added that his group has found that men tend to over-forecast their books of business and then underperform, while women in general under-forecast and overperform.  Firms need to stop penalizing women for doing this, not just in the lateral market but during firms' business and budget planning processes, he said.

Ellenhorn said his organization has looked at thousands of lateral partner questionnaires, which are forms lawyers fill out when they move from one firm to another.  He said that while women make up just one-fifth of equity partners, they make up 31% of lateral partner moves.  "You start to scratch your head a little bit about what is going on in the market," Ellenhorn said.  And unlike their male counterparts, women depart and oftentimes within the data set they don't show up somewhere else. In the last two years in the U.S., that's about 8,000 women partners who have likely disappeared from the profession."

Crypto Trading Firm Must Justify Attorney Fees

October 24, 2022

A recent Law 360 story by Katryna Perera, “Crypto Trading Firm Must Justify Atty Fees in $1.5M Judgment reports that a Georgia federal judge has awarded digital-asset trading company GSR Markets Ltd. more than $1.5 million in its fraud suit against purported bitcoin dealer Valkyrie Group LLC, but he said he wouldn't grant a default judgment until GSR submits evidence supporting the roughly $174,000 in attorney fees it's seeking in the matter. 

GSR had moved for $1.5 million in compensatory damages and attorney fees in its June default motion, but U.S. District Judge Michael L. Brown granted only the damages, saying in his order that the affidavit in support of attorney fees submitted by GSR's attorney fell short of establishing a "reasonableness" for the fees.

According to the order, Richard L. Robbins of Robbins Alloy Belinfante Littlefield LLC testified that the fees GSR incurred are based on the firm's standard hourly rates and that from January 2019 through May 2022 the firm billed GSR approximately $174,000 in attorney fees. 

Robbins had also testified that the legal services and fees were "customary and necessarily incurred" by GSR and that the requested fees are similar to those of other attorneys in Georgia.  But Judge Brown said, "this is not enough" to warrant an award of the fees.

"Neither plaintiff nor Mr. Robbins indicate how much time was billed or what specific services were provided.  They also fail to attach any billing statements," he said.  The judge directed GSR and its attorneys to submit "clear and detailed evidence" supporting its fee request within 14 days.

Georgia Judge Asked to Reconsider Sanctions in Billing Practices

October 18, 2022

A recent Law 360 story by Kelcey Caulder, “Ga. Judge Asked To Reconsider Sanctions in Billing Row” reports that a Georgia state judge is considering what evidence should be allowed to go before the jury and whether to impose sanctions on Gebo Law LLC in a case in which the firm alleges one of itsrbusiness clients owes it about $600,000 in unpaid legal fees.

The firm's Carl Gebo, through his Atlanta-area practice, sued Cordial Endeavor Concessions of Atlanta LLC, which operates a travel spa in Hartsfield-Jackson Atlanta International Airport, last September seeking reasonable compensation for almost 2,000 hours of time he said he spent representing the Georgia company in various matters between April 2015 and May 2020.  Gebo, whose work for Cordial included litigation in New York, claimed his services were worth about $600,000.

But in a hearing before Judge William "Bill" G. Hamrick III, Carl E. Anderson of the Law Office of Carl E. Anderson, who represents Cordial, argued that there is no way to know whether Gebo's services were worth that much because the attorney threw away contemporaneous "scrap notes" and time records that detailed his work for the company and instead submitted one invoice to Cordial in June 2020 that purportedly outlined all work and charges owed.

Anderson argued that Gebo should be sanctioned for spoliation of evidence for getting rid of the notes, saying the attorney had reason to believe litigation would arise from the fee dispute and therefore had a duty to keep them.  This, he claimed, is supported by an "extensive" phone call Gebo had with Cordial's managing member Sheila Edwards before submitting the invoice, in which Anderson said Gebo threatened to sue Cordial for his legal fees and informed Edwards that he wouldn't perform any more work for the company until he received a "satisfactory" payment plan for them.

Gebo should've kept the notes as evidence following that conversation, Anderson said, arguing that Cordial is "clearly prejudiced" without them as it can neither use them to verify the invoice nor adequately cross-examine Gebo regarding its accuracy.  "No attorney can accurately record time months after the fact, much less after five years, without contemporaneous time entries," Anderson said.  "Unless based upon contemporaneous time records, the narratives in the invoices are unreliable at best."

Tyler Dillard of Andersen Tate & Carr PC, who represents Gebo, argued that the attorney hadn't foreseen the possibility of litigation prior to deleting the contemporaneous notes as he assumed that Cordial would pay the firm for its work.  There is no evidence suggesting otherwise, Dillard said, beyond what he called Cordial's "completely self-serving claim" that Gebo threatened litigation.  According to Dillard, Gebo's decision to get rid of the notes was nothing more than a matter of routine.

"What they're claiming is that Mr. Gebo needed to save his post-it notes or scrap legal pads for five years, where he may have written down a half hour call with someone or something like that," Dillard said.  "No lawyer I know keeps their post-it notes or scrap legal pad after putting it into an invoice.  No lawyer I know sends those things out with invoices to reiterate what is on the invoices.  It doesn't make any sense."

Dillard also noted that former Georgia State-wide Business Court Judge Walter W. Davis declined to sanction Gebo for this same issue in May.  While the judge at that time said he would've kept the notes if it were him, he'd also called the invoices "particularly detailed" and found that Gebo hadn't acted in bad faith, Dillard said.  All things considered, Dillard argued that the court should consider awarding Gebo fees for having to respond to another sanctions motion related to the same topic.

Donna L. Johnson of Donna L. Johnson PC, who also represents Gebo, further argued that the court should grant Gebo's limine motion asking that Cordial be prohibited from introducing argument or testimony related to the alleged spoliation of the scrap notes.  The court should do so, Johnson said, because of the previously denied motion for spoliation sanctions and because no new evidence has been presented showing that Gebo had any duty to preserve the notes.

Also before Judge Hamrick on Wednesday was Gebo's motion seeking to exclude the testimony of Matthew Martin, a rebuttal expert brought in by Cordial to testify about the factors that would go into determining an attorney's hourly rate and to help the jury determine what a reasonable fee would be for Gebo's work.  Martin's testimony is necessary, Anderson contended, because Gebo is requesting payment for a $600 hourly rate when his hourly rate had originally been $300 before being increased to more than $400 without Edwards' knowledge or approval in 2017.

According to Anderson, Martin is more than qualified to speak about Gebo's billing practices because he has four decades of experience in commercial litigation and has served as an administrative partner of Jones Day's Atlanta office and was vice chair and client finance partner of Paul Hastings' Atlanta office, among other management roles.

But Dillard argued that Martin's testimony must be excluded because he doesn't offer an opinion of what he believes to be the reasonable value of Gebo's services to Cordial, which is the sole remaining issue to be determined by the jury.  And even if he did offer such an opinion, Dillard contended, he doesn't have the necessary knowledge and experience as a government procurement and contracting attorney to assist the jury in actually determining the value of those services.

Dillard further contended that Martin's testimony must be excluded because he didn't take into consideration the rates of other attorneys that typically do work similar to the work Gebo performed or look into surveys of attorneys' hourly rates.  "Any expert in this case who is going to offer an opinion has to be able to help the jury decide on the single issue of quantum meruit damages for Gebo's legal services in whatever amount," Dillard said.  "If the expert can't provide them with their expertise in answering that question, then they aren't offering anything that's relevant."

Judge Hamrick asked Anderson to clarify what, exactly, Martin's testimony focused on, to which the attorney responded that it would be about the "appropriate way" of reaching an opinion on the reasonableness of fees.  "He is assisting the jury in understanding how you establish a reasonable rate for services under the facts of this case," Anderson said.  Dillard responded, saying that Cordial could question Gebo's own expert about the methodology he used to find a reasonable rate during cross-examination.

Six additional limine motions were presented during the hearing, including one in which Gebo argued that any argument or evidence concerning Cordial's finances and ability to pay a large award to Gebo should be excluded.  Johnson said that, in Georgia, a party's financial status isn't relevant or admissible in determining whether they can or should pay a judgment.

"What we're concerned about is clearly an improper argument," Dillard said.  "Which would be them telling the jury that even if they agree with us about the fair value of the services, Cordial isn't able to pay that and would be bankrupt if they had to.  That, clearly, based on Georgia case law, is improper.  You can't appeal to the jury's sympathy by saying they can't afford it and so an award shouldn't be entered."

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.

Seventh Circuit Tosses $11M Attorney Fee Award

May 20, 2022

A recent Law 360 story by Hailey Konnath, “Seventh Circ. Throws Out $11M Fee Award For Bernstein Litowitz” reports that the Seventh Circuit vacated an $11 million fee award for Bernstein Litowitz Berger & Grossmann LLP's work on a $45 million settlement between waste disposal company Stericycle and its shareholders, finding that the district court "did not give sufficient weight" to points raised in a class member's objection.  The three-judge panel said the Illinois federal court overseeing the case should've more seriously considered evidence of related fee agreements, all the work that Bernstein Litowitz inherited from earlier litigation against Stericycle and the early stage at which the settlement was reached.

"The cumulative effect of these issues leads us to conclude that the district court's analysis did not sufficiently 'reflect the market-based approach for determining fee awards that is required by our precedent,'" the Seventh Circuit said.  The panel added, "We vacate the fee award and remand for a fresh determination more in line with what an ex ante agreement would have produced."

Objector Mark Petri appealed a 25% cut that Bernstein Litowitz got from representing investors claiming that Stericycle falsely inflated its financial results through fraudulent pricing.  In particular, Petri argued that the attorney fees were potentially inflated by a pay-to-play scheme and the case never proceeded past the motion-to-dismiss stage.

In the underlying case, lead plaintiffs Public Employees' Retirement System of Mississippi and the Arkansas Teacher Retirement System had pointed to briefing in a study conducted by Nera Economic Consulting.  According to that study, for securities class action cases that settled between 2014 and 2018 in amounts ranging from $25 million to $100 million, the median attorney fee award was 25%, like the share awarded to Bernstein Litowitz.

Bernstein Litowitz asked the court to approve its $11 million fee request in June 2019, and the court gave its blessing in May 2020.  But the Seventh Circuit said that the district court's analysis was incomplete.  Notably, the court didn't address a 2016 retention agreement between the firm and the Mississippi attorney general, under which Bernstein Litowitz was authorized to represent the Mississippi fund and seek a percentage of the recovery achieved for the class as compensation.  That percentage, however, was supposed to be limited to the percentage corresponding to the fund's estimated individual recovery, the panel said.

At oral argument, Bernstein Litowitz had said that the sliding scale structure outlined in that agreement only applies to the amount recovered by the fund itself, not to the total amount recovered by the class.  The Seventh Circuit said that interpretation is "improbable, arbitrary, unreasonable and not consistent with a class representative's fiduciary duty to class members."

Additionally, the district court's assessment of the risk of non-payment also didn't give sufficient weight to prior litigation involving Stericycle, litigation that substantially reduced the risk of non-payment, the panel said.  The court had found that the risk of non-payment was "substantial," but that earlier litigation demonstrating Stericycle's billing practices and other settlements signaled that class counsel was not actually taking on much risk, the Seventh Circuit said.

And on top of that, the court didn't properly consider just how early on in the litigation the case was settled, according to the decision.  At the very least, the district court should've considered whether the preliminary stage of the litigation warranted a reduction in the requested fee, it said.  The Seventh Circuit also remarked that it wasn't convinced the settlement was a good outcome for the class, but that neither Petri nor anyone else was challenging that.