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Category: Fee Agreement

NJ Attorney Can Pursue Fee Claim Without Written Retainer

July 14, 2021

A recent Law 360 story by Nick Muscavage, “NJ Atty Can Pursue $126K Fee Bid Without Written Retainer”, reports that a New Jersey attorney can pursue her bid for $126,000 in legal fees for a matter she never put into a retainer agreement after an appellate panel reversed an earlier court's dismissal of the case, noting that "it is well settled that an attorney-client relationship can be found without a written agreement."

On July 9, a two-judge appellate panel reversed the summary judgment granted to the clients of Theresa C. Grabowski, who retained the Marlton-based attorney to bring claims against their insurer for not fully covering lightning damage to their home.

The couple, William and Amanda Baskay, signed a written retainer agreement for Grabowski, according to court documents.

The retainer included a provision that said, "If, after completion of the matter at the trial level, either you or the opposing party appeals the result, a new retainer agreement will be drawn which will set forth our agreement with respect to the retention of this firm on appeal."

In May 2009, Grabowski filed a 16-count complaint against the insurance company that included breach of contract and violation of the Consumer Fraud Act, or CFA, among other things.

After the trial court dismissed the CFA and punitive damages claims, a jury returned a verdict in favor of the couple against the insurer in the amount of $9,025.

The accounts of what occurred next between Grabowski and her clients "are dramatically different," the appellate panel wrote in its July 9 opinion.

Grabowski claims that as she was leaving the courthouse with the couple following the jury's verdict, they asked her to pursue an appeal seeking to overturn the trial court's dismissal of their claims for damages under the CFA, punitive damages, and additional counsel fees and costs, according to court documents.

"Grabowski alleged she agreed to represent [the couple] on appeal, and further consented to continue representing them at no additional charge," according to court documents. "Grabowski alleged she did not insist that the parties execute a new retainer agreement because she would not be charging [the couple] any additional fees."

The couple disputed Grabowski's claims and said they did not ask her to file an appeal, but that the attorney "did so on her own," according to court documents. They also said they never signed a new retainer agreement for the appeal.

Grabowski filed a notice of appeal on the couple's behalf using the money from the jury verdict to fund the action. In response, the insurer filed a cross-appeal, challenging the verdict in the couple's favor.

Grabowski sent an email to the couple inquiring about her outstanding legal fees.

William Baskay responded by email, telling Grabowski, "As it stands now there is to be no appeal," according to court documents.

In response, Grabowski told William by email that "[t]he appeal has already been filed — which you knew, approved of and agreed to throughout (since the adverse rulings). As you know, the appeal was filed back in September, as I forwarded copies of it to you."

William did not reply to this email, according to court documents, and Grabowski continued to represent the defendants in the appeal and cross-appeal.

Ultimately, in April 2014, a state appellate panel affirmed the earlier dismissal of the couple's claims under the CFA and for punitive damages.

Three years later, Grabowski filed a complaint against the couple seeking to recover attorney fees "in excess of $126,678" for representing them against their insurance company. William and Amanda Baskay filed separate answers to the complaint, both claiming that Grabowski's claims were barred by the six-year statute of limitations.

New Jersey state law requires that a claim for breach of contract be filed within six years from the date the cause of action accrues, but the appellate panel noted that a "contract for legal services is not like other contracts."

Previous case law in New Jersey holds that because of "the unique and special relationship between an attorney and a client, ordinary contract principles governing agreements between parties must give way to the higher ethical and professional standards enunciated by our Supreme Court."

The appellate panel, in its July 9 opinion, further noted that the "facts of this case are disputed and far from settled."

"However, the law applicable to the statute of limitations in attorney fee collection actions is not," the appellate panel added.

If the six-year statute of limitations began when the couple's appeal concluded in April 2014, then Grabowski's claims against the couple were filed within the legally-permitted timeframe, the appellate panel noted.

The panel also rejected the couple's argument that Grabowski's representation ended in 2011 when William sent the attorney the email stating that, "As it stands now there is to be no appeal."

"This email is hardly an unambiguous statement that Williams intended to terminate Grabowski's services," the appellate panel wrote. "Indeed, when Grabowski informed him the next day that the appeal had already been filed, William failed to respond."

On remand, the appellate panel instructed the trial court to consider the couple's claim that Grabowski's complaint against them should have been barred because she did not give them "pre-action notice" of their right to seek fee arbitration.

Ninth Circuit Strikes Down $7M Fee Award in ConAgra Class Settlement

June 2, 2021

A recent Law 360 story by Emily Field, “9th Circ. Strikes Down $7M Atty Fees in ConAgra Label Deal,” reports that the Ninth Circuit overturned a judge's approval of a class action settlement with ConAgra Food Inc. over its labeling on oil products, saying the parties crammed into the deal "a squadron of red flags" including attorney fees of nearly $7 million that are much larger than what consumers were awarded.  The panel in a published opinion said the agreement includes a number of questionable provisions and "reeks of collusion," particularly the attorney fee award of $6.85 million that is seven times higher than what class members received.

ConAgra and class counsel contended the deal could be worth more than $100 million, but ultimately, ConAgra paid out less than $8 million, with just $1 million going to the class.  Large counsel fees comparative to the payout for class members raises the possibility that counsel colluded with the defendant to lower class compensation in exchange for a larger fee, the panel said.  A defendant would go along with this kind of conspiracy because it only cares about how much it's paying in total, not how it's divided up, they added.

The panel said district courts must scrutinize attorney fee award arrangements when deciding whether a class action settlement is fair, following revisions to the Federal Rules for Civil Procedure that introduced the requirement in 2018.  Specifically, that requirement also applies to settlements that were reached after a class was certified, the panel held for the first time.  "[A] post-class certification settlement only ensures that the parties litigated aggressively to arrive at an adequate total fund size; it does not, however, address the inherent incentives that tempt class counsel to elevate his or her own interest over those of the class members," the panel said.

The panel's decision reverses the 2019 approval of the deal and sends the case back to California federal court.  In the suit, the buyers alleged ConAgra mislabeled its Wesson oil products as "100% natural" even though they contain genetically modified ingredients.

The deal also included a stipulation that ConAgra not advertise the Wesson brand of essential oils as "100% natural" anymore, which was supposedly worth tens of millions of dollars but now appears worthless since ConAgra no longer owns the brand, the panel said.  "That is like George Lucas promising no more mediocre and schlocky Star Wars sequels shortly after selling the franchise to Disney.  Such a promise would be illusory," the panel wrote in their opinion.

Objector and University of Chicago law professor M. Todd Henderson brought the appeal last year, arguing the lower court did not take into account the deal's value to the class when it granted the fees.  The panel also found other red flags in the settlement, such as a "clear sailing arrangement" under which ConAgra agreed not to challenge the class counsel fees.  "A clear sailing provision signals the potential that a defendant agreed to pay class counsel excessive fees in exchange for counsel accepting a lower amount for the class members," the panel said.

Tenth Circuit Upholds Attorney Fees in Samsung Washer Settlement

May 7, 2021

A recent Law 360 story by Mike Curley, “10th Circ. Won’t Undo Samsung Washer Settlement Over Fees,” reports that the Tenth Circuit refused to toss a settlement that ended multidistrict litigation alleging that a defect in Samsung Electronics America Inc. washing machines caused the lids to blow off mid-cycle, rejecting a lone objector's challenge to how attorney fees were handled in the deal.  In a published opinion, the three-judge panel denied John Douglas Morgan's bid to undo the final settlement approval over the "kicker" and "clear-sailing" agreements in the 2018 deal reached by the appliance buyers and defendants Samsung, Best Buy Co. Inc., The Home Depot Inc. and Lowe's Companies Inc.

The panel wrote that while a settlement including both provisions is subject to heightened scrutiny, the district court applied such scrutiny and was well within its discretion to approve the deal, particularly as the agreement provided class members with a benefit double the value of what they could have received had the case gone to trial.

The "kicker" agreement in the settlement holds that if the attorney fees and costs came in at under $6.55 million, the difference would revert to the defendants, while the "clear-sailing" agreement bound the defendants not to object to any request for attorney fees and costs up to $6.55 million.  The district court's final judgment on the fees and costs came to around $3.8 million.  Morgan had objected based on those agreements, saying that they deprived class members of potential relief and that the attorneys negotiated the deal for their own benefit, not the class members'. The district court overruled his objections, leading to the appeal.

According to the opinion, the settlement gives the average class member a rebate of 15.5% of the cost of a washing machine, rather than the amount that would have been provable damages at trial, which came to 7%.  This shows that class counsel fought hard for the class members and obtained more than equitable compensation, according to the opinion.  "Where class members were receiving compensation equivalent to or in excess of actual damages, it cannot be said that class counsel and defendants negotiated terms that favored attorneys' fees and costs at the expense of adequate and reasonable compensation for the class," the panel wrote.

The circuit court found that the attorney fees were within acceptable ranges whether the court used the lower estimate for the value of the settlement, $6.44 million, or the higher estimate of $11.31 million.  Morgan also challenged three factual findings that the court made in rejecting his motion to disqualify class counsel, and while the circuit court found that one such finding was clearly in error, and it said that error was harmless.

Morgan argued that the court was wrong in finding that he and the defendants did not finalize a side agreement under which a portion of the unspent attorney fees would have been distributed to the class, but the panel found no such error.  Morgan walked away from negotiations and the side agreement was never ratified, the panel wrote, so the district court was within its right to conclude that the deal might never come to fruition.

Morgan had also argued that class counsel should be disqualified for threatening to sue him over the side agreement, saying the court's determination that no such threat was made was in error.  Again, however, the panel found that the record undermines Morgan's assertion, saying that an allegation that Morgan had engaged in "misconduct" was far from a threat of litigation.

The Tenth Circuit did, however, agree that the district court was wrong to find that class counsel never took a position about the side agreement, saying it was clear they opposed it by accusing Morgan and the defendants of "misconduct."

But the panel also found that class counsel's objections were not baseless as they had reason to be skeptical, noting the side agreement allowed Morgan's attorneys from the Hamilton Lincoln Law Institute to seek attorney fees, while Morgan's niece served as president of the institute, calling into question his motives.

Quinn Emanuel Defends Billing Practices, Expenses

May 5, 2021

A recent Law 360 story by Rachel Schart, “MiMedx Slams Quinn Emanuel Fees As 2 Other Firms Settle,” reports that MiMedx has accused Quinn Emanuel of seeking unreasonable fees, including for lawyers' luxury hotel stays and fine dining, as part of the cost of defending two former company executives who were convicted of securities fraud.  The allegation, in court papers, comes after the life sciences company settled claims with two other law firms seeking payment of fees as part of the same dispute.

Quinn Emanuel Urquhart & Sullivan LLP, Freshfields Bruckhaus Deringer LLP and Kobre & Kim LLP initially filed suit in New York state court on April 15 alleging MiMedx Group Inc. shirked its obligations to indemnify the firms' clients, company President William Taylor and ex-CEO Parker "Pete" Petit.  Both men were sentenced to a year in prison in February after being convicted of one of two counts each at trial.

Freshfields and Kobre & Kim said in court filings that they had settled their claims against MiMedx.  Without disclosing the terms, the firms wrote in similar notices that their "claims in this proceeding do not make, and never were intended to make, a charge of deception against MiMedx or its general counsel, Butch Hulse, and that the filed action in this matter was a good faith fee dispute, which now has been swiftly and amicably resolved."

But Quinn Emanuel has yet to drop its claims in the lawsuit, and MiMedx took aim at the law firm in an answer filed in a related Florida state court legal fee dispute with the former executives.  In response to the men's counterclaims seeking additional fees to appeal their convictions, MiMedx accused Quinn Emanuel of overbilling Petit and Taylor and then unfairly attempting to collect from the company.

"Quinn Emanuel will have to explain its billing and expense practices," MiMedx wrote.  "These include staffing its trial team with over ten professionals, mostly from out-of-town despite having a large New York office within a few miles of the courthouse; staying in a luxury boutique hotel; having meals catered by a Michelin-starred chef (and supplementing them with separate orders of crab legs and sushi to boot); and charging MiMedx tens if not hundreds of thousands of dollars on a 'last-minute' motion to adjourn the trial that the court found 'border[ed] on the frivolous.'"

MiMedx said Quinn Emanuel has refused to provide it with invoices for its expenses in the case, and that it and the other criminal defense firms have already been paid more than $18 million for their work defending the former executives.  MiMedx's counsel told Law360 that the company has indemnified its former executives where required, but that the law firms can't force it to pay unwarranted fees.  "The company has been reasonable.  It paid pursuant to the indemnity," said Louis M. Solomon of Reed Smith LLP.  "It always reserved the right to make sure that the fees were reasonable, and even now with the convictions in place, we're not obliged to advance any more costs."

Quinn Emanuel's in-house counsel defended the firm's billing practices to Law360.  "Quinn Emanuel tried this case during the pandemic and achieved an acquittal for its client on the most serious count," Marc Greenwald, who is representing the law firm in the New York case, said.  "Quinn Emanuel expects to get paid at the rates that MiMedx agreed, and our work was outstanding.  All the charges were appropriate and reasonable."

MiMedx lodged its Florida state court claims against Petit and Taylor in January seeking permission to stop indemnifying the former executives upon sentencing, as well as reimbursement for millions of dollars in already paid fees.  Petit and Taylor fired back with counterclaims soon after they were sentenced, arguing in April that the company must continue indemnifying them in the upcoming appeal.  Quinn Emanuel, Freshfields and Kobre & Kim filed their separate New York state court suit in April, alleging that MiMedx has violated its contractual duty to pay Petit and Taylor's criminal defense costs.

Article: When Are Outside Fee Experts Required to Prove Attorney Fees?

April 21, 2021

A recent Daily Business Review article by Jonathan Mann, "Appellate Brief: When Expert Testimony is Required to Obtain an Award of Attorney Fees," reports on whether a party seeking an award of attorney fees needs an expert witness to testify in support of the reasonableness of fees requested in Florida.  This article was posted with permission.  The article reads:

Whether a party seeking an award of attorney fees needs an expert witness to testify in support of the reasonableness of the fees requested has been the subject of much discussion and many written legal opinions in Florida.  The answer depends on the type of case, against whom fees are being sought, and in what area of the state the case is proceeding.

The general rule is that a party seeking an award of attorney fees from the other party to litigation must introduce the testimony of an expert witness in support of the request.  Family law proceedings under Chapter 61 are a notable exception, as the statute expressly provides that expert testimony of a fee witness is unnecessary to seek an award of attorney’s fees from the other side in proceedings under that chapter.  The general rule requiring expert testimony appears to hold true when seeking fees in the same proceeding pursuant to a charging lien.  See, Roshkind v. Machiela, 45 So.3d 480 (Fla. 4th DCA 2010).  But things are more uncertain when an attorney seeks unpaid attorney fees from the attorney’s own client or former client.

The Fourth DCA held in Valentin Rodriguez v. Altomare, 261 So. 3d 590 (Fla. 4th DCA 2018) that expert fee witness testimony was unnecessary in a separate breach of contract suit by an attorney against his former client.  The attorney sued his former client for unpaid legal fees under a flat fee contract in a criminal case.  Notably, the case involved a flat fee arrangement.  The former client did not dispute the amount of the fee, and had even acknowledged the debt by executing a promissory note for the unpaid balance.

The Fourth DCA recently reaffirmed and clarified its position on the issue of the necessity of expert fee witness testimony in separate breach of contract actions in Ramblewood East Condominium Association v. Kaye Bender Rembaum, 294 So. 3d 923 (Fla. 4th DCA 2020).  Robin Bresky assisted in presenting oral argument for the appellee before the Fourth DCA in the Ramblewood appeal, and the appellee successfully defended the award of attorney fees.  In that case, the Fourth DCA relied upon Rodriguez in affirming an award of attorney fees for a law firm that filed a separate breach of contract action to collect unpaid attorney fees even though the firm did not present expert testimony as to the reasonableness of fees.  The fee agreement at issue in Ramblewood was not a flat fee like the one in Rodriguez.

The Third DCA also recently followed Rodriguez in Law Offices of Granoff & Kessler v. Glass, 305 So. 3d 345 (Fla. 3d DCA 2020). In Granoff, a law firm sued its former client for unpaid attorney fees incurred in a dissolution of marriage proceeding by bringing a separate breach of contract claim against the former client under the attorney-client fee agreement.  The Third DCA held that expert fee witness testimony is not necessary when an attorney files a separate breach of contract suit as long as the attorney testifies regarding the fees and submits the billing invoices into evidence.  The court noted that in such a case, the fees are sought from a former client who agreed to pay them rather than an adverse party who did not.

In so ruling, the Third DCA certified conflict with Snow v. Harlan Bakeries, 932 So. 2d 411 (Fla. 2d DCA 2006) and the case went to the Florida Supreme Court.  The Granoff & Kessler case was fully briefed and awaiting disposition in the Florida Supreme Court until March 26.  However, on that date the Supreme Court entered an order determining that it should decline to exercise jurisdiction.

As a result, the apparent split that currently exists among Florida DCAs on the issue of whether an attorney pursuing fees from a former client in a separate proceeding must introduce the testimony of an expert fee witness remains.  Thus, whether a party seeking attorney fees requires diligent attention to the facts and circumstances of the particular situation.  For now, it appears that expert fee witness testimony is unnecessary to pursue attorney fees in a separate action in the circuit courts within the Third and Fourth Districts, whereas the opposite is true in the Second and Fifth Districts.  The answer is unclear in the First District, but the cautious practitioner would always be wise to introduce such testimony in support of the request for attorney fees to avoid any possibility of a challenge on such grounds on appeal.

Jonathan Mann is a senior associate at Bresky Law.  Prior to joining the firm, Mann worked as a judicial staff attorney to Judge George A. Shahood at Florida’s Fourth District Court of Appeal.  In this role, Mann managed civil and criminal appeals and gained extensive experience in the appellate process and procedural rules.

Former AG’s Hourly Rate: $2,295

April 16, 2021

A recent Law.com story by Mike Scarcella, “Covington’s Eric Holder Bills at $2.295 Hourly, New Legal Services Contract Shows,” reports that Covington & Burling partner Eric Holder Jr., the...

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