A recent Law.com story by Adolfo Pesquera, “Does New Insurance Law Cut Out Attorney Fees? High Court to Decide”, reports that the Texas Supreme Court justices responding to a federal appellate certified question appeared perplexed about the lack of guidance on how or if attorneys could get paid on property-damage insurance claims.  The justices heard oral argument on Rodriguez v. Safeco Ins. Co. of Indiana, a case that came to them from the U.S. Court of Appeals for the Fifth Circuit.  A federal trial court granted the insurer summary judgment and the homeowner appealed.

The appeal argued that when Safeco invoked the policy appraisal provision after litigation began, and paid damages and interest, a Texas insurance law created by the legislature in 2017 did not intend to eliminate attorney fees.  In examining the 2017 Texas Prompt Payment and Claims Act, the Fifth Circuit decided it could not interpret the law and asked the Supreme Court to weigh in on the issue.

Melissa W. Wray of Daly & Black, arguing for the homeowner, said the intent of the law is to promote prompt payment of insurance claims by imposing liability for statutory interest, attorney fees and prejudgment interest on insurers who do not pay claims in accord with the act’s deadline.

“Safeco asks the court to adopt an interpretation of the statute that would, in the context of attorneys fees, ignore the claim payment deadlines that the legislature has put in place and effectively redefine prompt payment of a claim to mean payment of a claim at any time up until the moment before the trial judge enters the final judgment,” Wray said.

Throughout the hearing, the justices grappled with a phrase in the law—”the amount to be awarded in the judgment”—and Justice Brett Busby began by referring to caselaw, Ortiz v. State Farm Lloyds (Texas 2019), where the supreme court said there is no claim for breach of contract when the insurer pays the appraisal award.  “So, wouldn’t the ‘amount to be awarded’ in the judgment for your claim under the insurance policy be zero?” Busby asked.

Wray drew a distinction, moving away from a breach of contract claim, to argue damages was not necessarily relevant to an “amount to be awarded,” because the only defined term in the statute was a “claim.”  “Safeco wants to interpret that as the amount of unpaid policy benefits for which the insurer remains liable at the time of judgment.  Those words aren’t used in the statute,” Wray said.

When Safeco’s representative, Mark D. Tillman of Tillman Batchelor, rose to speak, the justices repeatedly tried to pin him down on when the language of the statute allegedly read attorney fees out of the act.  “There has to be the possibility that a plaintiff can obtain a judgment,” Tillman argued.  “The legislature clearly tied the ability to award attorney’s fees to, in the future, obtain a judgment. That simply cannot happen here.”  Justices Busby, Jeff Boyd and Evan Young took turns arguing that point.

Boyd said Tillman was embracing the absurd argument that, speaking hypothetically, a $50 million building could be destroyed and insurance company disagrees with the amount damages claimed.  “You have five years of litigation, finally get to a jury trial, the jury finds for the insured, and you file your JNOV and the judge denies it and the judge says ‘send me an order.  I’m going to sign a final judgment awarding all this money,’ and your client at that moment can write a check and avoid all attorney’s fees,” Boyd said.

Busby jumped in, “You’re getting back to my question then.  Where is the moment … when you’re looking at what is ‘to be awarded?’  To Boyd’s point, it’s not the day before the judgment is signed.  So in the life of the case, when is it?”

Tillman said that in this particular case, the appraisal amount was paid immediately.  “I understand, but we have to write the rule not just for your case,” Busby said.  Justice Young asked, “What will inform the answer to that question if it’s not in the text of the statute?”  Tillman finally said he did not know.  Then we go right back to Justice Boyd’s hypothetical.  I’m with him.  I don’t understand where the line is if that’s the only thing the statue says and the only thing we’re guided by,” Young said.

Tillman argued Boyd’s hypothetical scenario was an extreme case and one he had never encountered in the real world.  He told the court not to “throw the baby out with the bathwater” using an extreme example to overturn a statute intended to curb abuses by trial attorneys that led to its passage in the first place.  “Then why not just embrace it and say, ‘Yeah, that’s an extreme hypothetical, not going to happen, but the statute says it and if it’s a problem there’s no judicially discernable way to draw that line, leave it to the legislature to fix that,” Young suggested.

A recent Law 360 story by Celeste Bott, “In a First, Dior Wants Fee Award For Beating BIPA Suit”, reports that Christian Dior says it should be the first defendant awarded attorney fees in a case under Illinois' biometric privacy law, urging a federal judge who threw out class claims against it to reject the argument that the law only allows for the recovery of fees for prevailing plaintiffs.  U.S. District Judge Elaine Bucklo in February dismissed the Illinois Biometric Information Privacy Act suit brought by lead plaintiff Delma Warmack-Stillwell, holding that an exemption under BIPA for data captured "from a patient in a health care setting" freed Christian Dior Inc. from the suit over its online tool for users to virtually try on sunglasses.

Warmack-Stillwell qualified as a patient because Dior's virtual try-on tool "facilitates the provision of a medical device that protects vision," the judge said.  In May, Dior argued that Judge Bucklo should award it attorney fees and costs, saying BIPA's plain language makes clear that a "prevailing party" may recover its attorney fees and that the Illinois Supreme Court has held that prevailing parties include defendants.

Dior claimed those fees were particularly warranted in this case, citing two other lawsuits that were dismissed by Illinois federal judges under the same health care exemption — one before Warmack-Stillwell's case was filed and one tossed about a week after hers was filed.  "These decisions were dispositive of this case, such that pursuing these claims would necessarily be wasteful," Dior claimed. "Plaintiff filed and pursued a lawsuit premised on a repeatedly-rejected theory of liability and increased the costs of this lawsuit with wasteful discovery demands."

Warmack-Stillwell, meanwhile, contends that no BIPA case has ever awarded fees to a defendant and says that BIPA provides a "prevailing party" may seek to recover its fees "for each violation," a phrase that necessarily implies further the word "proven" and therefore applies only to plaintiffs, she said.

In Dior's response contesting that interpretation, it cited the Illinois Supreme Court's recent holding in Cothron v. White Castle, which said claims accrue each time data is unlawfully collected and disclosed rather than simply the first time.  There, the justices cautioned against an "interpretation-by-assumption approach in the context of BIPA itself" by forbidding parties from creating "new elements or limitations not included by the legislature."

"In Cothron, it acknowledged that its ruling could result in 'annihilative liability' and that 'there is no language in [BIPA] suggesting legislative intent to authorize a damages award that would result in the financial destruction of a business,'" Dior said.  "And yet, because it found the statutory language was clear, those sort of policy judgments are reserved for the legislature. The same result applies here."

Judge Bucklo should also reject the plaintiff's other argument that the term "prevailing party" in BIPA should exclude defendants because the law's purpose is to protect consumers, Dior said in its reply.  "Of course, the Illinois Consumer Fraud Act was also intended to protect consumers, but that did not stop the Supreme Court from holding that its prevailing party provision applied to prevailing defendants as well," Dior said.

A recent Law.com story by Brad Kutner, “Attorney Push Back on Proposed Camp Lejeune Act Attorney Fee Cap,” reports that bipartisan efforts in both the House and Senate aim to add a cap to attorneys fees on lawsuits linked to exposure to toxic chemicals at a North Carolina marine base.  But attorneys who are already working with clients to get some of the $6.1 billion made available via legislation passed last summer say the suggested caps are unreasonably low and the market will better police the process. 

“Passing the Camp Lejeune Justice Act was an important step toward providing long denied justice for veterans, their families, and civilian workers,” said Rep. Jerry Nadler, D-New York, when he announced the Protect Access to Justice for Veterans Act earlier this year.  He said “bad actors” looking to take advantage of elderly vets were to blame for the bill. 

The Camp Lejeune Justice Act signed by President Joe Biden in August, nixed the statute of limitations on claims related to hazardous chemical and water exposure at the North Carolina marine base from the 1950s until the late 80s.  It defined the illnesses that can be covered and superseded the Feres doctrine, which would otherwise preclude suits from military personnel against the government.  But it also lacked any cap on attorneys fees, an issue that has stirred debate among lawyers as much as elected officials.  

Nadler’s effort would cap attorneys fees between 17 and 33%, depending on the services and timeline for completion of a claim.  Another effort sponsored by Republicans in the Senate, the Protect Camp Lejeune VETS Act, caps fees at 12 or 17%.  “In my eight years in the U.S. Senate, there are few issues I’ve been involved with that more desperately cry out for a just resolution,” said Sen. Dan Sullivan, R-Alaska, about his effort, which includes Minority Leader Mitch McConnell, R-Kentucky, among its co-sponsors.  

Efforts to limit fees were also submitted last fall after the act was signed, but they failed to gain traction before the end of the 117th Congress.  Now in the 118th congressional session, both bills have only been introduced, but that’s enough for lawyers working in the space to start speaking up.  “These are individual cases; every one is unique,” said Baird Mandalas Brockstedt Federico & Cardea partner Philip Federico in a phone interview, about the effort his firm has already put in for the clients he’s representing in Camp Lejeune claims.

But, as Federico and other attorneys pointed out, the individual nature of every claimant and the law’s language precluding class action claims will require a lot of work.  “We prepare as though we’re trying the cases,” said Beasley Allen principal Rhon Jones. His firm, along with vet disability firm Bergmann & Moore, are representing over 10,000 vets in claims under the act.  Many are still in the administrative process, and he’s still weighing his options for those who may now file suit. 

“There’s a lot of unknowns there.  We want to be prepared to represent our clients,” he said.  Notably the bill created an administrative process, managed by the U.S. Navy Judge Advocate General’s Corps, for vets to file claims with before going to court.  But as the six-month window for responses has come to an end for the earliest filers, the lawsuits have started steaming in.

According to a Court Listener search, at least 47 such suits have been filed in the U.S. District Court for the Eastern District of North Carolina, where all such complaints must be filed.  But the number of claims could skyrocket, with hundreds of thousands of people possibly impacted, as the administrative process has so far yielded only denials for the lawyers the National Law Journal spoke to. 

In a statement, Patricia Babb, public affairs officer for the Office of the Judge Advocate General of the Navy. said the office intaking claims was “closely monitoring the number of CLJA claims it receives each week, and also continually assessing its adjudication procedures.”  When asked whether any administrative claims had received payouts yet, she said no claims had “been fully adjudicated.”

As for concerns about resources to address the demand, a theory posited by Federico, Babb said the office was “taking appropriate actions to address staffing issues … when needed.”  Steven German, managing partner with Scout Law firm, has about 160 clients with Camp Lejeune claims. He’s among those who’ve yet to see an approved administrative claim.  But even before that administrative process starts, German said his firm is putting in work that requires reasonable compensation. 

“Lots of victims are dead, so you’re working with family members.  And it gets trickery when you get into the succession of the victim,” German said.  He also said finding medical records, some destroyed after 10 years, can be another challenge.  “It’s harder than people think, and these are the things that keep me up at night,” he said. 

German also argued that concerns about unreasonable attorneys fees are overblown.  Liens, hospital bills, Medicaid-owed funds and reimbursement claims such as workers’ compensation claims and veterans disability claims, can all get taken out from any settlement.  “The government gets all their money back,” he said.  “And the liens come off the top.” 

So what may start as a 40% fee on $60,000 win, $24,000, turns into $12,000 just as quickly.  “That’s a big haircut,” he said, also noting language in the bill can cause attorneys to forfeit up to one-third in fees.. 

Federico also expressed concern about reportedly high fees: “My father was an attorney and he always said ‘don’t tell me what you made, tell me what you ended up with,’” he said. To that end he’s promised to cap his firm’s handling of these cases at 25%, but he called the GOP-led effort to cap fees well below that “grossly unfair.”

One solution Federico offered was court intervention via a mediation process.  Once the court starts taking in complaints, a judge can make a matrix for awards and injuries and start sorting claims.  “We don’t need to take a decade to have this play out,” he said of the alternative.  Jones, meanwhile, is hoping once suits start rolling the system will work itself out. With his thousands of clients, he’s got plenty of work to do..  “We are in the process of preparing a lot of lawsuits,” he said.

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.

A recent article by John Connolly, “Can Texas Force Lawyers to Pay the Prevailing Party’s Legal Fees in Federal Litigation?,” reports on the new Texas legislation, SB 8 and its attorney fees provision.  This article was posted with permission.  The article reads:

The new Texas abortion law known as S.B. 8 has been the subject of extensive commentary for its “bounty” cause of action against abortion providers and “aiders and abettors.”  But the law creates a second cause of action that may infringe the right to counsel in federal courts and, as a result, may face its own judicial scrutiny.

The second modification to the Texas Code creates a cause of action against litigants and their lawyers who challenge the enforceability of any Texas law that regulates or restricts abortion, including but not limited to S.B. 8. See SB 8 § 4 (amending Texas Civ. Prac. & Remedies Code § 30.022).  The provision applies to cases filed in state or federal court.  If the party defending the Texas law prevails, that party can seek fees and costs in a new action filed in Texas state court within three years of final judgment in the underlying action. Id. § 30.022(c).  The lawyer is jointly and severally liable with the client for the fees and costs.  The fee-shifting provision, although somewhat ambiguous, appears to be entirely one-way; i.e., if the party challenging the law prevails, that party is not entitled (through § 30.022) to recover fees and costs from the opposing party or counsel.

Many other statutes and rules expose lawyers to attorney’s fees for misconduct during litigation, but as a few commentators have explained, S.B. 8 appears to be the first law that makes lawyers liable based solely on the issue they are litigating.  In view of other provisions in S.B. 8 that intentionally frustrate judicial challenges of the statute, it seems beyond doubt that one purpose of § 30.022(c) is to impede a litigant’s attempt to obtain counsel to challenge a Texas abortion law.

For cases litigated in federal court, § 30.022 violates at least the spirit of 28 U.S.C. § 1654, which provides that “In all courts of the United States the parties may plead and conduct their own cases personally or by counsel as, by the rules of such courts, respectively, are permitted to manage and conduct causes therein.” Section 1654 traces back to the Judiciary Act of 1789. See 1 Stat. 73, § 35 (Sep. 24, 1789). Thus, the right to private (or retained) counsel in federal judicial proceedings is older than the Sixth Amendment and the rest of the Bill of Rights, and the right to retained counsel is so accepted that case law defining its limits in federal civil cases is sparse. Most case law under § 1654 relates to the right to proceed pro se, but the statute also codifies a right to proceed with private counsel of one’s choice. See Texas Catastrophe Property Ins. Ass’n v. Morales, 975 F.2d 1178, 1181 (5th Cir. 1992); McCuin v. Texas Power & Light Co., 714 F.2d 1255, 1262 & n.24 (5th Cir. 1983); Bottaro v. Hatton Assocs., 680 F.2d 895, 897 (2d Cir. 1982). As the text of the statute provides, the right is subject to reasonable rules “of such [i.e., United States] courts.” A body of precedent makes clear that the right to counsel does not override, for instance, the requirement that an attorney hold a valid license, which typically is conferred and regulated in the first instance by state law. E.g., Eagle Assocs. v. Bank of Montreal, 926 F.2d 1305, 1308 (2d Cir. 1991). But ethics and licensing requirements are laws of general applicability, and federal courts usually adopt them through their own local rules. As far as I can tell, no state law seeks to impede access to counsel in federal courts more clearly and directly than S.B. 8.

Nevertheless, it is hard to predict whether a federal (or state) court would strike down § 30.022 under § 1654 or some other doctrine protecting the right to counsel in federal courts. In the criminal context, where the Sixth Amendment protects a right to appointed counsel for indigent defendant and to retained counsel of one’s choice for others, see Powell v. Alabama, 287 U.S. 45, 53 (1932), the Supreme Court has upheld a federal statute prohibiting the use of forfeitable funds to retain defense counsel. Caplin & Drysdale, Chartered v. United States, 491 U.S. 617 (1989). The four dissenting justices observed that “the reluctance of any attorney to represent the defendant in the face of the forfeiture threat effectively strips the defendant of the right to retain counsel.” Id. at 654 (Blackmun, J., dissenting). The majority nevertheless concluded that the government had a substantial property interest in the forfeitable funds. Id. at 627-28. That rationale would not apply to § 30.022, of course, as the federal government has no competing interest in the Texas fee-shifting scheme.

Because the right to counsel at issue here is primarily statutory rather than constitutional, the argument would be pre-emption rather than unconstitutionality under the Sixth Amendment. The most pertinent pre-emption doctrine is “obstacle pre-emption,” which applies when a state law imposes obstacles to the purposes and objectives of Congress. E.g., Hines v. Davidowitz, 312 U.S. 52, 67 (1941). In Felder v. Casey, 487 U.S. 131 (1988), for instance, the Court held that state-law requirements that prospective plaintiffs notify government officials before filing suit were pre-empted when applied to federal civil rights claims under 42 U.S.C. § 1983. See also El-Tabech v. Clarke, 616 F.3d 834, 840 (8th Cir. 2010) (although state law establishing procedure for payment of federally awarded attorney’s fees was not completely pre-empted, if state claims board rejected an attorney’s fee award “that specific executive or legislative action would almost surely be conflict preempted”). Although these cases are not directly on point, it seems intuitive that a state law requiring lawyers to pay attorney’s fees for unsuccessful federal claims filed in federal courts is a serious obstacle to the federal right to counsel. By all appearances, that is exactly what the Texas legislature intended it to be.

Whether the “obstacle” to retained counsel imposed by S.B. 8 would lead a federal (or state) court to strike it down is a novel question that may itself evade judicial resolution³.  But the question deserves its day in court. Like the bounty cause of action that S.B. 8 creates against abortion providers or aiders and abettors, the fee-shifting cause of action against federal litigants and their lawyers is transportable to other states and other rights. The right to counsel in civil proceedings is not as prominent as the right to abortion, but it is an important right nonetheless, and federal courts should have the last word on whether states can impede the right through legislation like S.B. 8.

¹A second basis for pre-emption might be the Texas law’s incompatibility with 42 U.S.C. § 1988, which allows reasonable attorney’s fees to the prevailing party in actions to enforce provisions of the federal civil rights statutes, including 42 U.S.C. § 1983. But § 1988 does not allow recovery of fees from opposing counsel. Roadway Express, Inc. v. Piper, 447 U.S. 752, 761 (1980). 

²Some courts hold that the right to retained counsel in civil cases is implicit in the due process clause. See, e.g., Morales, 975 F.2d at 1180; contra Kentucky W. Va. Gas Co. v. Pennsylvania Public Util. Comm’n, 837 F.2d 600, 618 (3d Cir. 1988). Like most rights, it is not absolute, and may be overridden for compelling reasons. See 975 F.2d at 1181.

The bounty statute may fall before the fee-shifting provision is tested; the United States’ complaint against Texas, for instance, does not clearly challenge the fee-shifting provision. In addition, because the prevailing party can file the attorney’s fee claim in a new case in state court, that claim might evade judicial review by federal courts. See Bill Johnson’s Restaurants, Inc. v. NLRB, 461 U.S. 731 (1983) (party had First Amendment right to file nonfrivolous claim in state court and NLRB could not order party do dismiss the claim before determination of its merits in state court); 28 U.S.C. § 2283 (anti-injunction act). Nevertheless, state courts would have authority to consider the pre-emption argument, and the Supreme Court ultimately could decide the issue on discretionary review.

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