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Category: Staffing Issues

Quinn Emanuel Defends Billing Practices, Expenses

May 5, 2021

A recent Law 360 story by Rachel Schart, “MiMedx Slams Quinn Emanuel Fees As 2 Other Firms Settle,” reports that MiMedx has accused Quinn Emanuel of seeking unreasonable fees, including for lawyers' luxury hotel stays and fine dining, as part of the cost of defending two former company executives who were convicted of securities fraud.  The allegation, in court papers, comes after the life sciences company settled claims with two other law firms seeking payment of fees as part of the same dispute.

Quinn Emanuel Urquhart & Sullivan LLP, Freshfields Bruckhaus Deringer LLP and Kobre & Kim LLP initially filed suit in New York state court on April 15 alleging MiMedx Group Inc. shirked its obligations to indemnify the firms' clients, company President William Taylor and ex-CEO Parker "Pete" Petit.  Both men were sentenced to a year in prison in February after being convicted of one of two counts each at trial.

Freshfields and Kobre & Kim said in court filings that they had settled their claims against MiMedx.  Without disclosing the terms, the firms wrote in similar notices that their "claims in this proceeding do not make, and never were intended to make, a charge of deception against MiMedx or its general counsel, Butch Hulse, and that the filed action in this matter was a good faith fee dispute, which now has been swiftly and amicably resolved."

But Quinn Emanuel has yet to drop its claims in the lawsuit, and MiMedx took aim at the law firm in an answer filed in a related Florida state court legal fee dispute with the former executives.  In response to the men's counterclaims seeking additional fees to appeal their convictions, MiMedx accused Quinn Emanuel of overbilling Petit and Taylor and then unfairly attempting to collect from the company.

"Quinn Emanuel will have to explain its billing and expense practices," MiMedx wrote.  "These include staffing its trial team with over ten professionals, mostly from out-of-town despite having a large New York office within a few miles of the courthouse; staying in a luxury boutique hotel; having meals catered by a Michelin-starred chef (and supplementing them with separate orders of crab legs and sushi to boot); and charging MiMedx tens if not hundreds of thousands of dollars on a 'last-minute' motion to adjourn the trial that the court found 'border[ed] on the frivolous.'"

MiMedx said Quinn Emanuel has refused to provide it with invoices for its expenses in the case, and that it and the other criminal defense firms have already been paid more than $18 million for their work defending the former executives.  MiMedx's counsel told Law360 that the company has indemnified its former executives where required, but that the law firms can't force it to pay unwarranted fees.  "The company has been reasonable.  It paid pursuant to the indemnity," said Louis M. Solomon of Reed Smith LLP.  "It always reserved the right to make sure that the fees were reasonable, and even now with the convictions in place, we're not obliged to advance any more costs."

Quinn Emanuel's in-house counsel defended the firm's billing practices to Law360.  "Quinn Emanuel tried this case during the pandemic and achieved an acquittal for its client on the most serious count," Marc Greenwald, who is representing the law firm in the New York case, said.  "Quinn Emanuel expects to get paid at the rates that MiMedx agreed, and our work was outstanding.  All the charges were appropriate and reasonable."

MiMedx lodged its Florida state court claims against Petit and Taylor in January seeking permission to stop indemnifying the former executives upon sentencing, as well as reimbursement for millions of dollars in already paid fees.  Petit and Taylor fired back with counterclaims soon after they were sentenced, arguing in April that the company must continue indemnifying them in the upcoming appeal.  Quinn Emanuel, Freshfields and Kobre & Kim filed their separate New York state court suit in April, alleging that MiMedx has violated its contractual duty to pay Petit and Taylor's criminal defense costs.

Facebook Challenges $12M Fee Request in Data Breach Case

March 11, 2021

A recent Law 360 story by Hailey Konnath, “Facebook Slams $12M Atty Fees Request in Data Breach Row, reports that Facebook opposed a $12 million attorney fees request from counsel representing users who settled a dispute with the company over a 2018 cyberattack, slamming the lawyers for accruing a hefty bill while pursuing claims that didn't win money for their clients.  The users sued Facebook Inc. in California federal court alleging it negligently allowed the cyberattack, which affected roughly 29 million individuals.  The social media giant and the class of users reached a nonmonetary settlement resolving the case last year, and U.S. District Judge William Alsup gave it his blessing in November.

Under the deal, Facebook agreed to reform its security protocols but not to pay monetary damages.  The users' attorneys at Tadler Law LLP, Cohen Milstein Sellers & Toll PLLC and Morgan & Morgan Complex Litigation Group asked for $12 million in fees and costs, including a $2.1 million bonus.  But Facebook said in its opposition that such a request for a settlement that yielded no monetary recovery to the class is not supported by law.  In just over 16 months, the users' attorneys managed to assemble a "very sizable bill" that they now ask be paid without scrutiny, according to Facebook's motion.

Notably, the class' attorneys have refused to provide project-level or even chronological time records, Facebook said.  But even the figures they have submitted show the dispute wasn't handled efficiently, it argued.  Facebook said that more than 100 timekeepers from 17 different firms billed the matter, with partners billing for tasks like "document management."

"This top-heavy staffing yields a blended hourly rate that is 35.8% higher than the average awarded in other recent data breach settlements, and stands in stark contrast to the court's instructions," Facebook said.  The company added that "there can be no doubt that substantial swaths of [the class counsel's] litigation efforts were unsuccessful." 

Named plaintiffs in the case went from 17 to one, only two out of 10 claims survived Facebook's dismissal bid, a star identify theft expert was struck from the record and no damages class was certified, Facebook said.  "Any award to class counsel should be commensurate with the reasonable level of effort necessary to secure the specific settlement achieved here -- and should not reward wasteful efforts that did not benefit the class," it said.

$4.8M Fee Award to Fenwick in Patent Litigation

March 3, 2021

A recent Law 360 story by Hailey Konnath, “Fenwick Lands $4.6M in Fees in Amazon-PersonalWeb IP Fight, reports that the Fenwick & West LLP team representing Amazon in PersonalWeb's failed patent infringement dispute with the online retail giant will come away with a hefty $4.6 million in attorney fees plus an additional $203,000 in court costs, a California federal judge ruled.  Software developer PersonalWeb Technologies LLC took Amazon and several of its customers to court over its cloud-based storage system, which PersonalWeb claimed infringed several of its patents.  But Amazon prevailed in the dispute, with the court ruling that the claims were barred because they were the same allegations the developer previously brought and lost against Amazon.

U.S. District Judge Beth Labson Freeman approved Amazon's request for attorney fees in October, slamming the litigation as "objectively baseless."  The judge declined to determine the amount at that time, but deemed the case "exceptional."  Amazon had asked for $6.4 million in fees and court costs, a bill that PersonalWeb challenged.  Judge Freeman held that Amazon's attorneys were entitled to $4.62 million of that for their more than 9,260 hours of work on the case.

Notably, the judge reduced Amazon's requested case management fees; its fees for investigating and responding to PersonalWeb's claims; and work on its own suit against PersonalWeb, among a few other areas.  "The time that Amazon spent on the declaratory judgment complaint cannot solely be traced to PersonalWeb's misconduct," Judge Freeman said.

She also chopped about $100,000 from Amazon's court costs request, saying that some of its costs entries are redacted and that it was seeking costs for experts who didn't do work that was within the scope of an "exceptional case."  Judge Freeman rejected PersonalWeb's contention that Amazon's fee request should see a 50% to 75% cut, saying the 75% reduction in particular "borders on ridiculous."  PersonalWeb had argued that Fenwick had engaged in "unreasonable billing," misallocation of resources and bringing too many attorneys to depositions.

But Fenwick's records indicate that only one or two attorneys attended depositions, the judge said.  "And although the court is often skeptical of the value of incessant meetings involving multiple attorneys, PersonalWeb's expert has done nothing more than provide stock criticism of the meeting and conference hours without identifying any specific irregularities," the judge said.

Gibson Dunn Awarded Attorney Fees in NYC Rental Ordinance

March 2, 2021

A recent Law 360 story by Justin Wise, “Gibson Dunn Gets $600K Fee Award in HomeAway-NY Dispute,” reports that a New York federal judge awarded Gibson Dunn & Crutcher LLP lawyers roughly $600,000 in attorney fees and costs for their representation of a vacation rental company in its successful fight against a New York City rental ordinance law.  Gibson Dunn represented HomeAway.com Inc. in challenging a 2018 city ordinance intended to facilitate the enforcement of regulations on short-term rentals. U.S. District Judge Paul Engelmayer said HomeAway.com was clearly a prevailing party in the litigation, which had been consolidated with a similar suit brought by Airbnb, despite the case being dismissed as moot in 2020 after the city narrowed provisions in the law.

Judge Engelmayer ruled the company was successful in its challenge of the original ordinance and that a judgment in favor of attorney fees and costs against the defendant was merited.  "HomeAway's claim to have won durable relief here is especially convincing," he wrote, noting that "a legally infirm ordinance no longer recognizably exists" because of it and Airbnb's claims that its original scope was unconstitutional.  Judge Engelmayer, however, significantly reduced HomeAway's $1.4 million request, ruling that roughly $568,000 in attorney fees and about $27,000 in costs was appropriate.

The ordinance at the heart of the dispute would have required businesses like HomeAway and Airbnb to provide volumes of data on its customers every month, including material on property owners, booking transactions and the duration of stays.  Both short-term rental companies sought to block enforcement of the law in August 2018, and their cases were subsequently consolidated in the Southern District of New York.  Judge Engelmayer in January 2019 issued a preliminary injunction, ruling the parties were likely to succeed on their argument that the ordinance violated their Fourth Amendment right against unreasonable searches and seizures.

Judge Engelmayer said the work of HomeAway's counsel and Airbnb's counsel overlapped considerably throughout the litigation, which factored into the decision to reduce the original fees and costs request.  He noted it would have been unreasonable to ask the city to shoulder the costs of each case "to the extent there was duplication."  Judge Engelmayer also said Gibson Dunn's "top-heavy legal staffing" warranted a reduced judgment.

A majority of the hours billed by Gibson Dunn were logged by partners, according to court documents.  And while Engelmayer acknowledged more seasoned lawyers would be expected to take on the pre-discovery phase of this litigation, he said document and discovery deposition is generally expected to have lower billing rates.

New York City spokesman Nick Paolucci told Law360 that the original fee request was excessive and that the city is "pleased the award was reduced by over 60%." He said the award would be paid using taxpayer money.  New York had previously argued that the $1.5 million legal request amid a "financial crisis for our city defies the spirit of the law entitling prevailing parties in civil rights cases to pursue reasonable legal fees."  Under its settlement agreement with the city, Airbnb agreed to bear its attorney fees and costs.

Judge Properly Awards Regular Hourly Rate for Clerical Tasks

February 12, 2021

A recent Metropolitan News Enterprise story, “Judge Properly Awards Attorney’s Fees, at Lawyer’s Normal Rates, for Clerical Work”, reports that the Court of Appeal for this district ruled yesterday that a judge did not abuse his discretion for including in an award of attorney fees recompense, at the lawyer’s usual rate for legal services, for the time he spent in performing clerical tasks.  Justice Halim Dhanidina of Div. Three wrote the opinion which affirms a $84,107.50 award by Los Angeles Superior Court Judge Michael L. Stern, except for a $552.50 component.  Plaintiff Albino Ojeda, who was the prevailing party in his action over Labor Code violations against Michelle and Eric Azulay, had agreed to that amount being remitted but it somehow wasn’t.

The Azulay’s complained that Ojeda should not paid for amounts charged by Encino labor lawyer Seth E. Tillmon, at his regular hourly rate of $425, for performing purely administrative chores.  Dhanidina said these tasks included “scanning, printing, and downloading documents; preparing proofs of service; preparing mailings; formatting documents; calendaring dates; and traveling to mailboxes or postal centers to mail documents.”

He wrote: “As an initial matter, necessary overhead support services that secretaries and paralegals provide to attorneys may be included in an attorney fees award….Therefore, so-called administrative tasks are recoverable in the trial court’s discretion.”

Dhanidina continued: “Although charging for purely clerical tasks at an attorney’s hourly rate is questionable, the trial judge nonetheless was the best judge of the value of the services rendered, and to reverse that judgment we must be convinced it is clearly wrong….Especially in the absence of the reporter’s transcript, which may have shed light on the time spent on so-called administrative tasks, we are reluctant to second guess the trial court.”

He noted that Tillmon is a sole practitioner, without support staff “and had to do everything himself.” The jurist observed: “His detailed time records largely show that when arguably clerical tasks were combined with clearly legal ones, the total time charged would not have been facially unreasonable for the legal task alone. 

On February 14, 2018, for example, counsel drafted 15 sets of discovery, printed copies of each, drafted proofs of service, printed mailing labels, and stuffed manila envelopes.  To do all this he spent 5.4 hours.  Spending that time on drafting discovery alone would be facially reasonable.  Further, it is possible that the trial court denied Ojeda’s request for a 1.5 multiplier, which the trial court might have otherwise awarded, as a way of ensuring that Ojeda was not compensated for performing clerical tasks.”  The Azulays also argued that fees amounting to $84,107.50 were impermissibly disproportionate to the $30,929.94 in damages Ojeda obtained.

“Azulay cites no authority for the proposition that a fee award that exceeds the client’s recovery is per se unreasonable or that California imposes a proportionality rule,” Dhanidina responded.  The case is Ojeda v. Azulay, B302440.  Armen Shaghzo of the Glendale law firm of Shaghzo & Shaghzo represented the Azulays.  There was no appearance for Ojeda.