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Category: Practice Area: Civil Rights / Public Interest

Federal Judge: Can’t Use ChatGPT to Justify Attorney Fees

February 22, 2024

A recent Law 360 story by Madison Arnold, “Law Firm Scolded For ‘Misbegotten’ ChatGPT Use in Fee Bid”, reports that a Manhattan federal judge criticized a special education-focused law firm or citing ChatGPT calculations to back up its attorney fee request of more than $100,000, calling the move "utterly and unusually unpersuasive."  U.S. District Judge Paul A. Engelmayer knocked the fees for the Cuddy Law Firm PLLC down to just $53,050.13 plus interest for work done in a case brought by a parent on behalf of a child against the New York City Department of Education involving two administrative hearings.

The firm had asked for $113,484.62 plus interest after securing judgments against the department, saying the feedback from the generative artificial intelligence program supported its request.  "As the firm should have appreciated, treating ChatGPT's conclusions as a useful gauge of the reasonable billing rate for the work of a lawyer with a particular background carrying out a bespoke assignment for a client in a niche practice area was misbegotten at the jump," Judge Engelmayer wrote.

An attorney for the department, Tom Lindeman, said in a statement to Law360 Pulse that his side is pleased with the decision.  "The firm's use of ChatGPT to support its aggressive fee request was deemed inappropriate and, as the court determined, the city's prior offer to resolve fees was fair and reasonable," Lindeman said.  The parent of an unnamed child, referred to as G.G., hired the Cuddy Law Firm.  G.G. has hyperactivity disorder, a language disorder, a developmental coordination disorder and acute stress disorder, according to the decision.

The child's parent, referred to as J.G., initiated two due process hearings, alleging in the first that the department failed to provide the child with a free appropriate public education for the 2017-2018 and 2018-2019 school years.  That included failing to provide annual reviews, evaluations and appropriate education services and implementing special education teacher support services, as mandated by the child's individualized education program from January 2018.

The Cuddy Law Firm sought compensation for its work in both hearings and resulting fees litigation.  While the firm doesn't rely predominantly on ChatGPT-4 in arguing for its billing rates, it did present the findings of the AI program as a "cross-check," Judge Engelmayer said.  He added that the law firm failed to identify any information it inputted into ChatGPT for it to rely on to confirm its calculation, among other omissions.

"The court therefore rejects out of hand ChatGPT's conclusions as to the appropriate billing rates here.  Barring a paradigm shift in the reliability of this tool, the Cuddy Law Firm is well advised to excise references to ChatGPT from future fee applications," the judge said.  Because of the inefficiencies of the ChatGPT argument, as well as its other arguments, the court decided to reduce the attorney fees awarded to the Cuddy Law Firm.

"For the reasons stated, the court grants J.G.'s motion for an award of fees and costs, but in an amount below that sought.  J.G. is awarded $52,386.01 in fees and $664.12 in costs, for a total of $53,050.13, plus post-judgment interest at the applicable statutory rate," Judge Engelmayer said.  Outside the ChatGPT issue, the court reduced the fees in part because the parent and the Cuddy Law Firm had not given evidence that the case presented novel or complex legal or factual issues.

Delaware High Court Clarifies Fee-Shifting in Public Interest Cases

January 31, 2024

A recent Law 360 story by Rose Krebs, “Del. Justices Clarify Fee-Shifting in Public Interest Cases”, reports that, in a decision offering guidance on attorney fee-shifting in public interest cases, Delaware's Supreme Court reversed a decision that awarded fees to nonprofit organizations that successfully challenged the use of outdated tax assessments in determining funding for the state's public schools.

In a 49-page ruling, the state's high court undid a Chancery Court order from last year that awarded roughly $1.5 million in fees to Delawareans for Educational Opportunity and the NAACP Delaware State Conference of Branches.  Left in place was the award of roughly $73,000 in legal expenses to the two groups, which hadn't been contested by the litigation parties.  "The parties in this appeal raise important questions regarding fee-shifting in the public interest litigation context," Justice Karen L. Valihura wrote for the court.

At issue were legal fees awarded after the two nonprofit organizations brought several lawsuits "that sought increased funding for Delaware's public schools," the Supreme Court said.  "The suits were brought against multiple Delaware public officials in their official capacities, some of whom were responsible for tax collection in Delaware's three counties," Justice Valihura wrote.

In a May 2020 opinion, Vice Chancellor J. Travis Laster ruled in favor of the two organizations, agreeing that the counties' tax assessment methods, which had relied on values from as far back as 46 years ago, treated owners of similar properties unequally.  "Appellees filed suit against the defendants because they believed that Delaware public schools were not providing an adequate education to disadvantaged students," the Supreme Court ruling said. "Appellees pointed to a broken system for funding public schools as one of the reasons why Delaware's public schools have fallen short."  The Supreme Court decision explained that in the state, "approximately one-third of funding for public schools is derived from local taxes levied by individual school districts."

"When school districts in Delaware levy local taxes, they use the county assessment rolls prepared by New Castle County, Kent County, and Sussex County," the ruling said.  "If there are deficiencies or problems with the counties' tax assessment rolls, those deficiencies or problems will affect the school districts' ability to levy taxes."  In his ruling, Vice Chancellor Laster said that "owners whose properties have appreciated more pay a lower effective rate than owners whose properties have appreciated less."

"The counties' outdated assessments conceal a reality of non-uniformity beneath a cloak of uniformity," the vice chancellor said.  His ruling came after the Chancery Court had bifurcated the litigation into a "County Track" to handle claims against county defendants, and a "State Track" to adjudicate claims against state officials, according to the Supreme Court opinion.

The "County Track" litigation was further divided, the Supreme Court said, including a "merits" phase that went to trial in 2019, leading to the vice chancellor's post-trial decision.  As proceedings continued following Vice Chancellor's Laster's ruling, an agreement was reached by the parties "pursuant to which each county agreed to conduct a general tax reassessment," according to the Supreme Court's decision.  The two nonprofit organizations sought an award of attorney fees and expenses in May 2021, and in two separate decisions, the Chancery Court first determined that the groups were entitled to the costs and then subsequently awarded the amounts to be paid by the defendants, the Supreme Court said.

In its ruling, the Supreme Court relied on two of its prior decisions, in Dover Historical Society v. Dover Planning Commission, in 2006, and Korn v. New Castle County, in 2007. In the Dover decision, the Supreme Court "rejected fee-shifting in a non-taxpayer, public interest suit that ultimately caused a government entity to 'perform properly,'" the opinion said.  "In Korn, fees were awarded under the 'common benefit exception' to the American Rule because the plaintiffs created for all taxpayers a tangible benefit that was both 'substantial' and 'quantifiable,'" the Supreme Court said.

The American Rule, which originated in the U.S. Supreme Court's 1796 decision in Arcambel v. Wiseman, provides that "litigants are generally responsible for paying their own legal fees absent certain limited exceptions," the Supreme Court said.  Exceptions for which fees can be shifted include cases in which a litigation party has acted in bad faith or the litigation "creates a common benefit," the high court's opinion said.

The two nonprofit organizations had argued in a filing that the Chancery Court had correctly determined they were entitled to fees and expenses for obtaining benefits "beyond the social good of making the government comply with the law."  Among those benefits were increasing annual tax benefits for school districts due to the agreement to perform updated tax reassessments, as well as "fixing deficiencies in the state equalization funding system," the groups asserted.

In an opening brief, the public officials argued that the Chancery Court had "ignored" Dover and incorrectly applied Korn, and that the court had ordered "defendants to pay fees for benefitting parties with whom those defendants have no identity of interest, which is both unprecedented and unwarranted."  The Chancery Court's "expansion of fee-shifting in public interest litigation should be curtailed," they argued.

In an amicus brief, the Delaware League of Local Governments urged the Supreme Court to reverse the Chancery Court's decision, arguing that it "improperly created a newfound common law exception to the American Rule by allowing fee-shifting ... for 'public benefit' litigation," the Supreme Court said.  On its website, the league describes itself as "a non-partisan, non-profit organization comprised of local government leaders."

The league had argued that a "mere social benefit does not justify an exception to the American Rule and it is up to the legislature, not the courts, to determine whether fee-shifting is appropriate in public interest litigation," the Supreme Court's decision said.  In its ruling, the justices agreed with the public officials and the league, saying the Chancery Court's decision exceeded "the bounds of Dover."  The Chancery Court's decision "omits any discussion of the guidance we offered in Dover as to the narrow parameters of the exception in the public interest context," the court ruled.

"Viewing this litigation through the prism of Dover's guidance, we conclude that the benefits achieved fall within Dover's 'perform properly' bounds," the Supreme Court said.  "Accordingly, we hold that the trial court erred in determining that the common benefit doctrine applied."  The high court said it was "not persuaded that the other benefits identified" warranted an award of fees and called some of the purported benefits "speculative."

The Chancery Court also erred by determining that the Korn decision "was not limited to taxpayer suits, but rather, it applied more broadly to public interest suits," the Supreme Court's ruling said.  "We decline to extend Korn beyond taxpayer suits that confer a quantifiable, non-speculative benefit to all taxpayers," the justices said.

New Castle County Executive Matt Meyer said in a statement: "We are proud that we just saved taxpayers $1.48 million, a substantial portion of which would have been paid to out of state New York lawyers.  This decision, from Delaware's highest court, means countless public funds will be at considerably less risk in future lawsuits against towns, cities, counties and local governments across Delaware."

Boston Urged to Settle Case as Legal Bill Climbs

December 29, 2023

A recent Law 360 story by Chris Villani, “Boston Urged To Settle Shooting Case As Legal Bill Climbs”, reports that during an emotional hearing, a federal judge ordered both sides in a lawsuit over the fatal shooting of a Black man by Boston police to try to work out a deal, grilling the city's attorneys on their hourly fees in expensive litigation that has been stalled by numerous discovery violations.  While saying that the city still faces a "substantial" risk of default in the now six-year-old case, U.S. District Judge Mark L. Wolf lamented at the end of a six-hour hearing that Boston is paying more than a dozen attorneys, including recently hired Nixon Peabody LLP, to defend the case.

"I don't know of any municipality that has enough money," Judge Wolf said before counting the attorneys sitting shoulder-to-shoulder at the tables in front of him.  "There are 14 lawyers sitting in the courtroom being paid by the city to litigate the effects of the city's repeated failures to provide discovery and to obey court orders," the judge said.  "Most civil cases settle, and I don't think that inertia or oversight should be a reason that settlement in these circumstances isn't seriously explored."

Judge Wolf has repeatedly threatened to hand the city an automatic loss in a case he said is "more messed up than any case I have had in 39 years."  The plaintiff, Hope Coleman, says her son Terrence Coleman was 31 and suffering from schizophrenia when she called 911 in an effort to get him into treatment in 2016.  The responding officers, Kevin Finn and Garrett Boyle, say Terrence Coleman attacked responding EMTs and the officers themselves with a knife during an altercation that ended with Coleman being shot and killed.

At the outset of the marathon proceeding, the judge asked Nixon Peabody attorney Brian Kelly what the city was paying for his services. Kelly said it was $750 per hour, $500 less than his usual rate.  Turning to George Vien of Donnelly Conroy & Gelhaar LLP, an attorney for former Boston Police Commissioner William Evans, Judge Wolf asked, "Are you a bargain compared to Mr. Kelly?"

"I am a bargain in many ways, Your Honor," Vien said, adding that he was billing at $600 per hour.  Leonard Kesten of Brody Hardoon Perkins & Kesten LLP, representing the officers, objected to the airing of lawyers' hourly fees in the first of several tense back-and-forth moments between him and the judge.

"All my clients have ever wanted is a trial," Kesten said. "And they want a trial now, so they can clear their names. That's what should be happening."  "Excuse me," Judge Wolf said, cutting him off. "Are you going to answer the question of what's your hourly rate?"  "I think that my hourly rate is $300 per hour," Kesten said.

In addition to paying its own attorneys, the city has forked over $500,000 to pay for discovery mishaps that an attorney for Coleman, William Fick of Fick & Marx LLP, said "dwarfs anything I have seen in over 20 years of law practice, or in any case I have ever read."

"I feel a bit like I am surveying a battlefield with rabbit holes," Fick said as he argued that default should enter against the city. "Each one of those rabbit holes has a detailed and really jaw-dropping story about a discovery deficiency."  Fick said over 80,000 pages of documents have been turned over, adding that they "should have been produced years ago."

The city has argued that there is no need for a default, citing the hiring of Nixon Peabody and an outside e-discovery expert, as well as the $500,000 and counting it has paid Coleman's lawyers for their trouble.  "This is in fact a very important case, a very significant case, and a trial would let the public see what really happened," Kelly said.  "Plaintiff wants to win this with procedural maneuvering, because they know if it goes to a jury, they may well lose and get nothing."

Federal Judge Rules on Reasonable Rates in New York

November 10, 2023

A recent Law 360 story by Marco Poggio, “Attys Get $2.25 Fees in NYC Suit Over Bronx Protest Arrests”, reports that a New York federal judge has greenlighted $2.25 million in attorney fees for counsel who represented protesters trapped by police in a Bronx block during the 2020 protests over the police killing of George Floyd in Minneapolis, one of the attorneys confirmed.  In an order giving her final approval on the settlement agreement in the cases Sierra et al v. City of New York and Wood v. De Blasio , U.S. District Judge Colleen McMahon authorized the payment of attorney fees and costs through March 3, the day she gave her preliminary approval on the deal.

Judge McMahon called the total fees award "reasonable" and said it was the product of a "fair, arm's length negotiation" among parties.  The judge also found the class counsel hourly rates — $800 per hour for Michael L. Spiegel, $575 for Rob Rickner of Rickner PLLC, $550 for Joshua S. Moskovitz of Hamilton Clarke LLP and his partners, $525 for Alison Frick and Douglas Lieb of Kaufman Lieb Lebowitz & Frick LLP, and $325 for two associates — to be appropriate.

The class's legal team estimated it clocked a total of 4,360 hours of attorney time, according to an Oct. 17 court filing by Moskovitz.  "The class representatives and the whole legal team are very happy that the court has approved this groundbreaking class action settlement," Rickner told Law360.  The attorneys will establish the fees accumulated after March 3 among themselves, and if no agreement will be reached, through petitions to the court, Judge McMahon said in her order.

The settlement agreement, which includes some of the highest payouts to protesters ever recorded, ends a class action brought on behalf of nearly 320 protesters who were arrested on June 4, 2020, in the Bronx neighborhood of Mott Haven. That event became one of the most highly criticized police responses to the citywide demonstrations going on at the time.

The five named plaintiffs in the suit, filed in December 2020, accused the New York City Police Department of violating their constitutional rights and causing them injuries when, as an 8 p.m. curfew was set to go into effect that day, officers encircled protesters in a stretch of East 136th Street and then hit them with batons, pushed them with raised bicycles and doused them with pepper spray.

The incident was highlighted as an example of excessive use of force by police in an investigation by New York Attorney General Letitia James, who filed her own suit against the city of New York over its broader response to citywide protests against police brutality.  As part of the settlement, each qualifying class member who was seized during the mass arrest will receive $21,500.  Those who were issued a desk appearance ticket will be paid an additional $2,500.  Each of the five class representatives will receive an additional $21,500 payment.

The total attorney fees and costs Judge McMahon approved are 12% lower than the $2.55 million maximum amount that class attorneys said they would seek following the preliminary approval of the settlement in March.  The judge called the lower figure a substantial "discount" considering that, she said, the actual attorney fees were likely higher than the $2.55 million cap.

From an initial pool of 394 people identified as potential class members, 256 were eligible to file claims and 251 did.  Twenty-eight settled their claims elsewhere, and one was found not to be a class member, leaving 222 people with eligible claims — a response topping 86%.  In her order, Judge McMahon called that response "extraordinary" and said the deal provided "unprecedented per-person monetary awards."  "The positive response rate received in this case is magnitudes above the average for class action cases," the judge said.

Court Calls Out Attorneys For ‘Egregious’ Billing Practices

October 24, 2023

A recent Law 360 story by Chart Riggall, “Colo. Judge Calls Out Enviro Attys For ‘Egregious’ Billing”, reports that a Colorado federal judge chided a group of environmental attorneys who successfully sued a gold-mining company for polluting the South Platte River over their "egregious" billing practices, slashing their request for fees by nearly two-thirds.  U.S. District Judge William J. Martinez of the District of Colorado — who in a 2022 bench trial ordered the Wyoming-based High Mountain Mining Co. LLC to pay $500,000 in penalties for violations of the federal Clean Water Act — said spotty record-keeping produced a fee request the court "cannot condone."

"These issues make the court seriously doubt counsel's billing judgment," Judge Martinez wrote in an order.  The judge ultimately awarded over $295,000 in fees and $77,000 to the attorneys representing Park County residents Pamela Stone, Twyla Rusan and M. Jamie Morrow, along with a pair of nonprofit groups, the South Park Coalition Inc. and Be the Change USA.  The groups also sued James R. Murray, a managing member and part owner of High Mountain.

That fell far short of the plaintiffs' request of nearly $1 million, which Judge Martinez pinned not only on their billing records but also on their "unprecedented" request for attorney fees in two separate, earlier lawsuits that were dismissed.

Stone and the other plaintiffs had argued that those two earlier cases yielded information directly bearing on the ultimately victorious lawsuit, but Judge Martinez disagreed, saying they pointed to "no case law supporting the proposition that a court may award fees for work done in earlier, failed actions at the conclusion of a later, successful action."

Filed in 2019, the residents' lawsuit took aim at a High Mountain mine near Alma, Colorado — mere steps from a fork of the South Platte River — that was allegedly leaking pollutants into the waterway.  The source of the contamination, according to the lawsuit and expert witnesses, was a series of unlined settling ponds containing mine waste that allowed chemicals to leach into the groundwater and then the river.

Judge Martinez used the factors laid out in the U.S. Supreme Court's 2020 decision in County of Maui v. Hawaii Wildlife Fund to determine whether the company was required to obtain a permit for its discharges, which plaintiffs' attorneys said was one of the first applications of the Maui precedent.  The judge relied primarily on two factors: the distance the pollution has to travel to get to the river and the time it takes to get there.

The final $500,000 judgment was based on Judge Martinez's calculations of how much the company had saved by failing to line the ponds, as he declined to award an additional $500,000 sought by the plaintiffs absent evidence of serious environmental damage.

Because the plaintiffs didn't succeed on all their claims, High Mountain argued that the case was, in effect, only 25% successful and that the fee award should be slashed accordingly.  But Judge Martinez said he wanted to avoid having to disentangle the fee requests from the prior actions and elected to split the baby by cutting the fee request by 50%.

More problematic, he continued, were a number of billing line items where the work reportedly done wasn't fully documented, or the plaintiffs' attorneys had put apparently frivolous tasks down for billing.  In one such case, an attorney billed 0.02 hours for reading court transcripts, "rather than writing off 72 seconds of work during which he could not have possibly accomplished anything for his client," Judge Martinez said. 

High Mountain had also tried to argue that opposing counsel had charged exorbitantly high rates for their work, but that argument ultimately fell short.  "The court concludes that plaintiffs' requested hourly billing rates are very much on the high end, but ultimately accepts them as reasonable for environmental law attorneys of comparable skill and experience in the Denver area," Judge Martinez said.