A recent article by William F. Cobb, “Do We Really Need An Attorney Fee Expert?” discusses the need to hire an attorney fee expert.  This article was posted with permission.  The article reads:

In 2002, the Fourth District Court of Appeal issued a decision in Island Hoppers Ltd. v. Keith 820 So. 2d 967 (Fla. 4^th DCA 2002) discussing whether or not expert testimony should be required to support an award of attorney’s fees to a prevailing party.  The decision questioned the necessity and wisdom of the longstanding judicially-created requirement.

Justice Polen, who authored the opinion in Island Hoppers, recognized that an award of attorneys’ fees must be supported by competent substantial evidence and Florida courts have required testimony by the attorney performing the services, together with testimony by an expert fees witness as to the time and value of those services.  The expert in that case spent a scant three hours in preparation of his opinion in this wrongful death case and is accused of lacking a sufficient factual predicate to form an opinion.  Although Justice Polen and the court allowed the testimony, claiming the testimony went to the weight of the evidence and not its admissibility, the opinion questions whether the longstanding rule requiring the corroborative testimony of an expert fees witness is always the best or most judicious practice. 

The opinion recognizes that expert witnesses are presented to assist with guidance to the trier of fact and fails to see what “guidance” if any a fees expert provides to judges who see various levels of skill and experience in the courtroom on a regular basis.  The opinion does recognize the expert may provide some assistance to the court in terms of a multiplier determination in the market, but distinguished the more fundamental issues of determining appropriate hours expended and rates charged and states the trial judge has greater insight and understanding regarding what is reasonable.   The Island Hoppers decision prompted a Florida Bar Journal article, authored by Robert J. Hauser, Raymond E. Kramer III and Patricia A. Leonard, of Beasley & Hauser, P.A., in January 2003 regarding the same topic, (Vol. 77, No. 1, page 38) essentially agreeing the requirement should be revisited and perhaps eliminated.  In virtually every case decided by the Florida Supreme Court, both before and subsequent to the Island Hoppers decision, the Court has found, or at least commented upon, the requirement for an expert to testify regarding the reasonableness of the time and amount of attorney’s fees being sought, together with a multiplier determination in the relevant market area, especially where there was a fee-shifting provision involved. 

In Roshkind v. Machiela, decided in 2010, the Fourth District Court of appeal again addressed the long-standing requirement of independent expert witness testimony to support a claim for attorney’s fees.  The Court recognized generally “where a party seeks to have the opposing party in a lawsuit pay for attorney’s fees incurred . . . independent expert testimony is required” and “case law throughout this state has adhered to the requirement of an independent expert witness to establish the reasonableness of fees, regardless of whether a first or third party is responsible for payment.”  Although the opinion recognizes Island Hoppers and the previously questioned judicially-created requirement of independent expert testimony to establish the reasonableness of attorney’s fees, it ruled the judicially-created requirement “remains etched in our case law.”  The Fourth District certified a question to the Florida Supreme Court regarding whether or not an expert witness is required to testify to establish attorney’s fees, seeking a final determination of the issue.  The Florida Supreme Court initially accepted jurisdiction but later issued an opinion “upon further consideration, we have determined to deny review and discharge jurisdiction” thereby denying a review and ruling on the issue.

In 2007, In re Amendments to Florida Rules of Civil Procedure, The Florida Bar Civil Procedure Rules Committee recommended adding Rule 1.526 to The Florida Rules of Civil Procedure.  The proposed rule was entitled “Expert Opinion Testimony on Costs and Attorneys’ Fees” and included “[e]xpert opinion is not required to support or oppose a claim or an award of costs, attorneys’ fees, or both, unless by prior order of the court.”  Essentially, the proposed rule would leave it to the trial judge to determine whether or not he or she would require “guidance” in the form of an expert’s opinion regarding the determination of attorneys’ fees.  In rejecting the proposed rule, the Florida Supreme Court opined “that the issue of whether expert opinion testimony is required in this context is not one that is appropriately addressed in a rule of procedure” and declined to adopt the proposed rule.

From a review of the foregoing, although at least one District Court of Appeal has questioned the judicially-created requirement for and independent attorneys’ fee expert to testify in a fee determination hearing, it is clear the Florida Supreme Court consistently has supported and recognized the longstanding requirement and has further refused to adopt a rule of procedure that would allow the trial court to determine the need for expert testimony.  In order to support an award of attorney’s fees, the attorney for the party seeking the fees, whether first or third party obligation for payment is present, is required to retain the services of an expert to offer testimony regarding the reasonableness of the hours expended and amount being sought in recovery in order to prevail.

William F. Cobb is a Partner at Cobb Gonzalez in Jacksonville, FL.

A recent Law 360 story by Emily Sides, “Ga. Judge Finds Atty Fees Must Be Public After $200M Verdict” reports that a Georgia state judge has rejected arguments that a Florida couple could keep their attorney fee agreement secret as he ruled that the deal was a matter of public interest as part of their efforts to add millions of dollars in legal fees to the $200 million verdict over their son's boating death.  Stone Mountain Judicial Circuit Judge B. Chan Caudell of Rabun County's Superior Court ruled that Stephen and Margaret Batchelder must file the agreement in connection with their motion requesting to amend the judgment to add almost $8 million in pre-judgment interest and attorney fees ranging from $31 million to $62 million.

The jury found in August that Malibu was responsible for $140 million of the total verdict, including $20 million in compensatory damages and $120 million in punitive damages.  Judge Caudell rejected the couple's argument that their fee agreement should be filed with the court under seal because it includes "details of the attorney-client relationship."

Earlier in February, Tennessee company Malibu Boats LLC, which made the boat at issue in the case, opposed the Batchelders' attempt to keep the attorney fee arrangement secret.  In a Feb. 9 email obtained by Law360 Pulse, Laurie Webb Daniel — an attorney for Malibu Boats — said sealing the fee agreement would be "particularly inappropriate where a party is relying on the document to claim more than $50 million in fees."  "Indeed, [the Batchelders] have asserted that their fee agreement with counsel is customary, which makes this motion quite odd," Daniel said. "There simply is no justifiable reason to seal this document."

Malibu Boats said the plaintiffs were not entitled to pre-judgment interest or attorney fees, calling the request exorbitant "on top of an already enormous verdict," while noting that their calculations include time spent working on dismissed claims and are based on a "discredited 'value added' methodology."

Representing the Batchelders, Donald R. Fountain — a partner at Clark Fountain La Vista Prather & Littky-Rubin — told Law360 Pulse that they accepted the judge's decision, and although they would have preferred a different ruling, they don't plan to appeal it.  Fountain said the fee agreement is privileged information that could be submitted under seal if the case was in Florida.  The Batchelders argued Feb. 10 that Malibu Boats should be responsible for prejudgment interest and attorney fees because the company unreasonably objected to a pretrial settlement offer of $16.9 million despite having an insurance policy that covered up to $26 million, Fountain said.

A recent Law 360 story by Silvia Martelli, “Hausfeld Doesn’t Have to Disclose Fees in £920M Google Suit,” reports that a tribunal has ruled that a woman bringing a proposed £920 million ($1.3 billion) antitrust class action against Google does not have to disclose the fees her lawyers at Hausfeld & Co. LLP stand to collect if the suit succeeds.  The Competition Appeal Tribunal found that Liz Coll, who brought a proposed class action against Google on behalf of 19.5 million consumers, does not have to reveal the percentage of any damages that Hausfeld will get as a success fee.  Coll also doesn't have to share the premiums on her litigation insurance, because they are not relevant to the lawsuit.

Coll alleges that Google has violated U.K. and European competition law by taking a 30% commission every time consumers in Britain buy applications, pay subscriptions or make purchases through the company's Play Store.  The claim follows a similar action filed against Apple at the same court in May.  The tribunal rejected Google's accusations that the success fee Coll agreed to pay her lawyers at Hausfeld must be disclosed as there is a potential conflict of interest between the class members and the solicitors.

There might be "an incentive" for the lawyers to ensure that there is "a sufficient pot" of undistributed damages so that the success fees are paid in full, because success fees are paid out of damages before they are distributed, Google said.  But the tribunal rejected the argument, saying that the bulk of the allegation is that there is a risk that the legal team will not comply with their professional obligations.  "We do not accept that that assumption is an appropriate one to make in this case, in the absence of any real evidential basis," the judgment said.

Google also argued that it is important to be able to strip out the deposit premium from the total budget to see what funding is available for each phase of the litigation.  But the tribunal said that Coll, formerly head of digital at Consumers International, a global organization for consumer groups, disclosed comprehensive information about the litigation budget, set at £11.3 million, and correctly broken down into phases of the litigation.

A recent Reuters story by Allison Frankel, “N.Y. Judge Calls Out Susman Godfrey for “Inadequate Fee Disclosure,” reports that Manhattan federal judge Kevin Castel refused this week to grant preliminary approval of a proposed $92.5 million class action settlement to resolve allegations that Voya Retirement Insurance and Annuity Company breached its contract with more than 46,000 life insurance policyholders who were subjected to a “cost of insurance” rate increase when Voya’s predecessor sold the policies to Lincoln Life and Annuity Company of New York.

The judge’s beef was not with the terms of the proposed settlement itself, which class counsel from Susman Godfrey described in a brief backing preliminary approval as “extraordinary.”  Susman Godfrey’s brief certainly establishes the firm’s tenacity in more than five years of litigation, all the way through class certification and summary judgment rulings.  The cash portion of the proposed agreement, Susman said, will provide at least as robust a recovery for policyholders as settlements that have previously been approved in other cost of insurance class actions.  And here, the firm said, the money will go straight to policyholders, who don’t even have to assert a claim to receive their share of the settlement fund.

Susman Godfrey said it intended to request a fee award of less than one-third of the settlement.  More specifically, the proposed notice to class members, attached as an exhibit to a declaration from the claims administrator, said Susman “will file a motion seeking an award for attorneys’ fees not to exceed one-third of the gross benefits provided to the settlement class.”

That mention of "gross benefits" caught Castel’s attention.  In the memo requesting preliminary approval, Susman touted the value of the non-monetary benefits it had obtained in the proposed settlement, including Voya’s pledge not to raise cost of insurance rates for class members for five years.  In an analogous class action mentioned in Susman’s motion, similar benefits were valued at more than $90 million.

Castel said it wasn’t clear from the language of the proposed class notice whether Susman Godfrey would ask for less than 33% of the cash value of the settlement – a number that would be simple for class members to calculate – or 33% of some as-yet unknown total settlement value.

“No hint is given as to the methodology that class counsel plans to employ,” Castel said, pointing out that if Susman Godfrey evaluated the non-monetary settlement provisions as generously as they were viewed in the class action cited in class counsel’s brief, one-third of the “gross benefits” could be as much as $62 million – which would give Susman Godfrey two-thirds of the cash in the settlement.  “If this is what counsel has in mind – or anything close to it – class members and the court should know it now,” Castel said.

Castel had to connect some dots to understand the potential gap between fees based on just the $92.5 million cash recovery for the class and an award that included the value of the non-cash benefits.  Susman’s memo requesting preliminary approval of the settlement does not put a dollar figure on those benefits.  Castel must have obtained the valuation figure he cited in this week’s opinion from a declaration filed by Susman’s Seth Ard.

Castel also took issue with class counsel’s proposed explanation to class members of the consequences of opting out of the settlement.  The proposed notice advised class members that they could tell the judge what they didn’t like about the settlement but would still be bound by the deal.  “This statement is fundamentally misleading,” Castel said.  “The purpose of an objection is to persuade the court not to approve the proposed settlement.  A successful objection means that the objector and other members of the class are not bound.”

Susman’s Steven Sklaver told me by email that the firm has taken Castel’s feedback to heart.  Susman intends to file a revised motion for preliminary approval clarifying that its fee request will be based only on the cash payout to class members, not on any additional value from the non-cash benefits.  “We are thankful for the court’s consideration of the matter and guidance,” Sklaver said.

A recent Law 360 story by Nick Muscavage, “McCarter & English Keeps Win in $860K Fee Suit,” reports that a New Jersey state appeals court upheld an $860,000 judgment for McCarter & English in its suit seeking unpaid fees from former client Moerae Matrix, finding that the biotech company couldn't show how the fees were unreasonable.  Moerae Matrix, a Morristown-based biopharmaceutical company that develops treatments for fibrotic and inflammatory diseases, retained McCarter & English in August 2017 to provide legal services for intellectual property and patent matters, according to court documents.

By signing the engagement letter with the Newark-based firm, Moerae Matrix agreed to its terms, "including McCarter & English's hourly rates, according to court documents.  McCarter & English "regularly" emailed its invoices to Moerae Matrix for legal fees and expenses incurred throughout the course of its representation.  The invoices detailed the work performed by the firm, the attorneys involved, how much time was spent on the tasks, the date of the tasks and the cost of the services.

Although Moerae Matrix made "certain payments" to McCarter & English, it was not current on its fees.  In September 2018, Moerae Matrix proposed converting the full amount of the outstanding balance to a promissory note, "but the parties could not agree on terms," according to court documents.  Three months later, the biotech company notified McCarter & English by email that it decided to terminate the firm's representation and to transfer its legal needs to Cooley LLP.  The email sent to the firm said, "We truly valued all your support over the years and are committed to seeing that [McCarter & English] is paid in full for past services and costs," according to court documents.

In the record presented to the appellate court, Moerae Matrix did not provide the invoices from McCarter & English, according to court documents.  Instead, the biotech company provided only a detailed statement of account, which shows the amounts billed, payments made and the balance McCarter & English claimed was owed.  "As a result, we are unable to independently assess the invoices either to confirm their contents or to render an independent determination concerning the reasonableness or fairness of [McCarter & English's] fees," the appellate court wrote in its Tuesday opinion.

Beverly Lubit, a partner at McCarter & English, served as the originating, billing and handling attorney responsible for the day-to-day representation of Moerae Matrix.  In seeking a summary judgment of $860,593, McCarter & English submitted certifications to the trial court from Lubit and Daniel P. D'Alessandro, another attorney with the firm. Lubit certified that the legal services provided, and the expenses incurred as a result, "were reasonable and necessary," according to court documents.

In an effort to escape the unpaid legal fees, Moerae Matrix relied on certifications from Moerae Matrix's founder, chairman and chief executive officer, Dr. Cynthia Lander, who asserted that Cooley was handling the very same tasks that were handled by McCarter & English "for less than half of the cost."  She argued that McCarter & English "charged too much in fees for the work that it performed" and "that [McCarter & English] filed many more patent applications and filings than necessary to protect the intellectual property interests of [Moerae Matrix]."

Moerae Matrix relied on an additional certification, one from Texas patent attorney Frank Grassler, who claimed to be an expert in patent law.  "In short, Grassler opined [McCarter & English] did a great deal of work, which was simply not necessary," the three-judge appellate panel wrote in its opinion.  However, Moerae Matrix did not disclose Grassler as an expert in its responses to McCarter & English's interrogatories prior to the conclusion of discovery, as required by state court rules, nor did the biotech company move to amend its responses to identify Grassler as an expert or supply an expert report from him.

Instead, Moerae Matrix submitted Grassler's certification in opposition to McCarter & English's summary judgment motion "well after the conclusion of discovery and unaccompanied by a certification setting forth the reason [Moerae Matrix] failed to identify Grassler as an expert in its answers to [McCarter & English's] interrogatories," the appellate panel noted.

For these reasons, the appellate panel agreed with the trial court's decision to exclude Grassler's certification.  The appellate panel also found that Moerae Matrix could not point to "competent evidence it claims establishes [McCarter & English's] fees are unreasonable or unfair," according to court documents.  There is no basis to conclude that the trial court erred by awarding McCarter & English the unpaid legal fees, the appellate panel wrote in affirming the lower court's $837,524 judgment, plus interest and costs of suit.

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