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Category: Fee Recommendation

First Circuit Affirms Sanctions in Long-Running Fee Dispute

February 10, 2022

A recent Law 360 story by Hailey Konnath, “1st Circ. Backs Sanctions Against Lieff Cabraser in Fee Tiff,” reports that the First Circuit left intact a Massachusetts federal judge's sanctions against Lieff Cabraser Heimann & Bernstein LLP in a fees spat, finding that the lower court didn't abuse its discretion in punishing the firm for misrepresenting a study regarding fee awards in similar cases.  A three-judge panel affirmed a decision from U.S. District Judge Mark L. Wolf, who sanctioned the firm for misrepresentations it made to the court while justifying a $75 million fee award for Lieff Cabraser and co-counsel at Labaton Sucharow LLP and Thornton Law LLP. 

The fees stemmed from their work securing a $300 million settlement with State Street Corp., and they were later slashed to $60 million following a lengthy investigation into allegations of overbilling and other improprieties.  The First Circuit said that Judge Wolf had provided notice to the firm that it was facing possible violations of Rule 11 in several instances, rejecting the firm's argument to the contrary.

"The court repeatedly explained to Lieff, over the course of two years, that it would consider whether any misconduct in the original fee application warranted sanctions — specifically flagging 'the accuracy and reliability of the representations' made by class counsel in its filings," the panel said.  It added that Lieff Cabraser "certainly responded as if it well understood what was at stake."  Thus, Judge Wolf met the important requirement of giving the firm both notice of the basis for a possible sanction and a fair opportunity to show why there shouldn't be any sanction, the First Circuit panel said.

The panel had hinted that the firm's appeal may be futile at oral arguments in November, saying that Judge Wolf may just double down if the appeals court held that he unfairly punished the firm.  Lieff Cabraser received far less flak from Judge Wolf than the other two firms but fought a $1.1 million reduction in its fees, arguing that reversing the rule violation finding is even more important than the money.

In the decision, the First Circuit noted that the district court had found that Lieff Cabraser and its co-counsel used a template for their fee declaration that misleadingly indicated that they regularly charged paying clients the rates supporting its lodestar.  The court also held that the firms failed to exercise reasonable care in contributing to a suspect $4.1 million payment to a lawyer in Texas and for misrepresenting a study regarding typical fees awarded in similar cases, according to the opinion.  Lieff Cabraser was formally sanctioned for misrepresenting the study, but not for the other criticisms, the panel said.

No other firm joined Lieff Cabraser in the appeal and no parties to the underlying litigation wanted to participate either, the First Circuit said.  That led Judge Wolf himself to try to lawyer up to defend his ruling.  However, the appellate court refused to let Judge Wolf participate and instead permitted amicus Hamilton Lincoln Law Institute to file a brief in the dispute.  While Lieff Cabraser didn't challenge the fee award in its appeal, it argued that if the appellate court set aside all of the district court's criticisms, it may be entitled to some money out of the funds awarded to the class if any funds are unclaimed, according to the decision.

But the First Circuit said it found no basis for deviating from the circuit's general rule that a district court's criticism of counsel unconnected to any challenge to a judgment or order on appeal is not itself reviewable on appeal.  The panel also rejected Lieff Cabraser's argument that it didn't sign the memorandum in support of the fee award underlying the dispute and thus cannot be held liable for any misrepresentations contained in it.  That contention "goes nowhere," the First Circuit said.  The firm's name and the names of three of its attorneys were placed on the signature page of the challenged papers and the firm advocated for the fee at a hearing, the panel said.

Judge Reduces Hourly Rates Citing Lack of Evidence

December 21, 2021

A recent Law 360 story by Nathan Hale, Judge Backs $30K in Fees for Alan Parsons’ Contempt Effort,” reports that a Florida federal magistrate recommended trimming an attorney's fee request from Grammy Award–winning music veteran Alan Parsons to just under $30,000 to cover costs he incurred obtaining a civil contempt finding against his former promoter in a trademark infringement lawsuit.

In a report and recommendation, U.S. Magistrate Judge Leslie R. Hoffman approved of most of the request filed by lawyers from three firms that worked on Parsons' claim that defendants John Regna and World Entertainment Associates of America Inc. violated a preliminary injunction in the case, but she said two out-of-state attorneys failed to support the nearly four-figure hourly rates they submitted.  "[N]o further information about these attorneys' experience or expertise is discussed, and plaintiffs submit no further evidence suggesting that the hourly rates sought for these attorneys are reasonable," she said.

Despite a lack of objection from the defense, Judge Hoffman recommended the court calculate the fees award for Jeff Goldman and Rod S. Berman of California-based Jeffer Mangels Butler & Marmaro LLP at a rate of $375 an hour — equal to what another attorney requested and what courts in the Middle District of Florida have granted in similar cases — rather than the $945 per hour and $995 per hour that they had respectively requested. 

She recommended to U.S. District Judge Roy B. Dalton Jr. that he award the full amounts of $24,030.50 requested by attorneys from O'Connell & Crispin Ackal PLLC and $5,137.50 requested by attorney Brian P. Deeb, whose fee was specifically cited by Judge Hoffman.  And she recommended the court reimburse Goldman and Berman $825 for the 2.2 hours of work they said they contributed, instead of the $2,109 they requested.

Class Counsel Earn $9.4M in Attorney Fees in Securities Action

December 8, 2021

A recent Law360 story by Clark Mindock, “Quinn Emanuel, Others Get $9.4M Atty Fee in Securities Suit,” reports that a Delaware federal judge has awarded $9.4 million in attorney fees to Quinn Emanuel and others representing energy management software company C3 Inc. in a shareholder suit alleging fraud in a stock-swap deal, trimming an originally requested amount.  U.S. District Judge Colm Connolly awarded the attorney fees after receiving recommendations from a special master overseeing the case who found just two out of five arguments raised by the investors against the award had merit.

The judge agreed with the special master that it was appropriate to trim $1 million from the original $10.1 million requested since the award for attorney fees shouldn't include fees related to litigated holdback claims.  Judge Connolly also determined that a further reduction of 3% was appropriate after the special master suggested the court consider whether block billing and redactions in the request were indicative of potential bad faith.  "I agree that defendants' block billing could obscure bad-faith expenditures related to the holdback claim," Judge Connolly said, before adding he was exercising his discretion to reduce the fee beyond the $1 million by 3%.

The C3 firms sought the fees after fending off a suit brought by investors accusing the company of securities fraud and breach of contract.  Seeking reimbursement for the attorney work, C3 said its lead counsel Quinn Emanuel Urquhart & Sullivan LLP billed 11,197 hours over five years, accounting for $9.7 million in fees.  Four other firms — Cooley LLP, Morris Nichols Arsht & Tunnell LLP, Potter Anderson & Corroon LLP and Parkowski Guerke & Swayze PA — accounted for another $400,000, they said.

In March, Judge Connolly rejected an initial attorney fee bid for the $10.1 million, saying an outside observer may need to review the matter.  He then punted the case to the special master who made the recommendations that have now been accepted by the court.

The Nation’s Top Attorney Fee Experts of 2021

September 5, 2021

NALFA, a non-profit group, is building a worldwide network of attorney fee expertise. Our network includes members, faculty, and fellows with expertise on reasonable attorney fees.  We help organize and recognize qualified attorney fee experts from across the U.S. and around the globe.  Our attorney fee experts also include court adjuncts such as bankruptcy fee examiners, special fee masters, and fee dispute neutrals.

Every year, we announce the nation's top attorney fee experts.  Attorney fee experts are retained by fee-seeking or fee-challenging parties in litigation to independently prove outside attorney fees and expenses in court or arbitration.  The following NALFA profile quotes are based on bio, CV, case summaries and case materials submitted to and verified by us.  Here are the nation's top attorney fee experts of 2021:

"The Nation's Top Attorney Fee Expert"
John D. O'Connor
O'Connor & Associates
San Francisco, CA
 
"Over 30 Years of Legal Fee Audit Expertise"
Andre E. Jardini
KPC Legal Audit Services, Inc.
Glendale, CA

"The Nation's Top Bankruptcy Fee Examiner"
Robert M. Fishman
Cozen O'Connor
Chicago, IL

"Widely Respected as an Attorney Fee Expert"
Elise S. Frejka
Frejka PLLC
New York, NY
 
"Experienced on Analyzing Fees, Billing Entries for Fee Awards"
Robert L. Kaufman
Woodruff Spradlin & Smart
Costa Mesa, CA

"Highly Skilled on a Range of Fee and Billing Issues"
Daniel M. White
White Amundson APC
San Diego, CA
 
"Excellent at Communicating Her Fee Analysis to Juries, Triers of Facts, and Clients"
Jacqueline S. Vinaccia
Vanst Law LLP
San Diego, CA

"Total Mastery in Resolving Complex Attorney Fee Disputes"
Peter K. Rosen
JAMS
Los Angeles, CA
 
"Understands Fees, Funding, and Billing Issues in Cross Border Matters"
Glenn Newberry
Eversheds Sutherland
London, UK

"Nation's Top Scholar on Attorney Fees in Class Actions"
Brian T. Fitzpatrick
Vanderbilt Law School
Nashville, TN
 
"Great Leader in Analyzing Legal Bills for Insurers"
Richard Zujac
Liberty Mutual Insurance
Philadelphia, PA

AIG Unit Denied Attorney Fees in $7.2M Coverage Win

August 6, 2021

A recent Law 360 story by Ben Zigterman, “AIG Unit Denied Fees Following $7.2M Coverage Win”, reports that an AIG subsidiary has lost its New York federal court bid to have its reinsurer pay more than $300,000 in attorney fees, following a ruling last year that the reinsurer must cover $7.2 million of a $20 million payment to Dole Food Co. to settle pollution claims.  The Insurance Co. of the State of Pennsylvania had sought the fees from London-based reinsurer Equitas Insurance Ltd. under English law, but U.S. District Judge Laura Taylor Swain adopted a magistrate judge's recommendation that the fees are not permitted by New York law.

On U.S. Magistrate Judge Sarah L. Cave's recommendation last month, ICSOP said it wouldn't object in an effort to speed up Equitas' appeal of the $7.2 million judgment, which is now up to $8.4 million with prejudgment interest.  After ICSOP covered the $20 million settlement of claims over lingering petrochemical pollution at a Dole subsidiary's housing development in California, it asked Equitas to pay $7.2 million of that under two reinsurance policies it had with Equitas.  Judge Swain upheld that request last year under English law.

Because the case was decided under English law, ICSOP asked the court to also apply it to the insurer's attorney fees of about $348,000, as British courts generally require the losing party to pay them, according to the insurer's motion.  ICSOP also said that its attorney fees were "eminently reasonable" compared to the total judgment and that it paid discounted hourly rates of $566.40 and $380 to the two attorneys working on the case.

But while the reinsurance policies were interpreted under English law, Judge Cave found that the question of attorney fees is a procedural matter that should be interpreted under the procedures of the court where the suit was filed.  Under New York law, losing parties in a lawsuit don't pay attorney fees unless a law or contract states otherwise, which was not the case with these reinsurance policies, she said.

"While it may have been predictable that, because the reinsurance policies were sold in the London market, English law would govern their interpretation, the reinsurance policies do not dictate that litigation be brought in an English court, contain a fee-shifting provision, or provide that the English Rule would apply in a United States court in which the parties chose to litigate," Judge Cave wrote.