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Category: Hours Billled

Class Counsel Argue for Attorney Fees in Flint Water Crisis Settlement

May 31, 2021

A recent Law 360 story by Michael Phills, “Flint Plaintiffs' Attys Argue For Final OK of $641M Settlement,” reports that plaintiffs' attorneys want to seal the deal on a $641 million settlement over the Flint, Michigan, water crisis that objectors have said carves out too much for legal fees, arguing that the fee request is fair for the hard-fought work to secure compensation for an environmental catastrophe.  In a trio of filings, the plaintiffs' attorneys pushed back against several types of objections around the settlement, including the argument that a nearly 32% award of attorney fees is unreasonable.  The attorneys argue that their work produced something significant that the judge should sign off on.  They say that despite the objections the court has received, more than 50,000 have supported the deal, showing its widespread backing from the Flint community.

On the question of fees, plaintiffs' counsel defended their request as reasonable, reflective of the many years and hours of work spent on the case.  And they said the top line fee request is more complicated than objectors make it out to be.  "Some objectors have claimed that plaintiffs' counsel seek an award of more than $200 million in attorneys' fees.  That is not true — a substantial portion of the attorneys' fees in this matter will be paid by claimants to their individually retained counsel," the plaintiffs' attorneys wrote.

According to court filings, individual attorneys that were privately hired had often already locked in their fees and "much of the aggregate fee request will go to these individual attorneys."  In May, 26 individuals objected to the deal and raised a range of concerns, including that the settlement generally lacks clarity on what it entails and that it won't provide enough money to help residents as they try to move past a crisis that has left them with medical concerns and exorbitant water bills.

In March, other objectors opposed the fee request, saying a motion for the fee award included "scant detail" about the claimed common benefit work and didn't estimate what the common benefit fees might amount to.  "[The request] provides absolutely no evidence that ceding 27% of claimants' recovery to private attorneys for work sight unseen could possibly be fair to Flint residents who need this money to help them grapple with oft-debilitating, ruinous, and violent consequences of lead exposure for their entire lives," the objectors said.

They said that in "megafund" settlements of this size, typical fee awards are in the 10% to 12% range.  In March, the plaintiffs' attorneys made their fee request for their five years and more than 180,000 hours of attorney work to reach the "remarkable" settlement result.  "Contrary to every single 'megafund' case cited by the [objectors], this case involved complicated questions of sovereign immunity which necessarily rendered the case riskier and required a heightened level of skill," the plaintiffs' attorneys wrote.  They argued that they should not have to provide detailed billing records to certain objectors.

U.S. District Judge Judith Levy gave preliminary approval to the deal in January, saying that it is a partial settlement that doesn't end the litigation over the lead-tainted water.  The settlement with Michigan and others provides a mechanism for minors, injured adults, property owners and renters, those who paid Flint water bills and impacted business owners to receive monetary awards, the judge said. It also offers a "class action" solution for adults who have not hired their own attorneys, the judge said.

53 Law Firms to Divide $34M in Fees Using Tier System in GM Ignition MDL

May 20, 2021

A recent Law 360 story by Marco Poggio, “Judge Initially Oks 53 Firms’ Fee Plan in GM Ignition MDL,” reports that a federal judge in Manhattan pushed forward a plan for a three-tier system for distributing $34 million in attorney fees and expenses among the 53 law firms involved in multidistrict litigation against General Motors, but asked for clarifications on how firms are assigned to each tier after objections were raised.  In an order, U.S. District Judge Jesse M. Furman of the Southern District of New York said the tier system works but stopped short of approving the full deal, pending resolution of a dispute arising from how fees are calculated between the leading counsel and three other firms.

Judge Furman dismissed main objections brought by three firms — Golenbock Eiseman Assor Bell & Peskoe LLP, Wolf Haldenstein Adler Freeman & Herz LLP, and a group of attorneys working under the supervision Gary Peller, a professor at Georgetown University Law Center — who claimed they were being shortchanged for their work in the sprawling case, which involves faulty ignition switches.  However, the judge found some merit in the three objectors' "claim that the proposed allocation fails to credit them for many hours of compensable work without adequate explanation," and he ordered the co-lead plaintiff firms — Lieff Cabraser Heimann & Bernstein LLP and Hagens Berman Sobol Shapiro LLP — to submit a document detailing the criteria used to determine the compensation for each participating firm.

"It is incumbent on class counsel to explain and justify the criteria they used to make these determinations," Judge Furman said in the order.  The judge approved the arrangement's structure, in which Lieff Cabraser and Hagens Berman stand at the top tier and are entitled to 35% of the lodestar.  Members of the plaintiffs' executive committee are in tier two, along with liaison counsel and bankruptcy counsel, with an allocation of 19.3%.  Finally, the rest of the attorneys would fall in tier three and receive the greater between $1,000 or 7.5% of the lodestar.

Firms in tier one, two and three will collectively receive more than $15.4 million, $8.9 million, and $254,000 respectively, according to the arrangement. The only exception will be Brown Rudnick LLP, which will receive 23.37% of the lodestar despite being in tier two because it contributed more work than firms in the same tier, according to the order.  Judge Furman also agreed to placing the three objectors in tier three.

One of the objections came from Peller, who claimed the difference in earning between tiers is unfair because it fails to compensate non-lead attorneys properly.  In a call to Law360, Peller said the lead counsel "punished" his group by assigning a small share of the lodestar compared to firms in the higher tiers.  "This is amazingly low compensation for lawyer work," he said.

Case law has put in place limits to the power of lead counsels in class actions. The same protections do not apply to multidistrict litigation, though Peller argued with Judge Furman that they should.  "The lead counsel in multidistrict litigation have virtually unfettered power over the litigation and litigation decisions, and that's a problem from a due process point of view," said Peller, who has been working on the case since 2014.

The MDL saw its turning point in March 2020, when General Motors proposed a $120 million settlement with drivers who claimed that their cars lost value due to faulty ignition switches.  Under the settlement, a trust controlled by creditors in the company's 2009 bankruptcy will contribute up to $50 million.  The deal also included $24.6 million in attorney fees and $9.9 million in litigation expenses, according to court documents.

In the order, Judge Furman acknowledged there is little case law guidance about the allocation of attorney fees among co-counsel, and that courts routinely give lead counsel the initial responsibility of determining how much each participating firm deserves.

Golenbock Eiseman had argued that the allocation system proposed by the lead counsel is only based upon fees and expenses incurred between Oct. 20, 2014, and Feb. 29, 2016, and fees and expenses it incurred between April 7 and Sept. 30, 2014, were improperly excluded.

Similarly, Wolf Haldenstein had told the judge that Lieff Cabraser and Hagens Berman had failed to credit it for work done before August 2014, without providing a rationale.  Golenbock Eiseman and Wolf Haldenstein had also argued they should have been assigned to tier two, claiming they had put in as much work as bankruptcy counsel during the early stages of the case, the order says.  Golenbock Eiseman said it expected to receive a share of the lodestar similar to that given to Brown Rudnick, "or at worst, [be categorized] in Tier 2," according to the order.

In the end, Judge Furman brushed off all objections except those regarding the allegedly unexplained omissions by the lead counsel in calculating the hours of compensable work for the three objecting firms.  The judge will issue a decision on the proposal after evaluating possible discrepancies between the attorney fees and expenses determined by Lieff Cabraser and Hagens Berman and those submitted by each participating counsel.

Elizabeth Cabraser of Lieff Cabraser, who also served as lead counsel for plaintiffs in the MDL against Volkswagen for its cheating of emission standards, cheered the judge's approval of the tier arrangement in an email to Law360.  "We are pleased the hard work we put into a fee allocation designed to reflect the relative efforts and risk undertaken by counsel who worked for the class resulted in a structure fully supported by the court as well as nearly all plaintiffs' counsel," she said.  "We look forward to a final distribution to counsel after submitting the requested information."

Block Billing Reduces Fee Award in Personal Injury Case

May 14, 2021

A recent Law 360 story by Mike Curley, “After ‘Block Billing’ and ‘Paper Dump,’, Attys Net Only $786K” reports that an Arizona federal judge has awarded $786,472 to attorneys representing a man who suffered additional injuries after a fall when his insurer delayed approving surgery, down from the requested $1.04 million as a result of "block billing," a "paper dump" and other failures in their request for fees.  U.S. District Judge Susan M. Brnovich also denied Greg Jarman's request for $74,000 in expenses from American Family Insurance Co. in its entirety, saying he failed to itemize the costs and the court will not "do the hard work for him" in separating out items like clothes for one attorney and a hotel room for another.

Jarman's request for fees comes after a jury in September awarded him $4.5 million over delays in care for injuries stemming from an on-the-job fall in 2015.  The court later reduced the verdict to $2.8 million.  Jarman, who had worked at electrical company Efficient Electric Inc. for more than 10 years before his injury, experienced a severe fall on July 25, 2015, according to court documents, and a couple of weeks later he went to the hospital and was diagnosed with a shoulder sprain and put on limited activity.  Jarman's neurologist on Oct. 6 of that year recommended cervical decompression surgery, after his orthopedic surgeon called his case "urgent."

American Family wanted its own doctor, Dr. John Beghin, to examine Jarman before approving the surgery, and he agreed on Nov. 5, 2015, that surgery was necessary.  The surgery was performed five days later, and Jarman said the delay caused cognitive injuries.  In the order, Judge Brnovich reduced the total fee for several reasons, starting with Jarman's failure to comply with court rules requiring his counsel to confer with American Family's on the fees before submitting his request.

While the judge did not accept American Family's argument that Jarman isn't entitled to fees at all, she did reduce them still further, saying that there is a particularly egregious case of block billing in this case, with one of the attorneys attributing hundreds of hours of work to single line items, leaving the court unable to determine how much time was spent on specific tasks.

The request also does not contain an affidavit as to the tasks that support staff at the firms took on during the case, so the court is unable to determine if the rates for their work are reasonable, the judge wrote, adding some entries from support staff are clerical in nature.  Jarman also failed to produce evidence that his attorneys' fee rates are reasonable, the judge wrote, further warranting a reduction to the fee.  The attorney fees request also includes entry for work done relating only to dismissed defendants, the judge added

Client Balks at Lodestar Rates in $8.5M ERISA Fee Request

May 13, 2021

A recent Law 360 story by Brian Dowling, “Raytheon Balks at Hourly Rate in $8.5M ERISA Fee Ask,” reports that Raytheon Co. has urged a Massachusetts federal judge to shrink what it calls a bloated $8.5 million fee request by attorneys who secured a $59 million settlement in a benefits class action, saying that amount would equate to a staggering $3,800 hourly rate.

The company, now known as Raytheon Technologies Corp. after its merger with United Technologies Co., said the award "exceeds the bounds of reasonableness" and instead should be cut down to a more appropriate $1.5 million lodestar amount.  Raytheon pointed to the simple math of dividing the $8.5 million attorney fee request by the roughly 2,200 hours billed by class counsel at Izard Kindall & Raabe LLP and Bailey & Glasser LLP, resulting in about $3,800 per hour paid for the work.

In requesting the $8.5 million in fees plus nearly $400,000 in litigation costs, counsel for plaintiff Johnny Cruz and the class argued the sum comes to a reasonable 15% of the total settlement amount and is appropriate given such a "complex case involving a novel and highly technical legal theory."

Cruz sued Raytheon and its pension plan managers in 2019, arguing they violated ERISA by improperly calculating certain retirees' pensions.  He sued on behalf of over 10,000 Raytheon retirees who received their pensions in the form of a joint and survivor annuity, or JSA, or a pre-retirement survivor annuity, or PSA.

ERISA requires these pension types to be paid out at a rate that is actuarially equivalent to what single retirees — who typically select a benefit package called a single-life annuity, or SLA — receive. Cruz's lawsuit accused Raytheon of flouting that requirement by using outdated data to calculate JSA and PSA pensions.  Cruz said he personally received $57 less per month than he should have.

Raytheon asked the court to toss the claims in September 2019, but U.S. District Judge Patti B. Saris denied that request in January 2020, saying the reasonableness of Raytheon's actuarial assumptions is a matter that required discovery.  The company settled the suit in February 2021 in what Cruz called an "excellent" deal.

While Cruz calculated the attorney fees using a percentage of the whole settlement method, his counsel checked the math against the alternative lodestar method for calculating fees and the $8.5 million amounts to a multiplier of 5.5 times the $1.53 million lodestar.  Raytheon attacked the idea of using such a high multiple, if not solely for the resulting hourly rate, on the basis that class counsel didn't do enough work to deserve it.

The parties streamlined the litigation to focus on the critical question of the actuarial reasonableness and settled soon after it was decided, Raytheon said.  The company added that class counsel represents plaintiffs in eight other cases involving similar "novel (and so far, untested) legal theories," including another in Massachusetts against Partners Healthcare System Inc.  "The work performed in this case benefits class counsel's other cases — and vice versa," Raytheon said.  "There is no reason why defendants' retirees should foot the bill in this case for work that benefits a plethora of class actions."

Federal Circuit Weighs in on EAJA Fee Awards in Partial Wins

April 29, 2021

A recent Law 360 story by Hailey Konnath, “Fed. Circ. Weights in on EAJA Fees in Partial Wins,” reports that the Federal Circuit issued a precedential decision clarifying that the government is still obligated to cover attorney fees stemming from initial case reviews for litigants who prevail against it in civil actions, even if the litigants did not succeed on all their claims. 

According to the underlying case, U.S. Army veteran Robert L. Smith partially won an appeal of a U.S. Department of Veterans Affairs decision on his benefits.  He then asked that his attorney fees for the appeal be covered under the Equal Access to Justice Act, which requires the government to pay attorney fees for those who prevail against it in court.

The Court of Appeals for Veterans Claims held that he should indeed receive an award, but reduced the portion of his award that stemmed from the time his attorney spent on an initial review of the case.  The court held that the reduction was needed because Smith only prevailed on one of the issues in his appeal.

But the Federal Circuit said that the veterans court had undervalued the importance of the initial review of Smith's case, holding that the review was "necessary before appellate counsel could determine what bases, if any, existed for an appeal."  The three-judge panel reversed in part and affirmed in part the veterans court's decision and remanded the case for an award consistent with its opinion.

The Veterans Court should have determined whether the time Smith's attorney spent reviewing the record could be reasonably understood as preparation for bringing the successful claim, the Federal Circuit said.  But instead, the court "assumed that, because such time must have been spent on both successful and unsuccessful claims, it therefore required a reduction in those hours," the panel said.

"This was an error," the panel said.  Specifically, the Veterans Court misinterpreted 28 U.S. Code § 2412, which governs the government's costs and fee obligations in civil actions brought against it, according to the decision.  "There is no statutory requirement that time reasonably expended in initial record review must be reduced, merely because there were eventually both successful and unsuccessful claims pursued in the case," the panel said.  "To the contrary, the law requires that Mr. Smith's counsel be compensated for time that was necessarily expended on the initial review of the record, regardless of whether some of the claims that came from that review ultimately were found not to prevail, if that time was necessary for a successful appeal."

The Federal Circuit noted that if Smith had only brought his successful claim before the court, his attorney would have been fully compensated for the 18 hours she spent on her initial review of the 9,389-page record.  "There may be instances in which the time spent on reviewing the record is unreasonable or could be apportioned.  This is not one of them," the panel added.

Harold Hoffman, who works for Veterans Legal Advocacy Group and represented Smith in the action, told Law360 that the non-profit organization relies on Equal Access to Justice Act fees to help disabled veterans.  "We are happy that the Federal Circuit recognized the importance of good representation for veterans forced to appeal bad VA decisions to the federal courts," Hoffman said.

Rachel Bayefsky, an attorney with Akin Gump Strauss Hauer & Feld LLP, added that the Federal Circuit opinion "laid down important principles for the Veterans Court to follow in this case and in the future."  "The Federal Circuit correctly recognized that the standards of proper appellate advocacy apply equally to veterans, and that attorney's fees should be awarded accordingly," she said.

Citing his partial victory, Smith requested a fees award of about $10,200 for 50 hours of attorney work, per the order.  The hours total included the 18 hours his attorney spent reading and taking notes on the administrative record for the case.

In November 2019, the Veterans Court granted Smith's request but only awarded him fees for six of those 18 hours spent reviewing the record.  At the time, the court reasoned that "[b]ecause counsel's review of the [record before the agency] in this case 'presumably pertained to both the prevailing and nonprevailing [sic] issues,' the court concludes that reductions are warranted to account for time spent reviewing and taking notes regarding evidence related to the six unsuccessful claims."