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Category: Hourly Rates

Judge Acted Arbitrarily in Setting ADA Attorney Fee Award

October 8, 2021

A recent Metropolitan News story, “Judge Acted Arbitrarily in Setting ADA Attorney Fee Award,” reports that a District Court judge, in setting an attorney fee award, acted arbitrarily in disregarding the services of three of five lawyers who represented the plaintff in securing a settlement of his action under the federal Americans With Disabilities Act and the state Unruh Act and by making a 10 percent deduction as a penalty for the law firm inflating its fees, the Ninth U.S. Circuit Court of Appeals held.

Its memorandum opinion comes in a case bought by the Center for Disability Access, a division of the San Diego law firm of Potter Handy LLP, on behalf of Antonio Fernandez, who is wheelchair-bound.  The center brings hundreds of ADA and Unruh actions each year, using a stable of plaintiffs, including Fernandez.  The appeal came in a case instituted in the U.S. District Court for the Central District of California against Roberta A. Torres, who owned real property in Whittier and against CBC Restaurant Corp., which operated the Corner Bakery Café on Torres’s property. The suit was brought over the height of the counter.

In making his award of attorney fees, Judge Fernando M. Olguin said in a July 14, 2020 order: “Despite many years of experience litigating the two claims in this case in virtually hundreds of cases, and a docket that reflects little, if any, litigation in this case, plaintiff seeks $15,762.50 for the work performed by five attorneys….Further, the cases filed by plaintiff include nearly identical complaints and subsequent filings.”  Olguin made note of three of the several ADA-based actions the center has recently brought in the Central District with Fernandez serving as the plaintiff.

The judge opined that the “assignment of so many experienced attorneys to such a simple case replete with boilerplate documents resulted in substantial task padding, duplication, over-conferencing, attorney stacking, and overall excessiveness,” declaring: “Given the simplicity of the case and ADA accessibility cases in general, the quick settlement and apparent lack of any contested litigation matters in this case, and the lack of any dispositive motions, no more than one partner and one associate was necessary to prosecute this case.  Thus, the court will reduce the fee award by cutting the fees for three of the five attorneys.”

He opted to take cognizance only the services of the lead attorrney, Christina “Chris” Carson, who was admitted to practice on Dec. 2, 2011, and Mark D. Potter, whose State Bar membership goes back to Dec. 1, 1993.

Potter sought recompense at an hourly rate of $595 and Carson wanted to be paid $450 an hour. Olguin said that taking into account the various factors customarily assessed in setting attorney fees, “$425 is reasonable for attorney Potter, and an hourly rate of $275 is reasonable for attorney Carson.”  Noting that there was a “quick settlement of this routine, non-complex case, where plaintiff did not file or oppose any dispositive motions,” Olguin declared that “the court will apply a ten percent reduction.”  After subtracting “10% of the time billed for general excessiveness,” he awarded $3,897 in attorney fees—slightly less than 25 percent of what was sought.  Olguin allowed the $642.50 in costs that were claimed.

Reversal came in an opinion signed by Circuit Judges Susan P. Graber and John B. Owens and by District Court Judge Charles R. Breyer of the Northern District of California, sitting by designation. The judges said: “While we agree with the district court that Fernandez’s lawyers overbilled, it was ‘arbitrary’ to ignore entirely the time billed by three of the five lawyers….These three appear to have performed at least some necessary work….To the extent that overstaffing resulted in inefficiencies, the district court should reduce the fee award in proportion to those inefficiencies, rather than Through a ‘shortcut.’ ”

The opinion continues: “The district court also abused its discretion in calculating the hours of the two attorneys whose work it considered.  The court provided cogent reasons for its specific cuts as to various tasks, but its final additional 10% reduction for ‘general excessiveness’ lacked any justification.”  Olguin did not abuse his discretion in setting the rates for Carson and Potter, the Ninth Circuit said, because they had nor provided evidence substantiating the higher value they ascribed to their services.

Article: What is a Legal Fee Audit?

October 7, 2021

A recent article by Jacqueline Vinaccia of Vanst Law LLP in San Diego “What is a Legal Fee Audit?,” reports on legal fee audits.  This article was posted with permission.  The article reads:

Attorneys usually bill clients by the hour, in six minute increments (because those six minutes equal one tenth of an hour: 0.1).  Those hours are multiplied by the attorney’s hourly rate to determine the attorney’s fee.  There is another aspect of attorney billing that is not as well known, but equally important — legal fee auditing.  During an audit, a legal fee auditor reviews billing records to determine if hourly billing errors or inefficiencies occurred, and deducts unreasonable or unnecessary fees and costs.

Both the law and legal ethics restrict attorneys from billing clients fees that are unreasonable or unnecessary to the advancement of the client’s legal objectives.  This can include analysis of the reasonableness of the billing rate charged by attorneys.  Legal fee audits are used by consumers of legal services, including businesses, large insurance companies, cities, public and governmental agencies, and individual clients.  Legal fee audits can be necessary when there is a dispute between an attorney and client; when the losing party in a lawsuit is required to pay all or part of the prevailing party’s legal fees in litigation; when an insurance company is required to pay a portion of legal fees, or when some issues in a lawsuit allow recovery of  attorneys’ fees and when other issues do not (an allocation of fees). 

In an audit, the auditor interviews the client, and reviews invoices sent to the client in conjunction with legal case materials to identify all fees and costs reasonable and necessary to the advancement of the client’s legal objectives, and potentially deduct those that are not.  The auditor also reviews all invoices to identify any potential accounting errors and assure that time and expenses are billed accurately.  The auditor may also be asked to determine if the rate charged by the attorney is appropriate.

The legal fee auditor can be an invaluable asset to parties in deciding whether to file or settle a lawsuit, and to the courts charged with issuing attorneys’ fee awards.  The court is unlikely to take the time to review individual invoice entries to perform a proper allocation of recoverable and non-recoverable fees leaving the parties with the court’s “best approximation” of what the allocation should be.  The fee audit provides the court and the parties with the basis for which to allocate and appropriately award reasonable and necessary fees. 

Audits are considered a litigation best practice and a risk management tool and can save clients substantial amounts of money in unnecessary fees.  It has been my experience, over the past two decades of fee auditing, that early fee auditing can identify and correct areas of concern in billing practices and avoid larger disputes in litigation later.  In many cases, I have assisted clients and counsel in reaching agreement on proper billing practices and setting litigation cost expectations. 

In other cases, I have been asked by both plaintiffs and defendants to review attorneys’ fees and costs incurred and provide the parties and the court with my expert opinion regarding the total attorneys’ fees and costs were reasonably and necessarily incurred to pursue the client's legal objectives.  While the court does not always agree with my analysis of fees and costs incurred, it is usually assisted in its decision by the presentation of the audit report and presentation of expert testimony on the issues.

Jacqueline Vinaccia is a San Diego trial attorney, litigator, and national fee auditor expert, and a partner at Vanst Law LLP.  Her practice focuses on business and real estate litigation, general tort liability, insurance litigation and coverage, construction disputes, toxic torts, and municipal litigation.  Her attorney fee analyses have been cited by the U.S. District Court for Northern California and Western Washington, several California Superior Courts, as well as various other state courts and arbitrators throughout the United States.  She has published and presented extensively on the topic of attorney fee invoicing, including presentations to the National Association of Legal Fee Association (NALFA), and is considered one of the nation’s top fee experts by NALFA.

Federal Judge Cites NALFA Survey in Attorney Fee Award

October 1, 2021

A federal judge has cited a NALFA survey in a class action attorney fee award.  U.S. District Judge Amos L. Mazzant of the U.S. District for the Eastern District of Texas referenced NALFA’s hourly rate survey in awarding attorney fees and expenses in Cone v. Porcelana Corona de Mexico, S.A.de C.V. et. al (“Vortens”).  The NALFA survey independently showed prevailing market rate data of class counsel in the Dallas-Fort Worth area. 

“To support its submitted rates, Class Counsel commissioned and submitted a survey conducted by the National Association of Legal Fee Analysis ("NALFA").  The sample of the NALFA survey was Dallas-Fort Worth metropolitan area plaintiffs’ counsel practicing in consumer related or product liability class-action work.  Class Counsel’s submitted hourly rates, while on the higher side, falls within the accepted range,” wrote Judge Mazzant.

NALFA conducts custom hourly rates for clients such as law firms to independently prove billing rates in court.  Lead plaintiffs’ counsel commissioned NALFA to conduct a billing rate survey of plaintiffs’ rates in class actions in the Dallas-Fort Worth area.  NALFA conducted this survey via email, employing its best practices measures.  In his 26-page fee order (pdf), Judge Mazzant accepted the hourly rate data and survey results and awarded over $4.3 million in attorney fees in the Vortens class settlement.

Gibson Dunn Under Fire for Billing Practices

September 23, 2021

A recent Law 360 story by Rose Krebs, “Gibson Dunn Under Fire For Billing in Landmark Theatres Suit,” reports that Gibson Dunn & Crutcher LLP and Ross Aronstam & Moritz LLP have been accused of problematic billing in a Delaware Chancery Court suit over a price adjustment dispute that followed the 2018 sale of Landmark Theatres to billionaire real estate developer's Charles S. Cohen's theatrical production and distribution company.

In a brief, Cohen Exhibition Company LLC told Vice Chancellor Paul A. Fioravanti Jr. that a request by Gibson Dunn and Ross Aronstam to have the buyer reimburse roughly $840,000 of the sellers' legal costs and expenses should be reduced by no less than about $396,000.  A lesser-than-sought amount should be awarded, in part, due to the firms' "failure to support the hourly billing rates" included in the fee motion, the brief says.

The sellers, Roma Landmark Theaters LLC and MCC Entertainment LLC, which are represented by the two law firms, told the court in August that buyer Cohen Exhibition Company should have to pay costs and expenses they incurred litigating a battle over post-closing adjustments that ended up being largely decided in their favor.

But Cohen raised issues with the billing.  "Both the Ross Aronstam and Gibson Dunn invoices contain significant redactions of time entries," Cohen said in Tuesday's filing.  "The redactions are particularly problematic insofar as they not only completely obscure the services performed ... but also because they even obscure the timekeeper and amount of time spent."  Cohen argues that due to the redacted information it is "completely impossible" for the court to assess the reasonableness of certain invoices.

The company also pointed to "excessively high charges for Westlaw research, in one month totaling over $20,000 alone" in Gibson Dunn's bills.  The online legal research service "offers attorneys a plan with unlimited access to Delaware cases, statutes, and briefs at a flat monthly fee," according to Cohen. Granting those fees would effectively mean Cohen paying for "Gibson Dunn's overhead in maintaining a legal research account with Westlaw," the company said.

Cohen additionally took aim at what it described as the "high hourly rates billed by the attorneys at Gibson Dunn."  "Here, plaintiffs' attorneys have not provided any proof as to what their customary billing rates are for comparable matters," the brief said, highlighting one rate of up to $1,645 per hour.  "Nor have they provided any evidence as to each attorney's background and years of experience to support the respective claimed rates."  Cohen also protested what it said was the firms' request for reimbursement for "preparing and litigating" an unsuccessful motion to dismiss counterclaims lodged by the buyer in the litigation.

Roma and MCC said in court papers that an arbitration decision went in their favor, entitling them "to receive nearly all of the escrowed funds." Thus, they argued they are entitled to reimbursement for costs and expenses, especially since alleged legal posturing by the buyer led to a delay in escrow funds being turned over.  The Chancery Court confirmed the arbitration decision and the seller plaintiffs were awarded roughly $2.6 million plus additional interest and other costs, according to the motion, which added, "The fee award sought here is fair and reasonable in light of these positive results."

Quinn Emanuel Gets $185M in Attorney Fees in $3.7B ACA Win

September 16, 2021

A recent Law 360 story by Dave Simpson, “Quinn Emanuel Gets $185M Fee From $3.7B Win in ACA Suits,” reports that a U.S. Court of Federal Claims judge granted Quinn Emanuel Urquhart & Sullivan LLP's request for $185 million in fees stemming from two class actions against the federal government over so-called risk corridor payments under the Affordable Care Act, which resulted in a nearly $3.7 billion total win.  Judge Kathryn C. Davis said that despite the "at times hyperbolic" motions for fees, the law firm did show "foresight" in focusing on a successful legal theory months before other parties jumped on that bandwagon.  She granted its request for 5% of the winnings.

"At the end of the day, what is more important is that class counsel's legal theory resulted in a huge award to the classes here," Judge Davis said.  Quinn Emanuel was the first firm in the country to file a lawsuit on behalf of a qualified health plan insurer accusing the federal government of unlawfully reneging on a commitment to shield ACA insurers from heavy financial losses.

Health Republic Insurance Co. sued the government in 2016 and in July 2020 won a judgment for $1.9 billion alongside a subclass of insurers.  Common Ground Healthcare Cooperative sued the government in 2017 over similar claims and won a $1.7 billion judgment.  Those cases set off a firestorm of parallel litigation across the country, alleging similar claims.  Two of those cases ended up at the U.S. Supreme Court.  In April 2020, the justices reversed Congress' denial of $12 billion in "risk corridor" funding, which the ACA dangled as an incentive for insurers during the law's first three years of operation.

While Quinn Emanuel didn't work on those cases directly, the firm argued in its request for fees in July 2020 that the Supreme Court "adopted the exact legal theory Quinn Emanuel set forth in the initial Health Republic complaint and which it advocated at every step."  But in August 2020, objectors like Kaiser Foundation Health Plan Inc., UnitedHealthcare Insurance Co. and others argued that class counsel was entitled to just $8.8 million after a lodestar cross-check.

They said that Quinn Emanuel had little to do with the litigation that ended up at the Supreme Court, and argued that the firm was trying to walk away with an award that would work out to an hourly rate of $18,000 per attorney.  Class members signed on to the suit with a guarantee that the proposed 5% fee award would be subject to a lodestar cross-check, the motion said, which the firm had eschewed.

Quinn Emanuel shot back in September 2020 that the $8.8 million award proposed would discourage attorneys in the future from taking on similarly ambitious cases.  The percentage model, which the insurers agreed to when choosing to join the class instead of pursuing individual claims, is favored by the courts for exactly this reason, the firm said.  According to the firm, despite the dozens of companies signing on to the fee objection, most of them Kaiser or United entities, almost 90% of the class members have not objected.

Judge Davis sided with the firm.  "These are not cases in which class counsel merely rode the coattails of other innovative litigators," she said.  The 5% fee is well below market value, and the objectors propose what would amount to a .22% fee, she said.  Further, the firm allocated 10,000 billable hours and might not have been paid for any of it had the outcome gone differently, the judge said.