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Category: Block Billing

Law Firm Charged with ‘Excessive and Unconscionable’ Attorney Fees in Suit

May 10, 2023

A recent Law.com by Alaina Lancaster, “Proskauer Rose Legal Malpractice Suit Claims Firm Charged ‘Excessive and Unconscionable’ Fees in Trustee Dispute,” reports that Proskauer Rose allegedly billed siblings embroiled in litigation over a family trust millions of dollars after initially estimating that their fees would total $100,000 or less, according to a legal malpractice suit filed May 5. 

The suit, surfaced by Law.com Radar and filed in Los Angeles County Superior Court, claims Proskauer Rose and Andrew M. Katzenstein, a partner in the firm’s private client services department, engaged in unnecessary and excessive work and improper billing practices, such as block billing and charging “unearned, unreasonable, excessive, and unconscionable fees,” according to the complaint.  Trustees Sharyl Gabriel and Susan Louise Gabriel-Potter claim that Proskauer Rose also overstaffed the underlying trust disputes involving their brother Robert Gabriel, additionally inflating costs.

The suit—filed by Makarem & Associates’ Ronald Makarem and Samuel Almon in Los Angeles—also asserts that the firm assigned attorneys who were not licensed in California to perform legal services in the litigation.  The filing alleges that Proskauer partner Matthew Triggs in Boca Raton, Florida, and Bridget Devoy—a former associate at the firm in Los Angeles who is now a counsel at McDermott Will & Emery—were tapped to work on the underlying matter without being licensed in California.  The suit asserts Devoy wasn’t licensed in California until May 14, 2018, but worked on the matter in 2017.

The lawsuit also alleges that the firm improperly advised the trustees on several matters, including guiding them to pay excessive distributions to Robert from the trusts.  “This advice was below the standard of care because, among other reasons, the distributions were not legally required, and were used by Robert to wage litigation against parties including Plaintiffs, which in turn caused Plaintiffs to incur damages, including legal fees incurred defending the litigation brought by Robert,” the complaint said.

Judge Rips Class Counsel’s ‘Overstated’ Fee Request

May 8, 2023

A recent Law 360 by Gina Kim, “Joint Juice Maker Rips Class Attys’ ‘Overstated’ $8.3M Fee Bid,” reports that Premier Nutrition asked a California federal judge to cut $2.4 million from class counsel's "bloated and unreasonable" $8.3 million fee request in litigation over allegedly misleading advertising claims about its Joint Juice, citing block billing, overstaffing, lavish hotel stays and fringe expenses for "boba and coffee runs dating back to 2013."  In a 33-page opposition, Premier Nutrition's attorney Steven E. Swaney of Venable LLP accused class counsel, except for Iredale & Yoo, of presenting to the court "a bloated and unreasonable application asking this court to award $8,274,516" in combined fees, expenses and costs.

Premier argued the lodestar calculation of the two other class counsel firms, Blood Hurst & O'Reardon and Lynch Carpenter "betray a lack of 'billing judgment,'" as they propose a fee award that doesn't approximate what a paying client is willing to approve.  Their lodestar calculation is "massively overstated" since it includes time spent for other related Joint Juice class actions, Premier argued, pointing out the plaintiffs only prevailed in one of 11 related cases but are now submitting a fee bid as if they prevailed on all of them.

Excluding Eugene Iredale and Grace June of Iredale & Yoo, Premier complained that Blood Hurst and Lynch Carpenter's billing records are riddled with inefficiencies, including "top-heavy administration of work," block billing, billing in quarter-hour increments, overstaffing, nontravel work billing and other things.  Examples include Blood Hurst lawyers billing 24 or more hours per day and submitting several duplicative entries on a single day, staffing six lawyers on the trial, "two of whom sat passively in the gallery of the courtroom" and charging $575 per hour for a contract attorney, Craig Straub, doing document review, the opposition states.

"As explained in the declaration of Premier's fee expert Steven Tasher, a 40% across-the-board percentage reduction to BHO's and Lynch Carpenter's lodestar is warranted to account for these inefficiencies," Premier said.  "The total lodestar for class counsel should be reduced to $2,406,809.  This constitutes approximately 29% of the judgment amount, which aligns with the Ninth Circuit's 25% benchmark for reasonable fees."

Premier balked at class counsel's suggestion for the court to apply a multiplier to pump their fee award if their lodestar is reduced, and also took issue with their "extravagant expenses" that it said warrants an across-the-board cut in their claimed charges.

"Class counsel also seek reimbursement from Premier for every sundry or fringe expense they encountered over this decade-long litigation, including boba and coffee runs dating back to 2013," the opposition states. "Class counsel even tries to bill Premier for hundreds of dollars in laundry expenses incurred during trial — even though they apparently traveled back home to San Diego that same day."

The opposition references defense's expert, Tasher, who reviewed the billing entries and opined the class counsel's requests costs also reveal "a 'spare no expense' approach" to the case along with double billing and "phantom charges."  "In my opinion, while the dollar value for many of these items may seem small, they reflect a big attitude of no cost being too great to throw onto the bill and eat, drink and be merry on someone else's dime," Tasher wrote.  "No paying client would tolerate class counsel's lifestyle expenses or lavishness."

Premier said that Blood Hurst and Lynch Carpenter's proposed lodestar figure was grossly inflated and warrants dramatic cuts across the board, arguing that the firms can't include time spent on class representative depositions in other related actions in their calculation.  Blood Hurst's proposed lodestar also includes nearly 1,000 hours for trial prep spent in Mullins, which Premier said should be removed since the Mullins trial never occurred.  It's inappropriate for Blood Hurst to get 100% of the fees for work common to the related cases based on the successful outcome of just one case, the opposition states.

Premier also sought a 40% cut to Blood Hurst's remaining lodestar account for several deficiencies in their billing practices, noting that  the firm's Timothy Blood and Thomas Joseph O'Reardon billed for work done in 2013 at their current hourly rate, which is significantly higher.

While Blood, partner Paula Brown and Straub billed 1,000 hours for trial prep, Blood was the only one who had an active role at trial, and O'Reardon and Straub "sat passively in the gallery," Premier alleged.  Premier also accused Straub and O'Reardon of billing extra hours after trial each day and erroneously adding entries that exceed 24 hours a day "or are obvious duplicates," totaling $62,207.50.

Premier also attacked Lynch Carpenter's fee bid of $392,392.50, arguing the billed work was entirely spent on Mullins.  The fee should be apportioned among the related cases and then cut by 40% due to excessive time and top-heavy administration work, Premier said.  That should leave Lynch Carpenter with $20,842.77.  "As an initial matter, in what can only be described as a shocking act of chutzpah, Mr. Carpenter — who has not worked on these cases since 2020 — includes in his fee petition 13.7 hours to fly to San Francisco to observe one day of trial on May 25, 2022," the opposition states.

Nor should class counsel recover fees and deposition costs for experts that weren't used in the Montera suit, Premier said.  Furthermore, several charges from the two firms weren't only lavish and extravagant, but also "purely wasteful," Tasher said.

"Each of these issues is exacerbated by the level of staffing," Tasher wrote. "Had the trial been staffed with attorneys Iredale, Jun and Blood, (the three attorneys who actually appeared on the record to try the case), the expenses would also have been much more modest.  However, given the excessive staffing (and related trial expenses) of attorneys [Todd] Carpenter, O'Reardon and Straub, the costs grew exponentially, considering the additional flights, Uber/taxi charges, meals/alcohol, and snacks brought about by these three additional timekeepers (essentially double the trial team.)"

City of Detroit Says $2M Fee Request is Unreasonable

April 13, 2023

A recent Law 360 story by Danielle Ferguson, “Detroit Says $2M Atty Fee is Unreasonable in Property Case,” reports that the city of Detroit asked a federal judge to deny a $2 million attorney fee request from a commercial property owner that won an inverse condemnation case against the city, saying some requests are "outrageous" and so vague that it would be a "Herculean" task to calculate individual fees.  HRT Enterprise's requests are unreasonable because the fees include time spent on issues not directly related to the case and because HRT didn't provide documentation detailing why the hourly rates they proposed would be appropriate, the city said in its response to the fee request.

"The Court should either require HRT to purge its billing records of all entries unrelated to this case and explain the ambiguous entries so that the Court and the City can properly review the entries, or the Court should award a fee of not more than $300,000," the city wrote.  Mark Demorest of the Demorest Law Firm, representing HRT, said the plaintiffs filed almost 300 pages alongside the motion that properly detail the hours spent working on the case, and that the hourly rates requested for lead attorneys are appropriate, given their more than 40 years of experience.

In its motion for fees, HRT said it understands the fees in the case are "substantial," but that they are reasonable because of how long the case has been active.  "We had to fight for 11 years to get the city to pay for our client's property that they took through their actions.  The City has still not paid, and we're entitled to every bit of the attorney's fees that were incurred to protect our client's constitutional rights," Demorest told Law360.

The attorneys spent thousands of hours on the case, responsibly managed the litigation for it and properly documented everything they did, HRT said.  The city cannot protest fees for a case it rigorously defended, Demorest said.  "We documented all the time we had to spend on this.  It's not a situation where the city can just say, 'Well, that's too much.'  It is what it is," he said.

HRT sued Detroit in federal court in 2012 for inverse condemnation, alleging the city took its property when the city was considering expanding or improving the Detroit City Airport, now known as the Coleman Young International Airport.  In state court, lawsuits from HRT's tenants resulted in the city paying $6.8 million and $4 million for claims the city's activities to expand the airport interfered with the tenants' use of the property.  The 2012 lawsuit – at issue here – alleges inverse condemnation based on events since those state jury verdicts.  In an initial trial, the jury sided with HRT and said the city owed HRT $4.25 million for the property it took. Detroit moved for a new trial, which the federal court granted. The second jury awarded just under $2 million.

In its response to the motion for attorney fees, Detroit said HRT put hours for the state lawsuits and city's bankruptcy issues into its fees for this case.  The attorneys billed for hours during the period in which this case was stayed due to the bankruptcy case, the city said, arguing the city's bankruptcy, while it does have an impact on HRT's case, is a different matter.

HRT made "no effort" to detail hours spent by the attorneys on the case, which the city said, wrongfully puts the onus on the city. The line items were vague or in block entries, according to Detroit.  "Because HRT did not separate its fees, it is a Herculean task to calculate the lodestar," the city wrote.  The city said the "most egregious" entry was 1.5 hours billed to drive to and from a location to pick up a check, something the city alleges isn't related to attorney's fees.  "Moreover, attempting to charge the city $427.50 to pick up the $3,800 payment when a stamp costs less than $0.50, is outrageous," the city said.

The city protested HRT's request to compensate it for travel arrangements for HRT's owner because it said HRT didn't pay for the travel in the first place.  The travel compensation requests are also done in blocks, "making it impossible" for the city to determine how much time was spent on a task, the city said.  The city also shouldn't have to pay for time HRT attorneys spent removing privileged documents from the court's docket when HRT shouldn't have uploaded them to the docket in the first place, the city said.

"The City should not have to pay attorney's fees for time spent on motions that should have been resolved between the attorneys in under ten minutes," according to the response.  HRT requested more than double the billable hours that it should have, the city said.  HRT said it billed about 3,000 billable hours.  The city said 1,200 hours is reasonable if the state and bankruptcy hours are removed.

Detroit also said the hourly rate for attorneys HRT is requesting isn't reasonable based on prevailing community rates.  Some attorneys didn't submit affidavits for their experience and skill to support their hourly rate request, so they shouldn't be awarded fees, the city said.

Feds Push Back on $1.9M Fee Request in GMO Salmon Action

April 28, 2022

A recent Law 360 story by Mike Curley, “Feds Push Back On Bid For $1.9M Fees in GMO Salmon Suit” reports that the federal government has opposed a motion from environmental groups seeking $1.9 million in attorney fees and costs in a suit alleging the U.S. Food and Drug Administration wrongly approved the first genetically modified salmon for human consumption, saying the "excessive" fees request follows a "narrow" suit victory.  In an opposition brief, the government said the groups, led by the Institute for Fisheries Resources, saw limited success and repeated losses in the suit, prevailing narrowly on only three of the 14 claims, including losing all claims under the Food, Drug and Cosmetic Act.

That limited success should in turn limit the amount that the court awards in fees, according to the brief, and the government said if the court decides to award fees at all, they should be capped at $246,333.37, while expenses should max out at $1,135.91.  In particular, the government said, the groups should not be able to recover fees for their unsuccessful claims, such as the claims under the FDCA and the bulk of their claims under the National Environmental Policy Act.

The plaintiffs sued the FDA in March 2016, claiming the agency's groundbreaking 2015 approval of a genetically engineered salmon for human consumption poses unknown dangers to food, health and the environment.  AquaBounty used genetic material from a Pacific Chinook salmon and from another fish, the ocean pout, to create a line of fish that grow to full size in about half the standard time, according to court documents.  U.S. District Judge Vince Chhabria in November 2020 found the FDA should have looked deeper into regulating genetically modified salmon, saying the agency didn't meaningfully analyze what might happen to normal salmon if the genetically engineered salmon were able to establish a population in the wild.

The environmental groups asked for the $1.9 million in attorney fees in March, after a previous bid — seeking $2.9 million — was rejected in February.  In March's motion, the groups said they had cut down their billable hours to 3,190.6.  In the brief, the government further argued that the plaintiffs had used "unreasonable" hourly rates that go beyond the market standards in the attorneys' home markets by using the benchmark of San Francisco rates despite three out of four core counsel working out of Portland, Oregon and Seattle.

And the hours claimed are excessive, the government wrote, with the plaintiffs presenting vague time entries and block billing that make it impossible for the government defendants to figure out what hours apply to which claims.  In addition, the time sheets include hours that are not compensable, the government wrote, such as hours spent in separate regulatory proceedings, client solicitation, media activities and challenges to the FDA's deliberative processes.

In other cases, the attorneys' time sheets included duplicative time entries for overlapping efforts among multiple attorneys, resulting in excessive hours for which they should not be billed.  The government also challenged particular time entries linked to tasks that they say were well in excess of the actual time spent on those actions, such as 240 hours marked as being spent on a procedural motion that "did not necessitate so many hours."

Finally, the government argued that the plaintiffs should not be granted any fees under the Equal Access to Justice Act, which allows fees to be granted to the prevailing party unless the government shows its actions were substantially justified.  Both the FDA's approval decision and its conduct in the litigation were substantially justified, the government argued, saying the FDA had diligently examined AquaBounty's application and the U.S. Fish and Wildlife Service concurred with its determination.  That the government prevailed on the bulk of the claims in the suit is further evidence that its position was reasonable, according to the brief, and therefore no fees should be awarded under the EAJA.

Judge Reduces Billing Rates in FCRA Case

February 9, 2022

A recent Law 360 story by Vince Sullivan, “Ariz. Firm Gets Bulk of $370K Fee Bid in Mass. FCRA Case,” reports that an attorney with Arizona consumer protection firm Price Law Group APC was awarded $204,200 in fees that he earned while representing a former debtor in a Fair Credit Reporting Act lawsuit against a mortgage servicer in Massachusetts federal court.  In an order from U.S. Magistrate Judge M. Page Kelley, the court found that the $675 per hour rate sought by attorney David Chami was too high and wasn't reasonable given the rates generally charged by lawyers with similar experience in the Boston area.  The judge said a $350 per hour rate suggested by Selene Finance LP, which is on the hook for the fees under a settlement with plaintiff Robert Sullivan, was too low.

"From its overall sense of the suit … the court finds that Sullivan's proposed rates of $550-675/hour and Selene's proposed rate of $350/hour are unreasonable," Judge Kelley said in her order.  "It finds that a rate of $500/hour is reasonable."  The court further reduced the requested fees based on the time reports kept by Chami and another attorney that worked on the beginning phase of the case in 2016, saying that many entries submitted included block billing, which isn't permitted.

In fee-shifting cases, the court said, the party seeking the payment of their fees must keep contemporaneous time records so the court can accurately determine the reasonableness of the request using a lodestar method.  That method calls for the court to come up with a reasonable hourly rate for the attorney and then multiply by the number of hours worked on the case.  Using that method, Judge Kelley determined that Chami was entitled to payment of $248,550 in fees based on 497.1 hours of work, reflecting some reductions in the hours billed by Chami.  But the block-billing practice employed by Chami and co-counsel Nicola S. Yousif led the court to reduce the fee award by 10%.

"The block billing has prevented the court from applying separate rates for the 'core' and 'noncore' work performed by attorneys Chami and Yousif," Judge Kelley said in the order.  That reduction, coupled with other time adjustments made by the court, drops Chami's fee entitlement to $204,200 based on 408 hours of work.  Yousif is entitled to $13,825 in fees for 39.5 hours of work and a paralegal employed by Chami's firm is entitled to $1,250 in fees.  The court also approved $2,310 in expenses incurred during the case.

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...

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