A recent Law.com story by Allison Dunn, “Judge Rejects Quinn Emanuel’s $1700 Hourly Rate Request, Slashing Fees for Virginia Settlement By Nearly 80%”, reports that a federal judge in Virginia drastically reduced Quinn Emanuel attorneys’ requested fees related to enforcing a $6 million settlement agreement they successfully obtained for a client over a fraud scheme involving the Model Tobacco Building in Richmond, Virginia.  Some of the rates requested by Quinn Emanuel—$1,690 per hour for a lead partner or $1,385 per hour for associates—were unrealistic for the Richmond market in the present case, the court found.

Quinn Emanuel attorneys based out of Washington, D.C., who served as plaintiffs’ counsel, sought prejudgment interest at a rate of 6%, as well as $236,641.18 attorney fees and costs relating to enforcing a $6 million settlement agreement between the plaintiffs, SS Richmond and MK Richmond, against Christopher A. Harrison, the owner and manager of several entities including, The C.A. Harrison Cos., CAH Model Tobacco and the McKenzie Blake Development Co.  Under the settlement agreement, the Harrison defendants were obligated to pay the $6 million payment by June 8, but the plaintiffs maintain that they have failed to do so, according to the district court’s opinion.

The plaintiffs had accused the defendants of “‘a pattern of bank fraud, wire fraud, mail fraud and money laundering in an effort to seize control and interest in a project to purchase and refurbish’” the Model Tobacco Building, which previously served as a factory for the United States Tobacco Co.  Harrison’s counsel from midsize firms Mahdavi Bacon Halfhill & Young, as well as Fraim & Fiorella, opposed the plaintiffs’ request.  The defendants argue that the plaintiffs failed to establish the reasonableness for such hourly rates.

The judge agreed in part with the plaintiffs that, in addition to the prejudgment interest, they were also entitled to attorney fees and costs, but Novak also sided with the defendants in finding Quinn Emanuel’s more than $1,000-per-hour rates for both partners and associates in post-settlement motions were ”not reasonable in accordance with the Court’s prior decisions and the Richmond legal market,” the opinion said.  Considering the reasonable rates for attorneys in Richmond with comparable skills, experience, reputation, as well as other factors, Novak reduced Quinn Emanuel’s total fee award to $50,380.

“Our client is focused on the Model Tobacco project.  As to fees, we don’t agree with everything the judge wrote, but Judge Novak obviously took the time to write a thoughtful opinion,” said George R. A. Doumar, an attorney with Mahdavi Bacon, representing the defendants.  “The local market dictates hourly rates awarded, and Quinn Emanuel was seeking rates far higher than I’ve encountered for fee awards in Virginia courts.  The lawyers I see day in and day out are billing at much lower rates.  The judge also seemed to be aware of law firm billing practices such as block billing and multiple reviews, and took that into account.”

Novak concluded that a rate of $650 for the lead partner and $400 for associates was a reasonable rate based 12 factors such as time and labor expended; the novelty and difficulty of the questions raised; the customary fee for like work; the amount in controversy and the results obtained; the experience, reputation, and ability of the attorney; attorney fee awards in similar cases and more.

“Here, Plaintiffs have failed to rebut the presumption that the hourly rates should be derived from the community in which the court sits. While Plaintiffs argue that this case has factual connections to Washington, D.C., and that the underlying case involved ‘complicated, high-stakes claims in financial fraud and RICO claims,’ … they present no evidence that a local attorney could not have provided competent representation,” Novak wrote, citing Rehabilitation Association of Virginia, Inc. v. Metcalf (1998).  “Because Plaintiffs have not made the requisite showing to apply out-of-town rates, the Court will consider the proper market from which to determine reasonable hourly rates as the market where the Court sits—Richmond, Virginia.”

The plaintiffs failed to file any affidavits from other law firms regarding “the prevailing market rates in Richmond for similar work,” and said Quinn Emanuel proffered no cases concerning fee awards within the district, Novak held.  Additionally, the law firm cited a news article from Law.com publication The American Lawyer titled, “What $1,000 an Hour Gets You in the AM 200 Today.”  The judge, however, said the article didn’t weigh in the law firm’s favor since it “cut against the reasonableness of the Plaintiff’s requested fees.”

In one of the cases cited by the plaintiffs, Proofpoint v. Vade Secure, a 2020 opinion by the U.S. District Court for the Northern District of California, the requested hourly rates ranged from $590 to $675 per hour for associates, and $880 to $915 per hour for more senior attorneys, the opinion said.

“Here, in contrast, Plaintiffs charged $1,305 per hour (Paul Henderson) and $1,385 per hour (Nicholas Inns) for the associates who performed most of the work and $1,690 per hour (Keith H. Forst) for the lead partner. … Even after accounting for inflation and the 15 percent discount applied here, Proofpoint does not support the hourly rates requested in this case,” Novak wrote, further concluding no fee would be awarded for paralegal work because the plaintiffs failed to present evidence of the customary rates billed in Richmond.  Novak concluded that the majority of the plaintiffs’ expenses were reasonable and included them in the award, bringing the total to $51,271.86 in fees and costs.

A recent Law 360 story by Aebra Coe, “Law Firms See Revenue Growth Amid Soaring Billing Rates”, reports that as of the end of the third quarter of 2023, U.S. law firms had increased their revenues, on average, by 4.6% year-over-year as a result of "the highest growth in billing rates we've seen," according to a new report from Wells Fargo Legal Specialty Group.  Law firms brought in more revenue even as demand continued to lag, increasing just 0.2% as of the end of the third quarter across the cohort of more than 120 law firms surveyed by Wells Fargo, according to the report.

The rise in revenue was largely fueled by a 7.9% year-over-year increase in billing rates among all the law firms, and an 8.2% increase among the respondents ranked in the top 100 in the U.S. by revenue, the report said.  With the jump in revenue, law firms also posted an increase in net income and profits per partner as of the end of September, with net income on average increasing by 2.7% and profits per partner by 1%.  However, those results were buttressed by strong numbers reported by the largest law firms, with smaller firms faring less well.

Among the top 50 law firms by revenue, net income was up 5.2%, among the top 100 firms it was up 3.7%, and among the firms ranked in the second 100 by revenue, net income actually fell by 3.9%.  For those that performed well on net income, one major contributor was an industrywide reining in of expense growth, according to the report.  Expense growth slowed to 5.6% at the end of the third quarter, down from 6.2% midyear and 12.8% this time last year.

Alongside the differences in net income, law firms' expense growth also varied based on firm size, with the largest firms seeing smaller upticks than those among the second 50 largest and second 100 largest by revenue.  One part of the expense equation for firms is lawyer headcount, which continued to increase during the third quarter, although at 3.5%, the pace was slightly slower than in the previous year.

Because of the flat demand and increases in headcount, lawyer productivity among the cohort remained low, with an average annualized pace of 1,540 billable hours per lawyer, maintaining levels logged midyear that are well below 2018, 2019 and 2021 figures, the report found.  Of the more than 120 law firms surveyed by Wells Fargo for the report, 65 were among the 100 largest in the U.S. by revenue, 30 were among the second 100, and the remainder represented regional law firms, according to the bank's legal specialty group.

A recent Law 360 story by Brian Steele, “Cigna Seeks $155K Atty Fees in ‘Complex’ COVID Test Site Row”, reports that Cigna Health and Life Insurance Co. is seeking $154,700 in attorney fees after a Connecticut federal judge sanctioned a medical practice chain that is suing the insurer for allegedly failing to properly reimburse for policyholders' COVID-19 tests.  Cigna, which is represented by Robinson & Cole LLP, cited the "complex and difficult" matter in its fee bid.  It's one of a plethora of insurers that Murphy Medical Associates LLC has sued via separate dockets.

On Aug. 30, U.S. District Judge Janet Bond Arterton imposed sanctions on the plaintiffs after finding that they "have shown blatant and willful disregard for discovery deadlines" laid out in an order from March 2022, authorizing Robinson & Cole attorneys to seek fees.  Cigna asked the court to order payment of $465 per hour for partners, $300 per hour for an associate and $180 to $206 for paralegals, reflecting a 25% discount off Robinson & Cole's negotiated rates.

"This case and the motion is complex and difficult," Cigna said in a memorandum supporting its motion.  "The large volume of itemized claims also increased the demands of the case.  This is especially true for the motion for sanctions, due to plaintiffs' decision to produce 100,000-plus pages of documents after Cigna had filed its motion."

Dr. Steven A. R. Murphy, Murphy Medical and three other practices in southwestern Connecticut sued Bloomfield, Connecticut-based Cigna in November 2020, alleging $9.3 million in damages connected to unpaid claims at their testing sites.  A third amended complaint filed in December 2022 said that Cigna still owes the practice group more than $6 million.

In its memorandum, Cigna said that the plaintiffs were asserting a "novel claim alleging that they had a private right of action under the Families First Coronavirus Response Act" or the CARES Act pandemic relief law.  The plaintiffs also sought relief under the Employee Retirement Income Security Act of 1974, as well as Connecticut's unfair trade and insurance practices act, while Cigna filed counterclaims including fraudulent misrepresentation and violation of the Connecticut Health Insurance Fraud Act.  Cigna previously said that the plaintiffs were demanding $1,500 for tests while acknowledging that they only cost $200 to $600.

"Defending claims by out-of-network providers against managed care organizations for payment for health services is a specialized practice area, requiring expertise in the complex body of ERISA benefit law, as well as an understanding of the structure of health plans and the operations of managed care organizations," the memorandum said.  "The fees charged by Robinson & Cole are also reasonable based on prevailing market rates and customary fees awarded in this district in similarly complex cases."

Cigna said that its counsel's firm had to perform extensive reviews and analysis of late discovery material, accounting for 75% of the time for which they are seeking compensation.  Paralegals incurred the most billable hours at 519.3 out of 663, according to the memorandum.

A recent Law 360 story by Jeff Montgomery, “Pentwater Appeals $267M Atty Fee Award in Dell Case in Del.”, reports that a private equity investor in Dell Technologies Inc. is appealing a Chancery Court's record $266.7 million fee award to class counsel that secured a $1 billion settlement for stockholders who sued over a $23.9 billion stock swap in 2018.  Pentwater Capital Management filed notice of appeal without a transcript late Friday with the Delaware Supreme Court, challenging both the attorney fee award and a $50,000 incentive award granted to Steamfitters Local 449 Pension Plan, the lead plaintiff for the suit filed in November 2018.

Vice Chancellor J. Travis Laster set the fee at $266.7 million on July 31, trimming a request of $285 million.  He said in his July 31 decision and order that eight funds that had invested in Dell but were not part of the class suit, recommended a lower fee, citing concerns about "windfall" profits in the case of large awards.

Pentwater — holder of 1.6% of the Dell Class V tracking stock at issue in the Chancery Court suit — branded the fee award as massive and a potentially "dangerous" precedent. In a Chancery Court brief opposing the fee, Pentwater argued that "the requested fee in absolute and percentage terms is disproportionate to the value conferred on class members."

Settlement of the overall case prevented a trial on claims targeting Dell's effort to exchange Class V stock — created to finance much of Dell's $67 billion acquisition of EMC Technologies in 2016 — for shares of Dell common stock.  The Class V shares generally traded at only 60% or 65% of the price of VMware, a business in which EMC owned an 81.9% equity stake when Dell acquired EMC.  Public shareholders, the class had argued, were shortchanged by $10.7 billion when, in December 2018, Dell Technologies paid $14 billion in cash and issued 149,387,617 shares of its Class C common stock for the Class V shares.

When the challenged conversion closed on Dec. 28, 2018, VMware stock closed at $158.38 per share, and Class V stockholders received just $104.27 per share, fueling objections that the Dell Class C stock to be received for Class V shares had been overvalued.

In his fee opinion, the vice chancellor noted that class attorneys provided hundreds of examples of contingent fee agreements to support their original request for $285 million.  However, he noted, none of the objectors provided examples, except for Pentwater, and that example was "not for a Delaware case."  Vice Chancellor Laster also observed in his July 31 decision that investment funds that had recommended a lower amount, including Pentwater and seven others, had "a strong economic motivation for seeking a lower fee award."

The vice chancellor's decision elaborated on the idea that the investment funds that didn't go to the trouble of suing had a financial motivation now to object.  Following a 10% fee trend in federal securities actions, he noted, would have given them an extra $49 million for the equity holders, rather than sharing it with the class.  Five law professors suggested in a friend-of-the-court brief that a 15% fee would be appropriate, which still would have added $35.78 million to the objectors' recovery, the vice chancellor's decision noted.

"Having sat back and done nothing, the objectors now claim that a fee award without a sizable reduction would 'not yield equitable results,'" the vice chancellor wrote in an August filing confirming the $266.7 million fee award.  "That assertion masks self-interest with an appeal to equity.  Wanting more money for yourself is understandable, but it is not grounds for a fee objection."

A recent Law 360 story by Hailey Konnath, “Feds Question $23M Fee Request in PACER Overcharge Spat”, reports that the U.S. government urged a Washington, D.C., federal judge to "carefully examine" nonprofits' $23 million attorney fee request in long-running litigation challenging PACER charges, saying the review is needed "to ensure that class members' rights and recovery are appropriately safeguarded.

The government said that the court should indeed grant final approval to the $125 million deal but that it should also "exercise its discretion" in determining the attorney fees and costs requested by lawyers with appellate boutique Gupta Wessler LLP and plaintiffs litigation firm Motley Rice LLC.  In particular, the government said the attorneys calculated their fee request using their 2023 hourly rates but didn't account for the fact that the litigation began in 2016, when those rates were likely lower.

And they've apparently calculated the request without consulting the D.C. U.S. Attorney's Office's Fitzpatrick Matrix, a table that breaks down the hourly rates for legal fees in complex federal litigation in the District of Columbia based on attorneys' years of experience, according to the filing.  That's evident because both firms have laid out rates that are significantly above those in the Fitzpatrick Matrix, the government said in its response.

"In light of plaintiffs' failure to satisfy their burden to establish that above-market rates are appropriate in this case, the court may wish to inquire as to the basis for counsels' rates, and determine whether a reduction in line with prevailing market rates pursuant to the Fitzpatrick Matrix rate is appropriate," it said.

The government agreed to pay $125 million to resolve the dispute last year.  In their suit, the National Veterans Legal Services Program, the National Consumer Law Center and the Alliance for Justice alleged that PACER fees paid by the public exceeded limits under the E-Government Act of 2002.  The Public Access to Court Electronic Records system provides public access to federal court records.  Under the deal, settlement class members would receive up to $350 for PACER fees they paid between April 21, 2010, and May 31, 2018, with those who paid more than $350 receiving an additional pro rata share of the remaining settlement funds.

The court has already preliminarily approved the agreement, and the class has been notified.  The nonprofits asked the court for final approval of the settlement and their fee request last month.  According to the nonprofits, the roughly $23 million represents about 19.1% of the settlement fund and is "below the average percentage fee awarded for funds of this size."

But the government said that the fee request includes approximately $900,000 in work that "has not yet occurred and may not occur."  The court may want to ask the nonprofits' counsel how they reached that number, it said, adding that their declarations "provide little, if any, explanation of those estimates."  The nonprofits have also requested a $1 million payment to the class administrator, a request that includes $100,000 for work that hasn't yet been done, according to the motion.

"Defendant does not take issue with the general approach of awarding plaintiffs' counsel a percentage of the common fund in this case, but here are indicia – including above-market hourly rates that plaintiffs' counsel have not shown to be reasonable and inadequately explained predictions of future work — that the common fund may be excessively depleted, to the detriment of class members, if plaintiffs' counsel are awarded the percentage of the common fund that they have requested," the government said.

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