Fee Dispute Hotline
(312) 907-7275

Assisting with High-Stakes Attorney Fee Disputes


News Blog

Category: Fee Reduction

Federal Judge: Can’t Use ChatGPT to Justify Attorney Fees

February 22, 2024

A recent Law 360 story by Madison Arnold, “Law Firm Scolded For ‘Misbegotten’ ChatGPT Use in Fee Bid”, reports that a Manhattan federal judge criticized a special education-focused law firm or citing ChatGPT calculations to back up its attorney fee request of more than $100,000, calling the move "utterly and unusually unpersuasive."  U.S. District Judge Paul A. Engelmayer knocked the fees for the Cuddy Law Firm PLLC down to just $53,050.13 plus interest for work done in a case brought by a parent on behalf of a child against the New York City Department of Education involving two administrative hearings.

The firm had asked for $113,484.62 plus interest after securing judgments against the department, saying the feedback from the generative artificial intelligence program supported its request.  "As the firm should have appreciated, treating ChatGPT's conclusions as a useful gauge of the reasonable billing rate for the work of a lawyer with a particular background carrying out a bespoke assignment for a client in a niche practice area was misbegotten at the jump," Judge Engelmayer wrote.

An attorney for the department, Tom Lindeman, said in a statement to Law360 Pulse that his side is pleased with the decision.  "The firm's use of ChatGPT to support its aggressive fee request was deemed inappropriate and, as the court determined, the city's prior offer to resolve fees was fair and reasonable," Lindeman said.  The parent of an unnamed child, referred to as G.G., hired the Cuddy Law Firm.  G.G. has hyperactivity disorder, a language disorder, a developmental coordination disorder and acute stress disorder, according to the decision.

The child's parent, referred to as J.G., initiated two due process hearings, alleging in the first that the department failed to provide the child with a free appropriate public education for the 2017-2018 and 2018-2019 school years.  That included failing to provide annual reviews, evaluations and appropriate education services and implementing special education teacher support services, as mandated by the child's individualized education program from January 2018.

The Cuddy Law Firm sought compensation for its work in both hearings and resulting fees litigation.  While the firm doesn't rely predominantly on ChatGPT-4 in arguing for its billing rates, it did present the findings of the AI program as a "cross-check," Judge Engelmayer said.  He added that the law firm failed to identify any information it inputted into ChatGPT for it to rely on to confirm its calculation, among other omissions.

"The court therefore rejects out of hand ChatGPT's conclusions as to the appropriate billing rates here.  Barring a paradigm shift in the reliability of this tool, the Cuddy Law Firm is well advised to excise references to ChatGPT from future fee applications," the judge said.  Because of the inefficiencies of the ChatGPT argument, as well as its other arguments, the court decided to reduce the attorney fees awarded to the Cuddy Law Firm.

"For the reasons stated, the court grants J.G.'s motion for an award of fees and costs, but in an amount below that sought.  J.G. is awarded $52,386.01 in fees and $664.12 in costs, for a total of $53,050.13, plus post-judgment interest at the applicable statutory rate," Judge Engelmayer said.  Outside the ChatGPT issue, the court reduced the fees in part because the parent and the Cuddy Law Firm had not given evidence that the case presented novel or complex legal or factual issues.

Roundup MDL Lead Counsel Defend Fee Allocations

February 19, 2024

A recent Law.com story by Amanda Bronstad, “Roundup MDL Lead Counsel Defend Fee Allocations: ‘Limited Funds Available’”, reports that lawyers doling out fees in Roundup litigation stood by their decisions on how to allocate the funds, despite objections raised by other firms.

The fee committee, which is comprised of the three lead plaintiffs firms in the Roundup multidistrict litigation, allocated 81% to themselves and the rest to four other firms, including those who helped win the only bellwether trial, which ended in an $80 million verdict in 2019.  Three of those firms objected to their share of the so-called common benefit fund, which totaled $20.23 million.

Lead counsel originally had sought an order that would have granted about $800 million in common benefit fees, enough for the firms to “each afford to buy their own island,” U.S. District Judge Vince Chhabria wrote in a 2021 order significantly trimming the scope of common benefit fees in the Roundup litigation.

Several firms had objected to the original request, which they called a “money grab,” but lead counsel insisted that Bayer, which owns Monsanto, would not have entered into settlements but for their work.  In 2020, Bayer announced it planned to settle about 125,000 Roundup claims for an estimated $10.9 billion, but thousands of cases remained unsettled.

The significant reduction in the common benefit fund appeared to influence the committee’s allocation amounts.  For instance, San Francisco’s Andrus Anderson, whose partner Lori Andrus served as co-liaison counsel in the Roundup multidistrict litigation, had wanted closer to $550,000, the amount the firm actually billed, rather than the allocated $200,000, or 1% of the common benefit fees.  The committee, in a response, acknowledged that Andrus Anderson’s request was reasonable.  “But, unfortunately, the limited funds available for distribution in this litigation do not allow this to happen,” the committee wrote.

The committee members are co-lead counsel Aimee Wagstaff, of Wagstaff Law Firm in Denver; Robin Greenwald, of New York’s Weitz & Luxenberg; and David Dickens, who took over following partner Michael Miller’s 2021 death, at the Miller Firm in Orange, Virginia.  Among the fee committee members, Wagstaff Law Firm is set to receive the most, with 30%.

‘Thousands of Hours of Common Benefit Work’

Common benefit fees are used in multidistrict litigation to compensate lead counsel for costs and fees associated with discovery, trials and settlements, while preventing “free riders,” or lawyers who collect fees on cases they generate but don’t necessarily litigate.  Lawyers with related state court cases, in past years, have challenged common benefit fees, which are funded through assessments against their settlements.

Chhabria, in the Northern District of California, called common benefit fees in multidistrict litigation “totally out of control,” sending shock waves through the mass tort bar.  In his Roundup order, he excluded a large amount of the legal work, including state court cases, from being reimbursed through common benefit fees.

Los Angeles-based Wisner Baum and its predecessor, Baum Hedlund Aristei & Goldman, focused heavily on Roundup cases in California state courts, where partner R. Brent Wisner won verdicts of $289 million, in 2018, and $2 billion, in 2019.  But the firm is set to receive 10% of the fees because “no other firm contributed more to the common benefit of the MDL,” according to the committee’s response, filed on Friday.

The allocation, the committee wrote, is based on Wisner Baum’s “good faith effort” to estimate its time.  But the firm didn’t have adequate billing records that divided up the hours tied to the multidistrict litigation versus state court cases.  The fee committee, as a result, was forced to reduce Wisner Baum’s requested amount.  “Applying such a reduction is consistent with how courts typically handle attorney fee determinations for firms that have failed to submit time records,” the committee wrote.

Jennifer Moore, of Moore Law Group, based in Louisville, Kentucky, was co-lead counsel with Wagstaff in the bellwether trial, which Monsanto appealed all the way to the U.S. Supreme Court.  Moore had argued that 6% was not enough given her work in that case or the $3.4 million her firm contributed to the common benefit fund, but the fee committee countered that the Miller Firm and Weitz & Luxenberg, both lead counsel firms, also anticipate receiving less than they paid.

“Moore Law contributed to the advancement of this MDL.  There is no question about that,” the committee wrote.  “But Moore Law also greatly benefitted from the thousands of hours of common benefit work that was done before it had any involvement in this MDL.”

Another objection came from David Diamond, of Diamond Law in Tucson, Arizona, who insisted he did not rely on lead counsel’s work in his Roundup cases.  He was joined by David Bricker, of Thornton Law Firm in Beverly Hills, California.  Diamond suggested returning the money to lawyers, like them, who took their own risks.

But the committee disputed his characterization.  “Diamond Law was able to resolve 300 MDL cases without having to draft and issue general discovery, brief and argue preemption and other general dispositive motions, depose a single Monsanto employee, or retain general experts in epidemiology, toxicology, pathology, and regulatory affairs,” the committee wrote.  “With this backdrop, it is difficult to comprehend how Diamond Law can boldly declare that it received no assistance from MDL leadership.”

Chapter 11 Fee Examiner OKs $20.4M in Fees for 15 Firms

February 8, 2024

A recent Law 360 story by Alex Wittenberg, “Kidde-Fenwal’s Ch. 11 Fee Examiner Oks $20.4M for 15 Firms”, reports that the fee examiner appointed in fire-suppression company Kidde-Fenwal's Chapter 11 case has recommended that a Delaware bankruptcy judge approve $20.4 million in pay for 15 firms working on the proceedings, after they agreed to cut their requested compensation by about $333,000.

In a report submitted, examiner Diana G. Adams detailed interim fees requested by law firms and others working on behalf of Kidde-Fenwal Inc., its unsecured creditors committee and an ad hoc group of governmental claimants.  The fees cover work conducted from Aug. 1 to Oct. 31 by professionals for the debtor and the creditors committee, and work done from mid-May or June 1 to July 31 by firms representing the ad hoc group.

U.S. Bankruptcy Judge Laurie Selber Silverstein ordered the appointment of a fee examiner in July to help avoid duplication of efforts by counsel for unsecured creditors in the case.  Kidde-Fenwal is one of the companies at the center of massive multidistrict litigation over the sale and use of toxic firefighting foams.

The debtor's attorneys, from five separate firms, requested about $9.61 million in total for their work during the period and agreed to reduce their fees to $9.49 million following discussions with Adams, according to the report.  Sullivan & Cromwell LLP stands to be the highest-paid firm representing the debtor, with reduced fees of $5.27 million and an hourly rate of $1,347.

Seven firms representing unsecured creditors asked for $10.1 million in total and agreed to reductions of about $187,000. Brown Rudnick LLP's reduced fees for representing the committee amount to about $4.05 million.  Three companies working for the ad hoc committee of governmental claimants would reap $1.01 million after cuts of around $23,000.

Kidde-Fenwal filed for Chapter 11 protection in May 2023, saying it faced more than $1 billion of liability tied to claims arising from a former subsidiary's manufacture and sale of aqueous film-forming foam.  The chemical foams have given rise to thousands of lawsuits alleging the companies caused lingering pollution of public waterways and aquifers, and to billions of dollars in toxic exposure claims tied to cancers, thyroid diseases, elevated liver enzymes and decreased fertility among those exposed.

After Judge Silverstein ordered the appointment of an examiner in July, Kidde-Fenwal asked the court to approve its request to pay the ad hoc group of governmental claimants, an atypical arrangement.  The debtor said doing so was necessary in part because of prohibitions against government-entity membership in regular unsecured creditor committees.

Insurer Ordered to Pay Casino’s 'Fees for Fees'

January 30, 2024

A recent Law 360 story by Alexa Scherzinger, “Insurer Ordered To Pay Casino $55K in Attorney Fees”, reports that an insurer must pay a Las Vegas casino and resort more than $55,000 in attorney fees after a Nevada federal judge sanctioned the carrier in September, ruling that the insurer failed to produce relevant portions of its claims manual during a COVID-19 coverage dispute.  In an order, U.S. Magistrate Judge Elayna J. Youchah ordered Affiliated FM Insurance Co. to pay Treasure Island LLC the fees within a month, exercising her discretion and awarding the resort "fees on fees" in addition to traditional fees for hours billed by counsel.

Neither Affiliated nor Judge Youchah objected to the rates charged by Treasure Island's counsel, according to the order, so the court was tasked with deciding whether the hours billed were reasonable and whether the casino was entitled to recover additional attorney fees incurred from the preparation of its memorandum seeking fees.

Judge Youchah reduced the total amount billed for preparing the motion for sanctions, reviewing the opposition and preparing the reply from nearly 90 hours to just over 67, reducing the fees by about 25% from $55,000 to $42,000.  However, the judge said, in the absence of an award for fees incurred in preparing the memorandum, the court would effectively reduce the award by another 30%, undermining the intent of the fee award granted.

Accordingly, Judge Youchah awarded Treasure Island $13,000 in fees-on-fees, bringing the total award back up to just over $55,000. In September, Affiliated was ordered to pay the fees and costs associated with the motion for sanctions, but not for past motions by the resort seeking to compel production of the insurer's claims procedures.

Treasure Island originally sued Affiliated in May 2020, alleging that the insurer wrongfully denied coverage for its pandemic losses and claiming that it was entitled to recover more than $1 billion in damages from the "communicable disease" under its all-risk policy.  The court's ruling on sanctions barred Affiliated from arguing that physical loss or damage can't be caused by a communicable disease, according to the order.

Yuga Labs to Receive $7M in Attorney Fees and Costs

January 29, 2024

A recent Law 360 story by Aislinn Keely, “Bored Ape NFT Copycats Owe Yuga Labs $7M in Atty Fees", reports that the artists accused of ripping off the Bored Ape Yacht Club non-fungible token collection have been ordered to pay creator Yuga Labs more than $7 million in attorney fees and costs, despite their concerns that Yuga's counsel at Fenwick & West LLP overbilled in the case.

In an order, U.S. District Judge John F. Walter awarded Yuga Labs just shy of $7 million in fees and an additional $300,000 for the costs associated with three experts deposed during the case, adopting the recommendation from Special Master Margaret M. Morrow.  The figure eclipses the $1.6 million in damages awarded to Yuga Labs when artists Ryder Ripps and Jeremy Cahen were found to have infringed Yuga Labs' flagship NFT collection.

Ripps and Cahen agreed to the fees to wrap up the case, but noted they may raise qualms about the fees on appeal.  "The parties seek to avoid further litigation concerning the amount of Yuga Labs' fee award, and defendants seek to preserve their objections to the amount of the fee award ... for purposes of appeal," the order says.

In a November joint statement to Morrow, Yuga Labs reported that its attorney fees were more than $12.6 million, and additional $500,000 in costs and expert witness fees, but said it would only seek $7.5 million in fees and roughly $300,000 in costs.  It doubled back to the $12 million figure when it couldn't find common ground with Ripps and Cahen, who said a reasonable total award would be $455,000.  In their objection, Ripps and Cahen argued that Yuga Labs' counsel at Fenwick maintains billing practices that "artificially increased hours, resulting in unreasonable fees."

They argued that the more than 14,000 hours billed over the two-year dispute is more than 20 times greater than comparable cases in the district, and that Fenwick used practices including duplicative time entries, where more than one attorney billed for efforts on the same task, and block billing, which bills multiple tasks in one billing entry.

The duo also argued that the hourly rates of $1,290 for a partner, $1,135 for a counsel, $1,030 for a fifth-year associate, $780 for a first-year associate and $515 for a paralegal are much higher compared to those charged by other attorneys in the Central District of California.

But Morrow found the Central District of California has approved rates in the general range of those billed by Fenwick, and while the firm's figures are high, they fell within the top end of the report referenced by Ripps and Cahen.  She did, however, recommend that the court adjust the paralegal rates down to $450 for 2022 and $500 for 2023.

While she didn't take issue with the block billing practices of the Fenwick attorneys, she did note that many of the descriptions in the time records related to duplicative billing were "so vague that it is difficult to discern what tasks were being performed or how they advanced the case," recommending a 45% reduction of fees from $12.6 million to the $6.9 million the court ultimately adopted.

In their December objection, Ripps and Cahen also claimed Yuga Labs racked up billable hours by litigating the case "in an unreasonable way," including unproductive settlement discussions, increasing its damages demand ahead of trial and a "frivolous" motion for sanctions.

"Yuga, a four-billion dollar company fueled by its animosity towards Mr. Ripps and Mr. Cahen, retained a huge litigation team at an expensive firm to wage a yearlong scorched earth litigation campaign against them," they said in the objection.  On the flip side, Yuga Labs argued the pair's own litigation strategy needlessly complicated and dragged out the case by repeatedly attempting to relitigate issues the court rejected.