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Category: Trial / Jury / Verdict

Should Judges Police The Gender Hourly Rate Disparity?

June 1, 2022

A recent Law 360 story by Andrew Stricker, “Should Judges Police The Legal Industry Pay Gap?” reports that as the pay gap between male and female attorneys persists despite industry pledges to do better, the power of judges to potentially bridge the divide is coming into sharper focus.  Following an unusual decision by a federal magistrate, some members of the Philadelphia bar have endorsed the idea that other judges should follow suit and help police gender pay inequities, or at least call them out from the bench.

U.S. Magistrate Judge Timothy R. Rice recently issued the order critiquing elements of a notable employment firm's request and awards that put attorney "status" over performance.  "I don't think it's always my role, but in this instance, I felt I had to set the rates based on the performance of the attorneys who really tried the case, and not a rate that was maybe based more on age or seniority," Judge Rice told Law360 Pulse.

In April, Judge Rice was overseeing the last stage of an age discrimination case brought by Alison Ray, a former sales director at AT&T Mobility Services who was let go at age 49 after more than two decades at the company.  Following a five-day trial, Ray last year secured a $2.3 million award after a jury determined that a company restructuring plan had targeted older employees as "surplus."

In February, lawyers at the firm representing Ray, Console Mattiacci Law LLC, asked for $847,945 in "shifted" fees from AT&T.  That lodestar calculation, based on a 40% contingency agreement, was justified by the complexity of the plaintiff's case, Ray's counsel argued, as well as a "complete and total victory" on her claims that AT&T had willfully violated federal age discrimination law.  The fee petition included nearly 1,570 hours from partners Susan Saint-Antoine and Laura C. Mattiacci, a highly experienced lead trial counsel, and associate Daniel S. Orlow. Saint-Antoine and Mattiacci, who have practiced since 1989 and 2002, respectively, both listed their "usual and customary" rate of $730 an hour. Orlow, who has practiced since 2011, was at $320 an hour.

The petition also included 37 hours contributed by firm principal Stephen G. Console. Console, a nationally recognized employment law expert, charged $900 an hour for consulting on strategy decisions and filings, as well as settlement demands and other key elements of the case.  In an order granting a handful of reductions totaling about $83,000, Judge Rice said Saint-Antoine and Mattiacci should be entitled to the same per-hour rate as Console, who has been practicing for three decades.

"Historically, women in law earn less than their male counterparts, a discrepancy that may reflect hidden bias," he said, citing a 2020 report that found widening pay discrepancies at large law firms.  Referring to a fee schedule used widely in the Third Circuit to determine market rates for Philadelphia-area lawyers, Judge Rice said Saint-Antoine and Mattiacci should be in line for a "premium" over those numbers that put them in line with Console.  Even if the fee schedule "serves as a useful guide on setting hourly rates, its reference to experience should not serve as a cap that precludes exceptionally talented trial lawyers from receiving fair compensation simply because of age or gender," Judge Rice said.

The legal industry pay gap, and its role in women reaching firm leadership and a lack of diversity in many areas of the profession, has been under intense scrutiny for years, but without much in the way of real progress.  In the 2020 report cited by Judge Rice, legal recruiting firm Major Lindsey & Africa found that partner compensation soared between 2010 and 2018.  But in that same period, the pay disparity between male and female equity partners widened significantly, from 24% to 35%.

Nancy Ezold, a veteran Philadelphia employment lawyer, said it was "absolutely" appropriate for Judge Rice to consider rate disparities for lawyers in his court, even though AT&T counsel hadn't raised the issue in its fee-award opposition.  "I don't know of anything in the law that says you have to consider what a law firm pays people," Ezold said.  "But Judge Rice looks at the bigger picture and asks, 'Am I going to do something to perpetuate an inequality and authorize a fee for a male partner over two female partners who really handled this case?'"

Ezold, who once sued her own former law firm in the late 1980s for denying her a partnership based on her gender, argued that fee petitions often provide a substantive overview of who did what work over the history of a litigation.  Depending on the nature of the case, they can also be an opportunity for judges to compare requested rates across different firms and legal teams comprising different gender and experience makeups.

"Here the judge couldn't overlook a difference between male and female in this case because it related directly to the responsibility to decide what would be allowed for each of these attorneys," Ezold said.  "Judges speak out on a lot of things, and I don't see why this should be any different."  Judge Rice served as an assistant U.S. attorney for the Eastern District of Pennsylvania before being appointed as a federal magistrate in 2005.  He retired in April, just after issuing the Ray opinion.

In an interview with Law360 Pulse, Judge Rice said the timing was coincidental, noting that the issue of male-female pay disparities had never before been "so squarely presented" to him in a fee petition.  "From the [fee] affidavits I see, and from all I know about law firm pay structures, I do think the pay gap is huge, and there are just so many variables out there that have cut against giving women equal pay," such as lack of trial experience and other opportunities to advance, he said.

"When I see lawyers perform in an exemplary fashion, it's appropriate they be paid at higher rates commensurate with their skills, not just based on the years they've practiced," Judge Rice added.  Alice Ballard, another veteran Philadelphia employment lawyer who provided a fee affidavit in the Ray case, said Judge Rice's prior time as a trial lawyer was evident in the opinion, including in his positive assessment of the hours Console Mattiacci dedicated to mock trial runs and other "essential" advocacy preparation.

Judge Rice "really understands what it means to prepare for a trial like this, and everyone on my beat really appreciates that," she said.  But Ballard took issue with Judge Rice's ultimate reliance on what she described as an outdated fee schedule, rates that don't well reflect the special skills of trial work, Mattiacci's successful track record or the contingency fee model.

She also cautioned against reading the opinion as a critique of the hourly rate request for Console, whom she called a "lion" of the city's employment bar.  Regarding his reference to the legal industry's gender pay disparities,"it's great that he took the opportunity to bring it up, but I just don't think it has much to do with this specific case," Ballard said.

Eleventh Circuit Orders Recalculation of Attorney Fees

May 26, 2022

A recent Law 360 story by Rosie Manis, “11th Circ. Orders New Look At $6M Atty Fee in Man’s Death” reports that the Eleventh Circuit has vacated a $6 million attorney fee awarded as part of a $21 million jury verdict over the death of a Georgia pedestrian who was hit by a truck, ordering the trial court to reconsider its reasonableness.  The three-judge panel's per curiam opinion affirmed the jury verdict but said that two subsequent opinions from the Georgia Court of Appeals warrant the reconsideration of the attorney fees.  The jury had ordered the $6 million fees after finding bad faith on the trucker's part.

The estate of Alabama trucker James Harper and his insurer Cypress Insurance Co. appealed the February 2020 verdict in favor of Patricia and Wayne Holland, the mother and brother of Kip Holland, who was hit by Harper's truck and died in December 2016 after Harper suffered an unspecified medical event while driving.

The panel rejected most of the defendants' arguments for overturning the verdict, but they said the Hollands' 40% contingency agreement alone doesn't necessarily make the attorney fee award reasonable.  U.S. Circuit Judge R. Lanier Anderson III pointed out during oral arguments in February that the fee amounted to about $5,000 an hour.  "A contingency fee agreement alone, without more, is not sufficient to support the award of attorney fees," the court said, citing Georgia case law.  "Rather, the party seeking fees must provide other evidence of the value of the professional services actually rendered."

The panel cited a March 2021 opinion from the Georgia Court of Appeals that vacated a $12.7 million attorney fee award in a wrongful death case after a $32.8 million damages verdict.  The attorney fee in that case was based solely on a 40% contingency fee agreement.  In the other cited case, the Court of Appeals upheld a July 2021 $1 million attorney fee award that was less than what the relevant contingency fee agreement would have provided.  The trial court in that case assessed the work of the plaintiff's lawyers as well as the fee agreement in determining a reasonable award.

The Eleventh Circuit judges said they did not comment on the cited cases or the reasonableness of the original $6 million attorney fee "to avoid influencing the district court's reconsideration."  They were not persuaded by the defendants' contention that Harper did not act in bad faith and therefore the Hollands couldn't get attorney fees under Georgia law.

Florida Panel Finds Attorney Fee Error in Irma Coverage Suit

May 19, 2022

A recent Law 360 story by Ben Zigterman, “Fla. Panel Finds Atty Fees Error in Irma Coverage Suit” reports that a Florida state appellate panel reversed a lower court's award of attorney fees to counsel for homeowners suing underwriters at Lloyd's of London for coverage of damage from Hurricane Irma in 2017.  Instead of being paid for more than 550 hours of work to get a $52,000 jury verdict for Roniel Candelaria and Amelia Padura, the three-judge panel agreed with the underwriters that the homeowners' attorney fees should be recalculated based on 480.5 billed hours.

The panel said Judge Martin Zilber should have gone through the time records of the homeowners' counsel line by line, but instead applied an arbitrary 15% cut.  The judge awarded the homeowners' counsel a lodestar amount of $312,000, applying a 1.8 multiplier to that amount and adding other legal costs, for a total award of more than $600,000.

"The lodestar amount is not supported by competent substantial evidence because the trial court did not make 'specific findings' as to its determination," Judge Kevin Emas wrote for the panel.  While the homeowners' expert suggested a 7.5% billing hours cut, the judge instead applied a 15% cut, according to the opinion.

"The insureds' expert did not conduct a line-by-line analysis of the billing," Judge Emas wrote.  "The trial court adopted plaintiff's expert's arbitrary methodology.  Indeed, in the instant case the trial court did not merely adopt the expert's methodology but added its own across-the-board reduction of 15%."  The panel said its previous decisions require "specific findings as to disputed time entries" and "particularized reductions."

"The trial court's comments at the conclusion of the hearing reveal that it had only examined 'several' of the timesheets," instead of making a line-item review, Judge Emas wrote.  The panel also said the trial judge improperly applied the 1.8-contingency multiplier.  The trial judge lacked "competent substantial evidence to address whether the attorney was able to mitigate the risk of nonpayment in any way — specifically, whether the client could afford to pay a retainer or hourly fees," Judge Emas wrote.

Insurer Asks Judge to Reduce Attorney Fees in Coverage Win

May 17, 2022

A recent Law 360 story by Ben Zigterman, “Insurer Asks Judge To Nix Cleveland Bar’s Atty Fee Request” reports that Auto-Owners Insurance Co. told an Ohio federal judge that the attorney for a Cleveland bar should not be awarded $293,000 in fees and expenses it requested after winning a $1.2 million jury verdict over coverage for fire damage.  At most, the insurer argued in the filing, Daniel Shimko should get $91,000 for representing Blues to You Inc., which does business as Wilbert's Food & Music.

In April, a jury ruled in favor of Blues to You on its claims that Auto-Owners breached its contract and acted in bad faith, awarding the bar $1.2 million, including $375,000 in punitive damages.  The bar had accused Auto-Owners of failing to properly investigate and not fully covering its claims for fire, smoke and water damage from a 2019 fire, as well as water damage from a 2020 fire in a unit above the bar.

While the bar said the insurer made a "pitifully low offer" and "dragged its feet," the insurer argued that Blues to You misrepresented the value of its claims by duplicating losses from the first fire in its losses from the second.  After the jury ruled in its favor, the bar asked for more than $271,000 in attorney fees based on 706.2 hours of work at $385 an hour, plus about $21,000 in legal expenses.

"More than a little skill and experience in this field is paramount to successfully represent an insured in such a legal proceeding," the bar wrote earlier this month. "Plaintiff's counsel went beyond proving bad faith.  Plaintiff successfully proved that Auto-Owners acted with ill will in the manner in which it adjusted plaintiff's two claims."  In response, Auto-Owners questioned whether Shimko really spent 700 hours on the suit, noting that its attorneys only spent about 504 hours on it.  "For plaintiff's counsel to allege that he spent 200 more hours is inconceivable and suggests that plaintiff's counsel's stated time is overstated," the insurer wrote.

It also argued that Shimko's proposed hourly rate is excessive for solo practitioners in Ohio and that the jury didn't provide for litigation expenses to be recovered.  The insurer also disputed that any attorney fees should be granted, arguing that the evidence did not back up an award for punitive damages.  "There is absolutely no evidence in the record of conduct on behalf of defendant that can be remotely categorized as being malicious," Auto-Owners wrote.  It also has filed a motion for a new trial, arguing that the jury's verdict "should have shocked the conscience of the court."

Attorneys Seek $4.3M in Long Running Trade Secrets Litigation

April 27, 2022

A recent Law 360 story by Andrew Karpan, “Atty Seek $4.3M In Fees For 13-Year Trade Secrets Suit” reports that lawyers for an Austrian-owned electronics company have asked a Texas federal judge to allow them to collect over $4.3 million in fees from losing party Renesas Electronics at what could be the end of a decade-long trade secrets saga, if the now-$48 million case doesn't head to a jury for a third time.  The fee bid came from the Dallas law firm that has continuously represented Texas Advanced Optoelectronic Solutions Inc. since its initial 2008 lawsuit against a California rival chipmaker named Intersil.  In the time since, Texas Advanced was sold to austriamicrosystems AG and renamed AMS Sensors USA Inc., Intersil was absorbed by Japanese conglomerate Renesas, and law firm Munck Carter PC became Munck Wilson Mandala LLP.

"Plaintiff seeks its reasonable attorneys' fees after 13.5 years of contentious litigation," Munck Wilson's motion reads.  Legal filings in the case had spanned "886 docket entries," and the case went to a jury twice.  In 2015, a jury agreed with AMS Sensors' argument that Renesas used failed merger talks to steal legally protectable trade secrets related to light sensors that Renesas sells companies including Apple to use in products like iPhones and iPods. Renesas was ordered to pay AMS $88.7 million in damages, although a Texas federal judge trimmed the amount to $77 million.

But the Federal Circuit later ruled that AMS' lawyers made a legally incorrect argument to jurors in that case: the exact amount of damages that Renesas owed should have formally come from the judge instead.  The Texas federal judge overseeing the case then declared senior status and, noting that he now had "limited time to devote to this matter," immediately handed the case to U.S. District Judge Amos L. Mazzant III, who sent the case to a jury again last year.  That time, the jury delivered only an "advisory" award of nearly $85.9 million. Last month, Judge Mazzant set the damages award at $48 million.

According to AMS, the original agreement the companies inked in 2004 to cover the merger negotiations "specifically provides that the parties 'will indemnify and hold harmless the other against any and all damages, loss, or liability (including reasonable attorney's fees).'"  Citing the clause, the company and its attorneys put forward a request for $4,332,265 in fees.  The lawyers say this accounts for "merely one-third of the total hours worked before the proceedings on remand, and just one-half of the total hours worked thereafter."

To defend their rates, the Munck Wilson attorneys cited what they could find about how much Renesas' lawyers at Foley & Lardner LLP are known to bill their clients.  For example, they found a deposition delivered by Foley's William Robinson after he won a 2014 trademark case that attested his "average rate" is "$769/hour."  Munck Wilson asked to list the actual rates it was asking for under seal.