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Category: Fee Scholarship

Should Judges Police The Gender Hourly Rate Disparity?

June 1, 2022

A recent Law 360 story by Andrew Stricker, “Should Judges Police The Legal Industry Pay Gap?” reports that as the pay gap between male and female attorneys persists despite industry pledges to do better, the power of judges to potentially bridge the divide is coming into sharper focus.  Following an unusual decision by a federal magistrate, some members of the Philadelphia bar have endorsed the idea that other judges should follow suit and help police gender pay inequities, or at least call them out from the bench.

U.S. Magistrate Judge Timothy R. Rice recently issued the order critiquing elements of a notable employment firm's request and awards that put attorney "status" over performance.  "I don't think it's always my role, but in this instance, I felt I had to set the rates based on the performance of the attorneys who really tried the case, and not a rate that was maybe based more on age or seniority," Judge Rice told Law360 Pulse.

In April, Judge Rice was overseeing the last stage of an age discrimination case brought by Alison Ray, a former sales director at AT&T Mobility Services who was let go at age 49 after more than two decades at the company.  Following a five-day trial, Ray last year secured a $2.3 million award after a jury determined that a company restructuring plan had targeted older employees as "surplus."

In February, lawyers at the firm representing Ray, Console Mattiacci Law LLC, asked for $847,945 in "shifted" fees from AT&T.  That lodestar calculation, based on a 40% contingency agreement, was justified by the complexity of the plaintiff's case, Ray's counsel argued, as well as a "complete and total victory" on her claims that AT&T had willfully violated federal age discrimination law.  The fee petition included nearly 1,570 hours from partners Susan Saint-Antoine and Laura C. Mattiacci, a highly experienced lead trial counsel, and associate Daniel S. Orlow. Saint-Antoine and Mattiacci, who have practiced since 1989 and 2002, respectively, both listed their "usual and customary" rate of $730 an hour. Orlow, who has practiced since 2011, was at $320 an hour.

The petition also included 37 hours contributed by firm principal Stephen G. Console. Console, a nationally recognized employment law expert, charged $900 an hour for consulting on strategy decisions and filings, as well as settlement demands and other key elements of the case.  In an order granting a handful of reductions totaling about $83,000, Judge Rice said Saint-Antoine and Mattiacci should be entitled to the same per-hour rate as Console, who has been practicing for three decades.

"Historically, women in law earn less than their male counterparts, a discrepancy that may reflect hidden bias," he said, citing a 2020 report that found widening pay discrepancies at large law firms.  Referring to a fee schedule used widely in the Third Circuit to determine market rates for Philadelphia-area lawyers, Judge Rice said Saint-Antoine and Mattiacci should be in line for a "premium" over those numbers that put them in line with Console.  Even if the fee schedule "serves as a useful guide on setting hourly rates, its reference to experience should not serve as a cap that precludes exceptionally talented trial lawyers from receiving fair compensation simply because of age or gender," Judge Rice said.

The legal industry pay gap, and its role in women reaching firm leadership and a lack of diversity in many areas of the profession, has been under intense scrutiny for years, but without much in the way of real progress.  In the 2020 report cited by Judge Rice, legal recruiting firm Major Lindsey & Africa found that partner compensation soared between 2010 and 2018.  But in that same period, the pay disparity between male and female equity partners widened significantly, from 24% to 35%.

Nancy Ezold, a veteran Philadelphia employment lawyer, said it was "absolutely" appropriate for Judge Rice to consider rate disparities for lawyers in his court, even though AT&T counsel hadn't raised the issue in its fee-award opposition.  "I don't know of anything in the law that says you have to consider what a law firm pays people," Ezold said.  "But Judge Rice looks at the bigger picture and asks, 'Am I going to do something to perpetuate an inequality and authorize a fee for a male partner over two female partners who really handled this case?'"

Ezold, who once sued her own former law firm in the late 1980s for denying her a partnership based on her gender, argued that fee petitions often provide a substantive overview of who did what work over the history of a litigation.  Depending on the nature of the case, they can also be an opportunity for judges to compare requested rates across different firms and legal teams comprising different gender and experience makeups.

"Here the judge couldn't overlook a difference between male and female in this case because it related directly to the responsibility to decide what would be allowed for each of these attorneys," Ezold said.  "Judges speak out on a lot of things, and I don't see why this should be any different."  Judge Rice served as an assistant U.S. attorney for the Eastern District of Pennsylvania before being appointed as a federal magistrate in 2005.  He retired in April, just after issuing the Ray opinion.

In an interview with Law360 Pulse, Judge Rice said the timing was coincidental, noting that the issue of male-female pay disparities had never before been "so squarely presented" to him in a fee petition.  "From the [fee] affidavits I see, and from all I know about law firm pay structures, I do think the pay gap is huge, and there are just so many variables out there that have cut against giving women equal pay," such as lack of trial experience and other opportunities to advance, he said.

"When I see lawyers perform in an exemplary fashion, it's appropriate they be paid at higher rates commensurate with their skills, not just based on the years they've practiced," Judge Rice added.  Alice Ballard, another veteran Philadelphia employment lawyer who provided a fee affidavit in the Ray case, said Judge Rice's prior time as a trial lawyer was evident in the opinion, including in his positive assessment of the hours Console Mattiacci dedicated to mock trial runs and other "essential" advocacy preparation.

Judge Rice "really understands what it means to prepare for a trial like this, and everyone on my beat really appreciates that," she said.  But Ballard took issue with Judge Rice's ultimate reliance on what she described as an outdated fee schedule, rates that don't well reflect the special skills of trial work, Mattiacci's successful track record or the contingency fee model.

She also cautioned against reading the opinion as a critique of the hourly rate request for Console, whom she called a "lion" of the city's employment bar.  Regarding his reference to the legal industry's gender pay disparities,"it's great that he took the opportunity to bring it up, but I just don't think it has much to do with this specific case," Ballard said.

Article: Courts Are Right to Reject Insurer ERISA Attorney Fee Awards

May 9, 2022

A recent Law 360 article by Elizabeth Hopkins, “Courts Are Right To Reject Insurer ERISA Atty Fee Award” reports on ERISA attorney fee awards.  This article was posted with permission.  The article reads:

As the U.S. Supreme Court has often recognized, the Employee Retirement Income Security Act is remedial legislation that is primarily intended to protect plan participants and beneficiaries, promote their interests and ensure that they receive the benefits they are promised.  According to the U.S. Court of Appeals for the Ninth Circuit's 1984 ruling in Smith v. CMTA-IAM Pension Trust: "An important aspect of that protection is to afford [plan participants and beneficiaries] effective access to federal courts."

And one of the ways that this access is promoted is through ERISA's fee-shifting provision, which grants courts in actions brought by plan participants and beneficiaries the discretionary authority to allow a reasonable attorney fee and cost of action to either party.  Despite these protective statutory goals, individual ERISA claimants face uphill battles in attempting to reverse adverse benefit determinations.  They are not entitled to anything like a full trial in federal court, but are instead normally stuck with a trial on the record that was assembled by the decision-making fiduciary, who is in many instances entitled to great deference.

And the only recovery they can hope to achieve if they are successful is full payment of the benefits that they were always entitled to and perhaps some interest on this amount.  Given all these hurdles and limitations to recovery, it shouldn't come as a surprise that it is not always easy for ERISA plaintiffs to obtain counsel, especially when there is only a small amount of benefits at stake.

For this reason, as the Ninth Circuit explained in Smith, "without counsel fees the grant of federal jurisdiction is but a gesture for few [plaintiffs] could avail themselves of it."  Plan participants and beneficiaries who successfully challenge benefit denials or bring successful fiduciary breach suits against plan fiduciaries do invariably seek and almost always are awarded some attorney fees under this provision.

The Supreme Court made clear in 2010 in Hardt v. Reliance Standard Life Insurance Co., that participants need not even be prevailing parties in an ERISA action to qualify for fees, so long as they have had "some degree of success on the merits."  Once the success threshold has been met, to determine whether a discretionary award of fees is warranted, courts apply a five-factor test first developed in 1993 by the U.S. Court of Appeals for the Fourth Circuit in Quesinberry v. Life Insurance Co. of North America — factors that clearly and intentionally favor successful plaintiffs.

But a potent new threat to the ability of plan participants and beneficiaries to bring suit is looming.  Increasingly, insurance companies are seeking attorney fee awards against claimants who are partially or wholly unsuccessful in overcoming deference and other substantive and procedural advantages to the plan decision makers, and are thus unable to have a denial of benefits reversed.

For the most part, courts continue to reject attorney fee applications from insurance companies that successfully defeat lawsuits seeking plan benefits.  A November 2021 decision in Martin v. Guardian Life Insurance Co. of America from the U.S. District Court for the Eastern District of Kentucky is instructive of both the heavy-handed tactics of insurance companies seeking fees from claimants and one court's reaction.  In Martin, the insurance company that insured disability benefits sought nearly $138,000 against the claimant, the father of a minor child whose only income was roughly $756 a month in veterans benefits and who had only $1,500 in his bank account.

The court seemed especially put off by Guardian's argument that Martin declined to participate in an independent medical examination and that this indicated bad faith, finding, to the contrary, that his attested reasoning for hesitation about the examination was a concern with going to an unknown medical facility during the COVID-19 pandemic.  And the court noted that granting Guardian's motion for attorney fees "would tend to create a chilling effect on other plaintiffs seeking redress under ERISA."

Other courts have expressed similar concerns in denying fee applications asserted by insurance companies against disability plaintiffs.  For instance, in December 2021, the U.S. District Court for the Western District of Washington in Amoroso v. Sun Life Assurance Co. of Canada, declined to order the plaintiff to pay $66,000 in attorney fees to the insurance company simply because it "completely prevailed on the merits."

Noting that application of the five factors that courts apply in determining whether fees are warranted very frequently suggests that attorney fees should not be charged against ERISA plaintiffs, the court concluded that was certainly true with respect to Sun Life's application for fees in that case.  With respect to the first factor, the Amoroso court concluded that there was nothing approaching bad faith in the record.  The court found the second factor weighed strongly against a fee award because Sun Life did not show that Amoroso had sufficient assets to pay an award, and the facts that his home was valued at over $1 million and that he had a medical practice was simply irrelevant with respect to his ability to pay.

Addressing Sun Life's most revealing argument — that the third factor weighed in its favor because awarding fees would deter other participants from brining unsuccessful benefit suits — the court disagreed, reasoning that deterring disabled plan participants from suing for plan benefits was flatly inconsistent with ERISA's policy and with ERISA's fee-shifting provision.

Likewise, the court rejected out of hand Sun Life's argument that awarding fees would benefit all other participants and beneficiaries of the plan by saving the insurance company money and perhaps leading to lower premiums.  The court found instead that such an award "would deter insureds from seeking such benefits at all, and it would only embolden insurers in denying claims at the administrative level."

Considering the relative merits of the parties' positions — the final factor — the court declined to "force a losing ERISA plaintiff to pay an insurer's attorneys' fees based solely on the fact that he lost," reasoning that to do so "would not be consistent with ERISA, the better-reasoned cases decided under it, equity, or common sense."

In the court's view, such a fee award in favor of an insurer would only be justified in unusual circumstances not presented by Amoroso's case.  Numerous other recent decisions have had no trouble denying insurers' requests for attorney fee awards against unsuccessful benefit claimants.

At this point, it appears that the recent and sharp uptick in fee applications from insurance companies seeking fees against plan participants and beneficiaries who are unsuccessful in reversing a denial of benefits is meeting with little or no success in the courts.

Application of the Quesinberry test, along with a healthy reluctance to punish disabled, sick or retired plan participants for seeking to obtain plan benefits, has quite correctly led courts in all but the most unusual circumstances to reject these fee applications.  Let's hope these kinds of decisions discourage insurance companies from engaging in this unfair tactic.

Elizabeth Hopkins is a partner at Kantor & Kantor LLP in Northridge, CA.

Article: Do We Really Need An Attorney Fee Expert?

April 18, 2022

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. 4th 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.

Compare & Prove Hourly Billing Rates with NALFA Survey

December 4, 2021

NALFA conducts custom hourly rate surveys for clients such as law firms, corporate legal departments, and government agencies.  Our hourly rate surveys provide accurate data on hourly rates within a given geography market and/or practice area(s).  Our hourly rates surveys have been cited by litigators in court documents and referenced by court adjuncts in court proceedings.  Our surveys can also be used for internal purposes, such as rate comparisons.  Some of our recent hourly rate survey engagements include:

  • A boutique law firm in Boston engaged NALFA to conduct a survey of associate and partner level billing rates in litigation in the greater Boston area.
  • A large Miami law firm hired NALFA to conduct a survey of plaintiffs’ and defense rates in commercial litigation in South Florida.
  • A small plaintiffs’ law firm in Dallas engaged NALFA to conduct a survey and report of hourly rates in consumer class actions in the Dallas-Fort Worth area. This survey was cited by a federal judge in his attorney fee award.
  • An insurer hired NALFA to conduct a survey of billing rates of defense counsel in insurance coverage litigation throughout California.
  • A large law firm in Seattle engaged NALFA to conduct a survey of hourly billing rates in regular and complex litigation in the U.S. District Court for the Western District of Washington jurisdiction.
  • A small law office in Albany hired NALFA to conduct a national survey of billing rates in public interest and civil rights litigation in federal court.
  • A technology firm engaged NALFA to conduct a survey of hourly rates in large and mid-size law firms in patent litigation in the San Francisco and Silicon Valley region.
  • A defense law firm with offices throughout North Carolina hired NALFA to conduct an hourly rate survey of similarly sized law firms in the Charlotte area so they could compare billing rates with their litigation peers.
  • A government agency engaged NALFA to conduct a survey of hourly rates in large Chapter 11 bankruptcy cases, nationwide.
  • A mid-size law firm in Atlanta hired NALFA to conduct a survey of hourly rates in IP litigation in several major markets.

Article: Who Pays For Attorney Fees in Litigation?

August 23, 2021

A recent article by Julie Pendleton, “Who Pays For Attorney Fees in Litigation?,” reports on who covers attorney fees in litigation in Washington.  This article was posted with permission.  The article reads:

One of the first questions asked of me by clients when considering litigation is, “Can I make the other side pay for my attorney’s fees?”  In Washington State, the answer to that question is generally no.  This is referred to as the “American Rule.”

Courts have reiterated their support for the American Rule because (1) litigation is inherently a risky proposition, and a party should not be penalized for merely participating in a lawsuit; (2) those without means would be unduly discouraged from pursuing their legal rights if they feared that losing the case would also cost them their opponents’ legal fees; and (3) the cost of proving the amount of legal fees would pose an undue burden on judicial administration.  Blue Sky Advocates v. State, 107 Wn.2d 112, 123, 727 P.2d 644 (1986).

However, there are three exceptions to this rule and Courts can award attorney’s fees where: (1) there is a contractual provision for attorney’s fees, (2) a statute allows for the award of attorney’s fees, and (3) equity allows for attorney’s fees.

Contractual Attorney’s Fees

A litigant can recover attorney fees if the dispute involves a contract that includes a provision that the prevailing party is entitled to recover attorney fees.  It is quite common to see an attorney’s fee provision in adhesion contracts.  The good news is that in Washington, attorney’s fee provisions have to be applied bilaterally, or in other words, even if the contract only provides attorney’s fees provision if Party A wins, the Courts will apply it equally, so whichever party prevails will be entitled to have their attorney’s fees reimbursed by the other side.

While contractual attorney’s fees are enforced as a matter of course in Washington, they do require a “win” to apply.  In some cases where the case ends in a draw or a tie, where both sides lose a little and win a little, the Court may refuse to award fees.  In addition,  most courts will only award “reasonable” attorney’s fees, so an attorney’s fee provision in the Contract should not be treated as a blank check to direct your attorneys to overwork the case.  .

Statutory Attorney’s Fees

In Washington, a party can recover its attorney fees against another party if a law or statute that governs the case provides for the recovery of attorney fees.  There are many types of statutes that include these types of provisions. Examples include parties prevailing on: a Consumer Protection Act claim, an unpaid salary or wages claim, or a discrimination claim. However, each statute is different and should be read carefully.  Some statutes are mandatory while others allow the court to exercise discretion in deciding whether or not to award fees.  Further, some other statutes may only allow a winning plaintiff to recover fees, but not a winning defendant.  For example, if an employer is sued for minimum wage act violations and successfully prevails against the employee, while the employee probably requested the court to pay their fees under the minimum wage act, the employer would not be entitled to a reimbursement of fees at this stage.

Many clients are particularly interested in the frivolous lawsuit statute, which provides for fees and costs if a lawsuit is brought and continued for an improper purpose and is not grounded in fact.  RCW 4.84.0185.  This statute provides attorney’s fees if a litigant is subjected to a lawsuit that is either brought solely to harass or burden the defendant or otherwise is completely fanciful.  However, the standard is high to recover these sort of attorney’s fees as the litigant is required to prove  that the other side was either solely motivated by malice or another improper purpose or that the lawsuit had no chance of winning under any circumstances.  Receiving  attorney’s fees under the frivolous lawsuit statute is difficult, and should never be considered a guaranteed method of recovery.

Equitable Attorney’s Fees

In rare cases, a party can recover attorney’s fees from a party who engages in bad faith litigation conduct.  There are three types of bad faith litigation conduct: (1) pre-litigation misconduct, where a party engages in bad faith conduct that wastes private and judicial resources and forces a legal action to enforce a clearly valid claim or right; (2) procedural misconduct, where a party engages in bad faith conduct during the course of the lawsuit; (3) substantive bad faith, where a party intentionally brings a frivolous clam, counterclaim or defense for an improper motive such as harassment.  While most litigants believe that the other side has engaged in bad faith conduct in some form or another, recovering under this provision is extremely rare.

How does this Impact my Case?

If there is a method to recover attorney’s fees in a case (either by contract or statute), this is vital to discuss early on in the case with an attorney.  Not only can attorney’s fees provisions be used to drive early settlement, but they should also be considered when determining whether or not to bring a lawsuit or counterclaims.

Julie Pendleton is an attorney at Lasher Holzapfel Sperry & Ebberson PLLC in Seattle and a member of the firm’s Business Litigation and Trusts and Estates Litigation practice groups representing individuals and small companies throughout various stages of litigation and dispute resolution.