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Category: Hourly Rate Survey

Compare & Prove Hourly Billing Rates with NALFA Survey

December 4, 2021

NALFA conducts custom hourly rate surveys for clients such as law firms, corporate legal departments, and government agencies.  Our hourly rate surveys provide accurate data on hourly rates within a given geography market and/or practice area(s).  Our hourly rates surveys have been cited by litigators in court documents and referenced by court adjuncts in court proceedings.  Our surveys can also be used for internal purposes, such as rate comparisons.  Some of our recent hourly rate survey engagements include:

  • A boutique law firm in Boston engaged NALFA to conduct a survey of associate and partner level billing rates in litigation in the greater Boston area.
  • A large Miami law firm hired NALFA to conduct a survey of plaintiffs’ and defense rates in commercial litigation in South Florida.
  • A small plaintiffs’ law firm in Dallas engaged NALFA to conduct a survey and report of hourly rates in consumer class actions in the Dallas-Fort Worth area. This survey was cited by a federal judge in his attorney fee award.
  • An insurer hired NALFA to conduct a survey of billing rates of defense counsel in insurance coverage litigation throughout California.
  • A large law firm in Seattle engaged NALFA to conduct a survey of hourly billing rates in regular and complex litigation in the U.S. District Court for the Western District of Washington jurisdiction.
  • A small law office in Albany hired NALFA to conduct a national survey of billing rates in public interest and civil rights litigation in federal court.
  • A technology firm engaged NALFA to conduct a survey of hourly rates in large and mid-size law firms in patent litigation in the San Francisco and Silicon Valley region.
  • A defense law firm with offices throughout North Carolina hired NALFA to conduct an hourly rate survey of similarly sized law firms in the Charlotte area so they could compare billing rates with their litigation peers.
  • A government agency engaged NALFA to conduct a survey of hourly rates in large Chapter 11 bankruptcy cases, nationwide.
  • A mid-size law firm in Atlanta hired NALFA to conduct a survey of hourly rates in IP litigation in several major markets.

Article: Recovering Attorney Fees in Arbitration

November 1, 2021

A recent article by Charles H. Dick, Jr., “Recovering Attorney Fees in Arbitration,” reports on recovering attorney fees in arbitration.  This article was posted with permission.  The article reads:

An accurate assessment of damages is crit­ical for case evaluation, and the cost of dispute resolution plays an important role in deciding to pursue claims.  Even strong liability cases can fail to make economic sense.  That is why a thorough case appraisal should thoughtfully consider the attorney fees to be incurred.  And equally important, an objective case valuation should assess the likelihood of recovering attor­ney fees.

The “American Rule,” which specifies that each party must bear its own attorney fees, is a lesson for law school’s first year, and though the rule has been slightly modified to encour­age certain litigation in the public interest, fee-shifting remains the exception rather than the rule.  Against this background, professional responsibility obliges counsel to keep clients informed about litigation economics (Cal. Rules Prof. Conduct, rule 1.4)—something critically important as a case approaches the in­evitable mediation.  Unfortunately, experience teaches that an exacting analysis of litigation cost and exposure to fee-shifting often is an afterthought, and that the development of case strategies, discovery plans, and tactical maneu­vers occurs without thoughtfully weighing the implications of the American Rule and its ex­ceptions.  This is a recurring issue in arbitration.

Perhaps litigators approach attorney fee recovery casually, thinking there will be ample time to deal with the question before a final judgment is entered.  Arbitration, however, is different.  The binding nature of arbitration makes appellate relief unlikely.  An arbitrator’s award of attorney fees is unlikely to be sec­ond-guessed by a court, even if there is no stat­utory or contractual basis for the award. (See Moncharsh v. Heily & Blasé (1992) 3 Cal.4th 1, 33; id. at p. 11 [“it is the general rule that, with narrow exceptions, an arbitrator’s decision cannot be reviewed for errors of fact or law.  In reaffirming this general rule, we recognize there is a risk that the arbitrator will make a mistake.”].)  When it comes to recovering attor­ney fees in arbitration, counsel needs to get the issue correct from the beginning.

California has codified the American Rule in Code of Civil Procedure section 1021.  Con­tractual arrangements can modify the rule and provide for fee-shifting, but a careful study of the parties’ language is critical. (See Valley Hard­ware, LLC v. Souza (Nov. 20, 2015, D067076) 2015 Cal.App.Unpub. Lexis 8347 [affirming arbitrator fee award in face of inconsistent contract provisions].)  Contractual language inevitably varies: Some agreements provide for recovery of fees “when permitted by law”; some say fees “actually incurred” are recoverable; some limit attorney fees to a percentage of the damages awarded; some say the prevailing party “shall” recover fees, while others use the uncertain “may.” Civil Code section 1717 de­fers to the contracting parties, subject to minor tweaks that limit fees to a “reasonable” amount and require that fee recovery be reciprocal.

In addition to carefully scrutinizing con­tract language, one also needs to know the procedural rules that will be applied in arbi­tration.  For example, in a Financial Industry Regulatory Authority (FINRA) arbitration regarding the investment brokerage industry, the arbitral panel is directed to determine the “costs and expenses,” yet absent some statutory exception to the American Rule, fee-shifting still depends on the parties’ underlying agree­ment (see FINRA rule 12902(c)).  Unless the parties’ agreement forbids fee-shifting, the rules of the International Institute for Conflict Prevention and Resolution (CPR) authorize the arbitration tribunal to apportion costs for “legal representation and assistance … incurred by a party to such extent as the Tribunal may deem appropriate” (see CPR 2019 Adminis­tered Arbitration Rules, rule 19.1(d) & 19.2). Rule 24(g) of the JAMS Comprehensive Arbi­tration Rules & Procedures is the mirror image: “[T]he Arbitrator may allocate attorneys’ fees and expenses … if provided by the Parties’ Agreement or allowed by applicable law” (ac­cord, Uniform Arbitration Act, § 21).

If all parties request an award of attorney fees, rule 47(d)(ii) of the American Arbitra­tion Association’s Commercial Arbitration Rules and Mediation Procedures authorize an award of attorney fees even if the underlying agreement is silent on the issue.  Throwing in a boilerplate prayer for attorney fees and costs without considering the consequences can result in fee-shifting.  And during arbitration, even casual discourse about attorney fees can be a basis for fee-shifting, absent an express agreement to the contrary.  (Marik v. Univ. Vill. LLC (Oct. 3, 2013, B247171) 2013 Cal.App. Unpub. Lexis 7143 [brief asserting entitlement to recover fees provided basis for arbitrator’s fee award]; see Prudential-Bache Securities, Inc. v. Tanner (1st Cir. 1995) 72 F.3d 234, 242-243 [“costs and expenses” under New York Stock Exchange Rules interpreted to permit award of attorney fees when both sides to dispute requested attorney fee award].)

Counsel should be mindful of an arbitra­tor’s predisposition to produce an award that is “fair to all concerned,” and this may include fee-shifting as an exercise in equity. (See Co­hen v. TNP 2008 Participating Notes Program, LLC (2019) 31 Cal.App.5th 840, 877 [absent parties’ agreement limiting arbitrator power, award of attorney fees on basis of equity and conscience affirmed].)  Further, misconduct of counsel may be a reason to “sanction” a party by reducing an attorney fee award. (E.g., Karton v. Art Design & Const., Inc. (2021) 61 Cal.App.5th 734 [fees reduced for incivility of counsel].)  And consider JAMS Comprehensive Arbitration rule 24(g), which authorizes an arbitrator to consider noncompliance with discovery orders when awarding attorney fees.

Attorney fees incurred prosecuting or defending a complaint to compel arbitration may be recoverable, but the procedural posture of the civil court action will determine when fee-shifting may occur. (E.g., Otay River Const. v. San Diego Expressway (2008) 158 Cal.App.4th 796.)  Though there is authority to the contrary (Benjamin, Weill & Mazer v. Kors (2011) 195 Cal.App.4th 40 [allowing recovery of fees even though liability on claim awaited arbitration]), the better-reasoned view is expressed in Roberts v. Packard, Packard & Johnson (2013) 217 Cal. App.4th 822.  In that case, clients filed suit against their former lawyers, alleging breaches of fiduciary duty and conversion in connection with settlement of qui tam litigation.  The law firm’s motion to compel arbitration was grant­ed, and the trial court awarded the firm its fees as the prevailing party.  On appeal, the court was persuaded the phrase “an action” means an entire judicial proceeding; procedural steps in the course of a lawsuit, such as a motion to compel arbitration, are steps in the prosecution or defense of an action, but they are not the entirety of an action on a contract.  The Roberts case stands for the proposition only one side can “prevail” in a lawsuit, and fee-shifting had to await the arbitrator’s final determination of the clients’ professional liability claims. (Id. at p. 843.)

Civil Code section 1717 defines the “pre­vailing party” as the person who recovers the greater amount on a contract.  Yet, Hsu v. Ab­bara (1995) 9 Cal.4th 863, makes it clear this involves more than a mathematical calculation.  The “court is to compare the relief awarded on the contract claim or claims with the parties’ demands on those same claims and their liti­gation objectives as disclosed by the pleadings, trial briefs, opening statements, and similar sources.” (Id. at p. 876.)  Thus, it is possible for a party to prevail by achieving litigation objectives, even though an opponent may have obtained a favorable verdict on liability theories.  Generally, however, when a verdict on contract claims is good news for one party and bad news for another, a court is obligated to treat the happy litigant as the prevailing party.

The identity of a prevailing party becomes more complicated when results of an arbitra­tion are mixed. In this regard, Marina Pacific Homeowners Association v. Southern California Financial Corp. (2018) 20 Cal.App.5th 191, is instructive.  This case between a homeowners’ association and a finance institution exempli­fies litigation that produces some wins and some losses for both sides.  The case involved a claim by the homeowners that they did not owe monthly fees the financial institution contended amounted to $97 million over the life of a lease.  The trial court found against the homeowners and declared there was an obligation to make monthly payments.  But the court also found the monthly payment rate was only 40% of the financial institution’s demand.  On appeal, the court declined to consider settlement communications as being a reliable expression of a party’s litigation objectives and concluded the “substance” of the result was a $58 million loss for the defendant.  Invoking the decision in the Hsu case, the court con­cluded there was no simple, unqualified result pointing to either side as a prevailing party, and the trial court had acted within its discretion in denying recovery of attorney fees.

One lesson regarding “prevailing parties” is the need for caution in over-pleading one’s case. Some counsel cannot resist converting a straight-forward breach of contract action into a fraud case with overtones of unfair business practices and assorted tort claims.  Pleading multiple claims that eventually are discarded for want of proof can be dangerous, especially unsubstantiated allegations of fraud.  In De La Questa v. Benham (2011) 193 Cal.App.4th 1287, 1295, an appellate court acknowledged the practice of overstating one’s claims, which makes it more difficult to determine the victor.  In a case producing mixed results, unsupported claims may lead to an opponent’s recovery of fees.

Counsel in arbitration need to address fee-shifting with a laser focus, beginning with the preliminary hearing, which is the first op­portunity to meet the arbitrator and learn his or her preferences.  Arbitrators can be expected to employ the lodestar method recognized as acceptable by a long line of California cases (e.g., PLCM Group v. Drexler (2000) 22 Cal.4th 1084, 1094).  Several issues can be dis­cussed at the hearing: What procedures will the arbitrator use to deal with attorney fee and cost issues?  Will these matters be bifurcated until an interim or tentative award on the merits is de­livered? Does the arbitrator have requirements for form, style, and specificity of time records? Will “block billing” be accepted? If more than one law firm will be appearing for a party, the conference also is an opportunity to explain why and set the stage to defuse a later argument about duplicated efforts.

In a case with both contract and tort claims, counsel should consider keeping a separate re­cord of time spent on matters that may not be entitled to recovery of attorney fees.  Counsel should be prepared to demonstrate that time records were prepared contemporaneously with the work reported, since there often is a lack of daily time recordation, let alone contem­poraneous reporting.  The fee application also should explain how the litigation team was de­ployed and why individual tasks were assigned to team members.

Proving the reasonableness of time and rates ordinarily can be accomplished by declarations of counsel regarding the usual, customary, and regular timekeeping and billing practices of the law firm.  Resumes of the personnel involved and a summary of the work may be useful.  (See, e.g., Syers Properties III, Inc. v. Rankin (2014) 226 Cal.App.4th 691, 702.)  And this informa­tion can be supplemented by the opinions of other lawyers objectively knowledgeable about actual practices within the community.  Survey data often is available for firms in metropolitan areas, and those reports also carry credibility.  But counsel should be alert to differences between posted or rack rates and hourly rates actually realized, because there often is a ma­terial difference.  As with hotels and rental cars, there may be a significant disparity between the advertised rate and what people actually pay.

Nemecek & Cole v. Horn (2012) 208 Cal. App.4th 641 makes it clear that a calculation of “reasonable fees” does not hinge on what fees actually were paid.  In that case, defense counsel had been compensated on the basis of negotiat­ed insurance panel rates.  The arbitrator refused to be controlled by such rate structures and declined to use the Laffey Matrix employed by the United States Department of Justice in de­termining rates the federal government believes are reasonable.  Instead, the award of attorney fees was based on an independent assessment of what would be reasonable, and the appellate court affirmed confirmation of that award. (See Chacon v. Litke (2010) 181 Cal.App.4th 1234, 1260 [awarding reasonable rate $50 greater than counsel’s regular rate].)

There are three important things to remember about recovering attorney fees in arbitration.  First, carefully study the parties’ agreement to understand the rights it extends and the limitations it imposes.  Second, avoid pleading unnecessary claims that make it seem the end result tips in favor of one’s opponent.  Third, vacating an erroneous fee award is unlikely, so make your best case regarding fee-shifting before the entry of a final award.

Charles H. Dick, Jr. is a neutral with JAMS, and he serves as a mediator and an individual arbitrator or member of multi-arbitrator panels in complex commercial matters, securities and investment disputes, professional liability cases, products liability issues, and other business-related controversies.

Federal Judge Cites NALFA Survey in Attorney Fee Award

October 1, 2021

A federal judge has cited a NALFA survey in a class action attorney fee award.  U.S. District Judge Amos L. Mazzant of the U.S. District for the Eastern District of Texas referenced NALFA’s hourly rate survey in awarding attorney fees and expenses in Cone v. Porcelana Corona de Mexico, S.A.de C.V. et. al (“Vortens”).  The NALFA survey independently showed prevailing market rate data of class counsel in the Dallas-Fort Worth area. 

“To support its submitted rates, Class Counsel commissioned and submitted a survey conducted by the National Association of Legal Fee Analysis ("NALFA").  The sample of the NALFA survey was Dallas-Fort Worth metropolitan area plaintiffs’ counsel practicing in consumer related or product liability class-action work.  Class Counsel’s submitted hourly rates, while on the higher side, falls within the accepted range,” wrote Judge Mazzant.

NALFA conducts custom hourly rates for clients such as law firms to independently prove billing rates in court.  Lead plaintiffs’ counsel commissioned NALFA to conduct a billing rate survey of plaintiffs’ rates in class actions in the Dallas-Fort Worth area.  NALFA conducted this survey via email, employing its best practices measures.  In his 26-page fee order (pdf), Judge Mazzant accepted the hourly rate data and survey results and awarded over $4.3 million in attorney fees in the Vortens class settlement.

Law Firms with Over 100 Attorneys Have Higher Rates Across All Experience Levels

September 4, 2021

NALFA recently released the results from our 2020 Litigation Hourly Rate Survey.  The results, published in The 2020 Litigation Hourly Rate Survey & Report, contains billing rate data on the very factors that correlate to hourly rates in litigation: geography, years of litigation experience, complexity of case, and litigation practice 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. 

Law firms with over 100 attorneys have higher rates across all litigation experience levels.  When compared to solo practitioners, law offices with 2-11 attorneys, and law firms with 12-99 attorneys, large law firms consistently have higher rates for litigators at all experience levels.  Almost half (49%) of litigators at large law firms bill at tier 2 rates ($401-$650).  While the percentages of litigators at smaller law firms and law offices who bill at tier 2 rates are lower.  "From our survey, the data analysis shows that associates at large law firms start with higher rates and raise them more frequently than litigators at small law firms and law offices," said Terry Jesse, Executive Director of NALFA.

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

Senior Litigators Now Entering Tier 3 Rates ($651-$900)

August 28, 2021

NALFA recently released the results from our 2020 Litigation Hourly Rate Survey.  The results, published in The 2020 Litigation Hourly Rate Survey & Report, contains billing rate data on the very factors that correlate to hourly rates in litigation: geography, years of litigation experience, complexity of case, and litigation practice 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.

3,285 litigators from across the U.S. participated in this hourly rate survey.  They included both plaintiff and defense counsel from solo shops to large law firms and at all experience levels.  The hourly rate survey shows more and more senior litigators (over 20 years of continuous litigation experience) starting to enter tier 3 rates ($651-$900).  Our survey shows that 28% of litigators with 21-24 years of litigation experience have tier 3 rates and 36% of litigators with 25-29 years of litigation experience also have tier 3 rates.  The percentages go up for litigators with over 30 years of litigation experience.

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