August 25, 2023
A recent Law 360 story by Emily Johnson, “Davis Polk Blasted Over Fees Bid For Paul Hastings Work”, reports that U.S.-based Chinese nationals — whose suit accusing Paul Hastings LLP of not registering as a foreign agent was dismissed earlier this month — called a request from the defendants' legal team at Davis Polk & Wardwell LLP for more than $327,000 in attorney fees "grossly excessive" and unreasonable.
Tao An and other Chinese nationals argued that Davis Polk attorneys' request is not rational, because "in essence … the entirety of their handling" consisted of arguing a motion to dismiss and a motion for sanctions, according to the plaintiff's brief filed. After their suit was tossed, the plaintiffs were sanctioned on Aug. 2 and ordered to pay attorney fees for the defendants.
"If the relief they sought in their motions was so obviously warranted to be in their favor, as they argued, it simply should not have taken in excess of $300,000 in legal fees to accomplish," the plaintiffs said. "The rates applied are also unreasonable, the number of attorneys was excessive, and the amount of hours spent were excessive. If the court is to award fees, it is respectfully requested that the amount be reasonable. The amount sought is clearly not reasonable."
U.S. District Judge Valerie Caproni dismissed the suit brought by the plaintiffs earlier this month, finding that the plaintiffs didn't provide any facts to support their claim that Paul Hastings' representation of Jinshang Bank, which is controlled and operated by the Chinese Communist Party, qualified the firm as an agent of a foreign principal under the Foreign Agents Registration Act, or FARA. The judge found that the case, filed in November, was part of a harassment campaign against Paul Hastings and one of its former attorneys, Luc A. Despins.
After finding that the suit was frivolous, Judge Caproni ordered the plaintiffs to pay the defendants' attorney fees. The plaintiffs pushed back on exhibits submitted by Davis Polk of other firms' billable hours, arguing that billable hours in bankruptcy cases in the Southern District of New York are not relevant to show reasonable fees for this case, saying, "Practice in bankruptcy court is a much more specialized and heavily detailed practice than the instant matter."
"Those cases are vastly different, and vastly more complicated, than the instant case," the plaintiffs said. In their motion for attorney fees filed Aug. 11, the defendants showed that other firms — Weil Gotshal & Manges LLP, Latham & Watkins LLP, Simpson Thacher & Bartlett LLP, Skadden Arps Slate Meagher & Flom LLP and White & Case LLP — charged anywhere from $1,250 to $2,230 for an hour of a partner's time. The defendants also showed ranges for counsel and associates at these firms.
In the motion for attorney fees, Greg D. Andres of Davis Polk said that he served as lead counsel in this suit, leveraging his expertise as co-head of the firm's white collar defense and investigations practice and 20 years of litigation experience that includes handling FARA matters. Andres said he was among the prosecutors assigned to Special Counsel Robert Mueller's prosecution of Paul Manafort, who was handed a 73-month prison sentence in 2019 after he pled guilty to failing to register as a foreign agent, among other charges.
"My standard hourly billing rate for 2022 was $1,990 in 2022, and $2,200 as of January 1, 2023," Andres said. "Paul Hastings was charged a discounted hourly rate for my work related to this action of $1,592 in 2022 and $1,760 as of January 1, 2023." The plaintiffs argued that the standard for reasonable attorney fees should be an hourly rate considering that a client would want to spend the "minimum necessary to litigate the case effectively."
"The defendants, of course, may choose whomever they wish to represent them, but that does not make defendant's counsel's hourly rates 'reasonable,'" the plaintiffs said. "Pursuant to this honorable court's order, and indeed controlling law on the subject, calls for any award to be based on a 'reasonable attorney's fee', it would be an outright abuse of discretion, a distortion of justice, and an outright violation of controlling law, to rely on the defendants' bankruptcy case rates to provide any guidance to calculate a 'reasonable fee' in this matter."
The plaintiffs said that Davis Polk's exhibits submitted are "unsupported hearsay" and include vague descriptions of time spent on litigating this suit. The plaintiffs cast doubt on why the defendants' legal team included five lawyers and three legal assistants. "This begs the question why so many people were needed to work on the case — other than to artificially inflate their legal bills," the plaintiffs said. The plaintiffs also said the firm's exhibits are "unreliable due to excessive block billing and over billing, two practices that go against legal billing best practices."