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 360 story by Chris Villani, “Attys Want $11M for $58M Vets’ Home COVID Outbreak Deal” reports that attorneys who led a class of veterans and their families to a nearly $58 million settlement with the state of Massachusetts following a deadly COVID-19 outbreak at a veterans' home asked a judge to approve their $11.5 million fee request.  Lawyers from the western Massachusetts firm of Lesser Newman Aleo & Nasser LLP told U.S. District Judge Mark G. Mastroianni that their fee request, which is unopposed by the commonwealth, is on the low end among similar settlements in the First Circuit.

The $11,512,500 request is just under 20% of the $57,912,500 legislative appropriation that covers veterans who became ill or died of COVID-19 at Holyoke Soldiers' Home between March 1, 2020, and June 23, 2020.  None of the 164 members of the settlement class have objected to the fee request, the lawyers said.  "Bringing a lawsuit of this nature is a daunting task," the memorandum states.  "It should be rewarded with a full attorney fee award, particularly in this case, where the requested fee is on the low end of the range of attorney fee awards recoveries in common fund class actions in the First Circuit and a full attorney fee award will not decrease the amounts to be received by the class members."

The settlement for the class members and the fee award were also negotiated separately in this case, the attorneys said, with just over $46 million set aside for the individual victims and their families.  Their awards, therefore, would not be reduced by the fee request, according to the memorandum.  The class lawyers also argued that awarding a lower fee could provide a disincentive for the commonwealth to settle future similar cases or take steps to prevent such tragedies from happening in the first place.  The fee award would also encourage lawyers to tackle tough cases when people are harmed by state action, the attorneys argued.

"In taking this case on, counsel was aware that the likelihood of prevailing at trial and actually recovering a judgment was, at best, difficult, [and] numerous other attorneys had declined to represent the veterans who had died of COVID-19 at the Holyoke Soldiers' Home," the document states.  "And, if the case went to trial, the firm would end up spending several million dollars' worth of billable hours, as well as incurring a minimum of $500,000 in expert fees."

A recent Law 360 story by Kelly Lienhard, “AT&T ‘Bait-and-Switch’ Customer Attys Want $3.5M in Fees” reports that attorneys who secured a $14 million settlement for a group of AT&T customers claiming they were charged an improper fee asked a California federal court for a $3.5 million cut of the award to cover their legal fees, as well as additional funds to cover litigation expenses.  The requested fee is 25% of the full settlement amount, which aligns with the Ninth Circuit's benchmark for attorney fees, according to the attorneys' motion, and is warranted based on the risk taken and time spent on the case.

"[The fee] is well justified under the circumstances of this case, including in light of the significant risk settlement class counsel assumed in taking this case on and vigorously litigating it for years notwithstanding the possibility that the case could ultimately be derailed on arbitration or any number of other grounds," the counsel stated.  AT&T agreed to the $14 million settlement to avoid litigation after its customers sued the telecom company over claims that the company used bait-and-switch tactics by applying an "administrative fee" to customers' accounts.

The customers' counsel is asking for 25% of the settlement amount to cover their fees and almost $75,000 for litigation expenses.  According to the attorneys, over 4,674 hours were devoted to the case, with more work still ahead to secure the finalized settlement.  The work was done with no guarantee that the lawyers would see any compensation, with additional challenges that come with going up against a large, well-funded company, according to the attorneys.

The customers' counsel added that a lodestar-multiplier cross-check found that the requested $3.5 million fee represents a little less than 128% percent of the $2,754,739 in attorney fees accumulated so far in the case, which is at the lower end of the range typically awarded, the attorneys said.

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 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.

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