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Category: Hourly Rates

State Judge: Hourly Rates Too Steep For North Carolina

September 2, 2022

A recent Law 360 story by Hayley Fowler, “Perkins Coie $2.35M Fee Bid Deemed Too Steep in NC Biz Spat” reports that a North Carolina state court judge has scrapped a request for more than $2.3 million in attorney fees by Perkins Coie LLP following a trial win, saying the requested rates are a far cry from what's typically charged in the state.

Superior Court Judge Adam Conrad said Wednesday that the rates proffered by Perkins Coie — which exceeded $700 per hour — "dwarf(ed)" that of their local counsel at Womble Bond Dickinson LLP for their representation of a North Carolina-based knitting machine maker in a lawsuit accusing its CEO of self-dealing.

"These rates may be typical of firms and attorneys based in California and Texas but are significantly higher than rates customarily charged in North Carolina for cases of this type," he wrote.

The judge consequently denied the attorneys' request but said they can renew it once post-judgment motions and appeals are completed.

Perkins Coie's fee bid follows a multimillion-dollar jury verdict in March on behalf of high-speed knitting machine manufacturer Vanguard Pai Lung LLC and majority owner Pai Lung Machinery Mill Co. Ltd.

The case centered on claims that Vanguard's former CEO and president William Moody had "orchestrated a long-running scheme of self-dealing and other misconduct designed to benefit himself, his family, and his friends," Judge Conrad wrote.

According to the judge's opinion, Moody was a minority owner of Vanguard through his company Nova Trading USA Inc. Both were named as defendants in Vanguard's 2018 lawsuit.

Moody had also filed counterclaims accusing Pai Lung of forcing him out of the business and seeking to have the company dissolved, the judge said, most of which were resolved before the case went to trial.

The jury ultimately issued a verdict for Vanguard and Pai Lung on their claims for fraud, conversion, embezzlement, unfair and deceptive trade practices and unjust enrichment. Court documents show the resulting damages totaled more than $3.4 million.

Shortly thereafter, attorneys with Perkins Coie and Womble Bond submitted their request for fees, saying state law in North Carolina allows parties to collect reasonable attorney's fees in a civil action for embezzlement.

The request outlined $2.35 million for Perkins Coie and $240,499 for Womble Bond.

Judge Conrad said Wednesday the motion was plagued by "several deficiencies," starting with the fact that state law only permits attorney's fees for the owner of property that was embezzled.

"Here, Vanguard is the owner of the property that Moody embezzled," he wrote. "Pai Lung is not the owner and had no claim for embezzlement. Plaintiffs have offered no reason why Pai Lung should recover attorneys' fees based on a claim it did not assert and property it did not own."

The law also does not allow parties to collect fees for claims unrelated to embezzlement unless they are "inextricably interwoven," the judge said, which he determined was not the case here. He also said the requested dollar amount was unreasonable, pointing in particular to two of the highest billing rates from counsel with Perkins Coie that exceeded $1,000 an hour.

Though Judge Conrad ruled the attorneys could collect fees on behalf of Vanguard for the embezzlement claim, he said they didn't submit any billing records to justify the amount requested.

"It is therefore impossible to determine whether Vanguard's attorneys spent a reasonable or unreasonable amount of time drafting or responding to motions, preparing for and conducting depositions, and handling other discovery matters," the judge wrote.

In denying the motion for fees with permission to renew, Judge Conrad also rejected a motion by Moody to dissolve Vanguard, which he said contained "no supporting evidence" and was "a glaring violation of the Business Court Rules."

Moody had contended in a post-trial motion that his company Nova Trading was powerless in the current operating agreement and dissolution was necessary to protect their rights.

But the judge said certain safeguards that prevent Pai Lung from making unilateral decisions are still in place, even if it has a "three-to-one advantage" over Nova Trading, he said.

"That is the division of authority that Nova Trading bargained for and agreed to when it signed the operating agreement," Judge Conrad wrote. "Being outvoted is not, by itself, a basis for dissolution."

Chancery Approves $75M Fee Award in Williams Merger Dispute

August 29, 2022

A recent Law 360 story by Jeff Montgomery, “Chancery Oks $75M Cravath Fee in Williams Merger Dispute” reports that Cravath Swaine & Moore LLP nailed a nearly $75 million fee after a Delaware vice chancellor upheld its 15% contingent pay agreement with The Williams Cos. during much of a long battle with Energy Transfer LP and its affiliates over a $410 million deal-termination damage claim.

Vice Chancellor Sam Glasscock III also upheld a provision of the agreement that shifted Cravath's fees to Energy Transfer — the losing side of a $410 million battle with Williams over a termination fee triggered when Williams abandoned an earlier deal with one of its affiliates to pursue an eventually doomed, $38 billion Energy Transfer merger.

Energy Transfer, already required to pay Williams' $410 million break fee, fought the reasonableness of Cravath's fee, the 15% contingent arrangement as well as the court's decision to allow quarterly compounding interest for the fee, including a multiyear span while the case was stayed.  According to the decision and a transcript of earlier arguments on the dispute, Cravath's average or "lodestar" rate was $47.1 million for the same hours, compared with $74.8 million under the contingent fee arrangement.

"It is worth pointing out that these sophisticated parties surely were aware that post-merger-agreement litigation, seeking a break fee, could likely include representation on a contingent basis." the vice chancellor wrote in a decision that upheld the Williams side on all points.  Energy Transfer "had every opportunity, therefore, to contract against use of a contingent fee to determine the amount of fees shifted, if they so desired. This they failed to do," the vice chancellor wrote.

"The merger agreement contains no limitation on what kinds of attorneys' fees and expenses may be shifted to the losing party, other than a requirement, which is already implied under Delaware law, that the shifted fees and expenses must be 'reasonable,'" the vice chancellor wrote.  Williams had argued that a new general counsel secured the contingent agreement with Cravath in mid-2017, after Delaware's Supreme Court let stand the vice chancellor's finding that failure of a required tax-treatment for the $1.38 billion merger allowed Energy Transfer to walk away.

Energy Transfer argued that interest should have been suspended during a two-year period between 2019 and 2021 when a Williams' discovery vendor's error brought litigation to a halt. They also argued that litigation time over the interest rate and fees should likewise not count.

The decision also provided for interest at 3.5%, compounded quarterly, with the court observing other decisions that found compound interest "the standard form of interest in the financial market."  In all, according to a court brief filed, Cravath earned $4,358,372.70 prior to the start of the contingent fee terms, $4 million under a contractual fixed fee and $74,846,161 under the contingent fee.

Apple Urges Judge to Cut Fees in iPhone Class Settlement

August 26, 2022

A recent Law 360 story by Piper Hudspeth Blackburn, “Apple Urges Judge To Trim IPhone Class Atty Fees” reports that Apple Inc. has asked a New York federal judge to lower a $6.6 million fee request from attorneys who helped secure a $20 million class settlement for iPhone users over device updates, insisting that there is a lack of documentation supporting the price tag.  While attorneys from Pomerantz LLP and Bronstein Gewirtz & Grossman LLC have asked for one-third of the payout for their services, Apple wants the award shaved by $666,000 to 30% of the total settlement, or exactly $6 million. The reduction, Apple argued in a brief, would provide an additional $600,000 to the class and give each member a payment of $68.56, up from $62.94 at the current number of claims.

Apple also took aim at the plaintiff's counsel's billable hours, calling their submission "insufficient."  According to Apple's memorandum, the class's counsel failed to submit any documentation that "substantiates" the over 10,000 hours they billed for the suit that lasted more than six years.  "Class Counsel merely provide a chart listing the names of billers, their requested hourly rate, and an aggregate number of hours each worked, with no elucidation as to whom did what," the motion said.

In an Aug. 12 motion for attorney fees, the plaintiff's attorneys said the fee is warranted given the number of hours they spent working on the suit and the expenses they incurred in the process – as well as the favorable outcome they achieved.  "From the outset, class counsel understood they were embarking on a complex, expensive, and likely lengthy litigation with no guarantee of ever being compensated for the substantial investment of time and money the case would require," the attorneys wrote.

Apple also asked the court to reduce the requested $2.8 million in litigation expenses and service awards of $15,000 for each named plaintiff.  Apple contends that a reduction of the amount of the plaintiff's service award is warranted because the plaintiffs would receive an award one hundred times greater than the maximum recovery afforded to class members.  Apple also took issue with the reported costs for meals, taxis and online research, which they said were not recoverable.

NALFA Survey: Hourly Rate Data Distribution is Chi-Squared

August 11, 2022

NALFA recently released the results from its 2021 Litigation Hourly Rate Survey.  The results, published in The 2021 Litigation Hourly Rate Survey & Report, contains billing rate data on the factors that correlate directly to hourly rates in litigation: geography, years of litigation experience, complexity of case, and litigation practice size.

This empirical survey and report provides macro and micro data of defense and plaintiffs’ rates in regular and complex litigation, at various litigation experience levels, from large law firms to solo shops, and in the nation’s largest markets.  This is the nation’s largest and most comprehensive survey or study on hourly billing rates in litigation.

Over 8,400 qualified litigators fully participated in this hourly rate survey.  When we plot all responses (plaintiffs' and defense) on a graph (x,y axis), we have a general shape distribution model known as chi-squared distribution.  That is, the distribution is not the classic bell-shaped curve. 

Our model here starts from a low point ($200-$250), peaks before the midpoint ($601-$650), then declines gradually and finishes with a long tail with an uptick at the very end (Over $1100).  It resembles a whale-shaped type distribution.  In the graph below, the y axis is the percentage of responses and the x axis is the hourly rate scale (Less than $200 to Over $1100).

NALFA Releases 2021 Litigation Hourly Rate Survey & Report

July 19, 2022

Every year, NALFA conducts an hourly rate survey of civil litigation in the U.S.   Today, NALFA released the results from its 2021 hourly rate survey.  The survey results, published in The 2021 Litigation Hourly Rate Survey & Report, shows billing rate data on the very factors that correlate directly to hourly rates in litigation:

City / Geography
Years of Litigation Experience / Seniority
Position / Title
Practice Area / Complexity of Case
Law Firm / Law Office Size

This empirical survey and report provides micro and macro data of current hourly rate ranges for both defense and plaintiffs’ litigators, at various experience levels, from large law firms to solo shops, in regular and complex litigation, and in the nation’s largest markets.  This data-intensive survey contains hundreds of data sets and thousands of data points covering all relevant billing rate categories and variables.  This is the nation’s largest and most comprehensive survey or study on hourly billing rates in litigation.

This is the second year NALFA has conducted this survey on billing rates.  The 2021 Litigation Hourly Rate Survey & Report contains new cities, additional categories, and more accurate variables.  These updated features allow us to capture new and more precise billing rate data.  Through our propriety email database, NALFA surveyed thousands of litigators from across the U.S.  Over 8,400 qualified litigators fully participated in this hourly rate survey.  This data-rich survey was designed to aid litigators in proving their lodestar rates in court and comparing their rates to their litigation peers.

The 2021 Litigation Hourly Rate Survey & Report is now available for purchase.  For more on this survey, email NALFA Executive Director Terry Jesse at terry@thenalfa.org or call us at (312) 907-7275.