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Attorneys May Bill for Preparation of Fee Application, But Not for Defending It

 Posted by at 2:53 pm  Court Decisions, Interesting Fee Cases, Overbilling, Weekly Wrap-Up  Comments Off on Attorneys May Bill for Preparation of Fee Application, But Not for Defending It
Nov 082017

In a noteworthy case from the last few years, the United States Supreme Court held that attorneys hired by the bankruptcy estate may not be awarded fees for defending their fee application in court. Baker Botts L.L.P. v. ASARCO LLC, 135 S. Ct. 2158, 192 L. Ed. 2d 208 (2015).
In the ASARCO case, the law firms submitted fee petitions seeking more than $120 million for their work in the bankruptcy proceeding, among which over $5 million was for time spent litigating in defense of their fee application.
The court first recognized the American Rule where “[e]ach litigant pays his own attorney’s fees, win or lose, unless a statute or contract provides otherwise.” It then observed that while section 330(a)(1) of the Bankruptcy Codes authorizes “reasonable compensation for actual, necessary services rendered” by law firms working for the trustee, defending the firms’ own fee petition is not a “service” rendered for the benefit of the estate, and thus is not compensable under section 330(a)(1). The court distinguished the “reasonable services rendered” language in section 330(a)(1) from other fee-shifting provisions which specifically mention awarding “fees” to the “prevailing party” in a “civil action.” Id. at 2164. In Woods v. city National Bank & Trust Co. of Chicago, the court held that the phrase “reasonable services rendered” implies “loyal and disinterested service in the interest of” a client. Id. at 2165 (citation omitted). In a fee application, however, “the primary beneficiary … is the professional.” Id. at 2163 (internal quotation mark omitted). In conclusion, because the Bankruptcy Code “does not explicitly override the American Rule with respect to fee-defense litigation,” the attorneys cannot seek reimbursement for defending their fee petitions.

Court reduced attorney’s fee award for “description issues”

 Posted by at 9:20 am  Court Decisions, Interesting Fee Cases, Overbilling  Comments Off on Court reduced attorney’s fee award for “description issues”
Oct 042016

In a recent case, a U.S. District Court reduced attorney’s fees for “blocking billing” and “vague entries.” Rock the Ocean Prod., LLC v. H1 Events, LLC, No. 15-5189, 2016 WL 4272931 (E.D. La. Aug. 15, 2016).
The practice of block billing is “disfavored by the Courts,” id. at 3 (citing Creecy v. Metropolitan Property and Cas. Ins. Co., 548 F. Supp. 2d 287 (E.D. La. 2008)), because it shows a lack of billing judgment and “prevents the Court from being able to conduct a proper analysis of the time actually spent on each of the transactions listed.” Id. Although block billing is not a basis for refusing to award attorney’s fees in their entirety, the court will apply a flat reduction of a specific percentage from the award. See id. Here, the court decreased the blocked billed time by 25%.
Moreover, the court decreased entries that were vague. Attorney fee entries must contain “sufficient detail and probative value” so that the court can “determine with a high degree of certainty that the billing is reasonable. Id. at 4 (internal citation omitted). Here, the billing entries reference emails but fail to describe the subject matter of the emails. The court deemed such entries as vague and applied a 50% reduction. See id.