A collection of interesting legal fees cases …
$89,000 Legal Fee Approved Despite $500 Award (Daily Business Review) – A New York Judge awarded a woman nearly $89,000 in legal fees and expenses after she won a $500 judgment against the management of a Brooklyn housing development for its private police officers’ use of excessive force during her arrest. Eastern District Judge Jack B. Weinstein issued the ruling in Brown v. Starrett City Associates on Jan. 9, 2012. The woman, Annette Brown, was awarded the $500 after a jury found in her favor. The jury was instructed to award Ms. Brown compensatory damages if her rights were violated and she suffered a “physical, emotional or financial injury” but to only award her $1 in nominal damages if she did not suffer an injury. Although Ms. Brown is entitled to the $500 judgment, the $89,000 in legal fees will go to her attorney.
Attempt to Recover $21,000 on a $54 Claim is Excessive (Strange v. Monogram Credit Card Bank, 129 F.3d 943) – A Federal court reduced an attorney’s fee request of more than $21,000 to an award of $3,000 finding that the request was excessive in light of the plaintiff’s potential award under statutory guidelines. The plaintiff, Jeffrey Strange, sued Monogram Credit Card Bank for violations of the Truth in Lending Act because it failed to reply to his billing error notices. Mr. Strange pleaded six violations of the Act and was awarded $54.27 (later increased to $100 on appeal) under statutory guidelines. The Court held that it was “absurd” for the law firm, Jeffrey Strange & Associates, to incur a bill of more than $21,000 for a claim that was worth $328.32 at the most due to statutory restrictions on recovery. In its ruling, the Court noted that the law firm’s billing rate of $175 per hour was not too high but held the 123 hours the firm spent on the case was excessive.
Billing 1,200 Hours is Excessive for a Three-day Trial (Perez v. Z Frank Oldsmobile, Inc., 223 F.3d 617) – A Federal court held that a legal fee award of nearly $240,000 was “awfully hard to swallow” when the trial only lasted three days and the plaintiff was only awarded $11,500 in compensatory damages, even though the total award included treble and punitive damages exceeding $500,000. The attorneys’ fees resulted from 1,200 hours of work at $185 per hour, which the Court found to be around two-thirds of a typical lawyer’s annual billable hours. Miguel Perez sued Z Frank Oldsmobile for misrepresentations regarding the odometer reading of his car made during his purchase of the vehicle. The Court vacated the attorneys’ fees award and noted that a similar odometer misrepresentation case resulted in only $12,560 worth of legal fees, and that case was tried twice. The entire case was remanded for further proceedings to determine the appropriate award for damages and legal fees.
Billing for “Briefs” (Jonathan Turley, Blog) – After former Qwest Communications CEO Joseph Nacchio was convicted of insider trading, he brought suit against his lawyer, Herbert Stern, for overbilling and a negligent defense. The lawsuit claims that Mr. Stern billed Mr. Nacchio for new underwear, staff breakfasts, and movies purchased in his hotel during the trial. Mr. Stern’s law firm billed Mr. Nacchio more than $25 Million while it defended him against civil and criminal charges.
Billing for Private Dinners (In re Lassen, 672 A.2d 988) – The Delaware Supreme Court suspended attorney J. Kai Lassen for three years for charging clients for personal restaurant fees, creating fictitious billable hours, disguising charges, and making misrepresentations to a bankruptcy court. The Court found that Mr. Lassen improperly billed clients for charges totaling more than $40,000 and held that his actions violated eight rules of the Delaware Layers’ Rules of Professional Conduct. Even though Mr. Lassen later reimbursed his clients and his law firm, the Court chose to publicly suspend him for three years instead of allowing him to permanently retire with a private reprimand.
Contingency Fee Results in Entire Award for Attorney (McCrary v. McCrary, 764 P.2d 522) – The Supreme Court of Oklahoma held that an attorney could not take title to his client’s home in exchange for representation in a divorce case. Suzanne McCrary was awarded the home when she and her husband, Mark McCrary, divorced. Ms. McCrary appealed the divorce decree because Mr. McCrary had been awarded custody of their children and contracted with attorney Randle Graham, Jr. for representation. Mr. McCrary also appealed the decree because Ms. McCrary had been awarded the home. To pay for his services, Mr. Graham insisted Ms. McCrary execute a quitclaim deed to the home to Mr. Graham’s brother-in-law. The Court held that this arrangement was “illegal and void” and constituted a 100% contingency fee arrangement in a divorce case because Ms. McCrary would lose her house whether or not she was successful on appeal. The Court also noted that Mr. Graham only spent approximately 40 hours on the case but would have gained a $15,000 equity in the home after paying off the encumbrances. Mr. Graham also collected $8,000 of rental income on the property during his representation of Ms. McCrary.
NY Partner Congratulated on Remarkably Low $14.4 Million Fee (New York Lawyer) – A Federal judge in California approved more than $14.4 Million in attorneys’ fees for representation during a $125 Million shareholder settlement. In approving the fees, U.S. District Judge Dean Pregerson told Salvatore Graziano, a partner at the New York Firm Bernstein Litowotiz Berger & Grossman, that the award “might have set a record for the lowest” in attorneys’ fees in a case of this nature. He then offered his congratulations. The shareholder settlement involved New Century Financial Corp., which was one of the largest lenders to go bankrupt during the subprime mortgage crises.
Tobacco Lawsuit Lawyers Paid $13,000 per Hour (New York Times) – A New York judge challenged legal fees paid to outside lawyers who represented New York in a lawsuit against tobacco companies. In settling the lawsuit, the tobacco companies agreed to pay the lawyers representing New York $625 Million or about $13,000 an hour for every lawyer who worked on the case. New York’s share of the settlement equals $25.5 Billion. New York Justice Charles E. Ramos of the State Supreme Court in Manhattan pushed the case forward by appointing two independent lawyers to represent New York after it became apparent that no one involved in the settlement would pursue the question of legal fees.
Partner’s Billing Lacked Judgment (Above the Law) – U.S. District Judge James Cacheris of the Eastern District of Virginia reduced Nixon Peabody’s legal fees by $440,000 after the law firm successfully represented Signature Flight Support Corp. in a dispute against Landow Aviation. Judge Cacheris reduced Nixon Peabody’s fees from $1.57 Million to $1.13 Million because he found the firm’s charges demonstrated a “lack of billing judgment.” Judge Cacheris specifically highlighted billing entries from Partner Louis Dolan, whose rate was $590 per hour. The Court held that Mr. Dolan routinely completed work better suited for a junior associate, citing examples such as document production and review. Judge Cacheris further chastised Nixon Peabody for billing Signature Flight for expensive hotels and other “entertainments” including limousine rides, $400 a night stays at hotels, and first-class plane tickets.
Fired Lawyer Claims Law Firm Encouraged Fraud with 3,000 Hour Billable Quota (ABA Journal) – Richard Unitan, a California lawyer, claims he was fired from the worker compensation defense firm Adelson, Testan, Brundo & Jimenez because he would not commit billing fraud. Mr. Unitan claims the firm’s requirement that associates bill 3,000 hours a year required him to bill for his “thinking time” and every task, no matter how short. A 3,000 billable requirement requires associates to work about eight hours a day, every day of the year. Other firms generally do not require more than 2,100 billable hours a year.