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.

Block Billing 2.0: Other Variations on this Problematic Billing Practice

 Posted by at 3:41 pm  Court Decisions, Interesting Fee Cases, Overbilling, Weekly Wrap-Up  Comments Off on Block Billing 2.0: Other Variations on this Problematic Billing Practice
Oct 032017

Block billing is almost an unavoidable issue in cases dealing with ascertaining appropriate attorneys’ fees. Some jurisdictions, as the one in Pierce v. Atl. Specialty Ins. Co., generally will reduce the number of hours billed when attorneys use block billing. Here, one attorney billed 115.25 hours in only 13 entries which created several instances of block billing. The court looked at each entry and made reductions. The same was done for two other attorneys. 2017 WL 3996216 (D.N.M. Sept. 8, 2017).
Other jurisdictions are not as quick to require an automatic reduction but will still carefully access the fees and may impose an across-the-board reduction. This is exemplified in another recent case. In this particular case, there were 15 instances of block billing found. For this, as well as duplicative work and excessive time spent, the court made a 10% across-the-board reduction. Div. 1181 Amalgamated Transit Union – New York Employees Pension Fund and its Trustees vs. Anchor Bus Co., Inc., 2017 WL 4049025 (E.D.N.Y. Aug. 25, 2017).
However, while it is true that some courts may not reduce entries or make across-the-board reductions when billing records exhibit this problematic billing practice, all courts at least agree that block billing makes it difficult to determine the reasonableness of the time expended on specific tasks. In other words, the presence of block-billing raises a red flag and, at a minimum, calls for a closer review. On, we have addressed block billing often, but here are two related problems that may often be overlooked but are similarly important to avoid:
Disbursements Will be Examined Too
Not only will courts evaluate a firm’s fee section of its bill, but the expense portions are often held to the same level of scrutiny. In Chevalier v. Sec’y of Health and Human Serv., while attorneys’ fees were found to be reasonable, upon examining costs, the court objected to the invoice from the expert. The court stated that as with attorneys, experts should avoid block billing. Here, the doctor billed for 35.5 hours that included reviewing the case file, medical literature, and drafting and revising his report. There were only four time entries spanning over a month. This lack of detail and block billing caused a reduction to 30 hours for this expert. 2017 WL 490426 (Fed. Cl. Jan. 11, 2017).
Splitting Up Entries Too Excessively

Earlier this year, a district court in Massachusetts encountered the “opposite” problem of block billing. Instead of block billing, the attorney billed numerous 0.1 unit entries for the simple review of docket entries or emails. The court speculated that the attorney could have read several of these emails during a six-minute period and should not have charged for them separately, thus driving up the bill. In cases like this, it is more reasonable to “block-bill” the entries, combining these small, simple tasks instead of listing them separately. Melo v. Lawrence Plaza Ltd. P’ship, 2017 WL 489681 (D. Mass. Feb. 6, 2017).

Ontario Court Cuts Lawyer’s Fees by $700,000

 Posted by at 9:48 am  Court Decisions, Interesting Fee Cases, Overbilling  Comments Off on Ontario Court Cuts Lawyer’s Fees by $700,000
Aug 142017

In Speciale vs Shrader Canada Limited, an Ontario Divisional court judge reinstated a decision to cut a bill for legal fees down from over $1 million to $325,000. The defendant, lawyer, Anthony Speciale, refused to even participate in the proceeding that examined his billing practices between 2010 and 2013.

Speciale, did not provide detailed accounts to his clients to substantiate the fees he charged and when he was assessed was unresponsive to requests for information.

The client had sent Speciale a registrar’s order to assess his bills, and while Speciale said he had intended to bring a motion to set aside this order it took a year and a half to do so. A judge dismissed Speciale’s motion and said it was a “thinly disguised effort to avoid an assessment of his legal accounts.”

During the proceedings, an assessment officer ordered the $700,000 reduction in fees as well as over $17,000 in costs against Speciale for the assessment and motion he had filed. He filed another motion for an order to refuse to confirm the assessment officer’s report and certificate. That judge ruled in his favour, but on appeal a Divisional Court Judge overturned the decision.

Lawyers must be active partners with their clients when being assessed and not delay proceedings. Even more important, however, this case shows that block billing does not provide clients with a detailed explanation of work undertaken. Clients have become increasingly aware of what they spend on legal costs and are seeking a more transparent process to understand those bills and assess them if they are not satisfied.

Billing Blunders: A 20% Reduction in Vague, Block-Billed Entries and a 10% Reduction for Overstaffing

 Posted by at 9:10 am  Court Decisions, Interesting Fee Cases, Overbilling, Weekly Wrap-Up  Comments Off on Billing Blunders: A 20% Reduction in Vague, Block-Billed Entries and a 10% Reduction for Overstaffing
Jul 202017

In National Council of La Raza, et al. v. Barbara K. Cegavske, the court accepted Defendants’ argument that Plaintiffs “over lawyered” the case through needless overstaffing of routine intra-office communications and engaged in faulty billing practices by block billing vague entries. See Nat’l Council of La Raza v. Cegavske, No. 3:12-CV-00316-MMD-VPC, 2017 WL 2683683 (D. Nevada June 21, 2017).
The Court pointed out a number of redundancies in the Plaintiffs’ intra-office communications where the attorneys spent an unreasonable amount of time billing for tasks such as telephone conferencing with co-counsel, strategy meetings, emails, and reviewing each other’s filings. The court deducted an additional 10 percent from the attorneys’ fees, despite a voluntary reduction of 10 percent by the firm, due to the severe nature of the redundancies.
Additionally, the Court mandated a further 20% reduction to block-billed, vague entries. The Court found that the Plaintiffs block billed these vague entries in such a manner that the Court could not even determine whether the time spent on those tasks was reasonable. The Court accepted the Defendants’ argument that the Plaintiffs’ attorneys did not bill with “the appropriate level of specificity and erroneously billed for hours spent on an unrelated case.”
This case exemplifies the need for specificity and precision with regard to legal billing and the consequential reduction in fees the court can make if the attorneys’ fees are not recorded with the correct level of detail. Further, the court placed an emphasis on the need for attorneys to allocate their resources properly to avoid overstaffing and redundant work to prevent a consequential reduction in fees by the Court.

Contemporaneous Time Records Are Accurate Time Records

 Posted by at 4:38 pm  Court Decisions, Interesting Fee Cases, Overbilling  Comments Off on Contemporaneous Time Records Are Accurate Time Records
May 102017

In Dagostino v. Computer Credit, Inc., the plaintiff brought suit under the Fair Debt Collection Practices Act (the “FDCPA”). 2017 WL 776086 (E.D.N.Y. Feb. 28, 2017). After accepting defendant’s Rule 68 Offer of Judgment, plaintiff filed a motion seeking attorneys’ fees under the FDCPA. The majority of the Court’s reductions in this case resulted from plaintiff’s counsels’ failure to contemporaneously record their time expended in this case. It became apparent that plaintiff’s counsel did not contemporaneously record their time when there were significant discrepancies between plaintiff’s draft timesheet provided to defendant and plaintiff’s final timesheet provided to the Court.
The Second Circuit requires that “[a]pplications for fee awards should generally be documented by contemporaneously created time records.” Plaintiff’s counsel initially submitted a draft timesheet to defendant in order to settle the issue of attorneys’ fees without court intervention. The draft timesheet contained a total of 30.2 hours of work. The final timesheet ultimately submitted to the Court contained a total of 35.9 hours of work. The only explanation provided by plaintiff for the 5.7 hour increase was that emails were not included on the draft timesheet. Plaintiff also assured the Court that all entries contained in the final timesheet were accurate. However, the Court did not accept plaintiff’s explanation of the additional time billed because the draft timesheet already included certain emails and correspondences leading the Court to question why plaintiff chose not to include 5.7 hours of emails in the draft timesheet. Although the Court reluctantly accepted plaintiff’s assertion that all the entries in the final timesheet were accurate, the Court reduced plaintiff’s time by 5.7 hours because the discrepancy made it apparent that plaintiff’s counsel did not contemporaneously record their time in this case.
Plaintiff’s failure to contemporaneously record their time expended also led to further reductions. Plaintiff’s draft timesheet contained a 0.8 hour entry for travel to a pre-motion conference. Defendant argued that this entry was false because the entry referenced a telephone conference that did not require travel. On the final timesheet submitted to the Court, the entry was changed to indicate that the 0.8 hours represented time spent preparing for the conference. Plaintiff simply indicated that the travel entry on the draft timesheet was an error that was corrected on the final timesheet. Plaintiff also responded to the allegations of the false entry by arguing that the draft timesheet was not intended to be a final product, and the final timesheet submitted to the Court was accurate. Even if the entry now was accurate on the final timesheet, the Court ultimately deducted this 0.8 hour entry because the plaintiff failed to provide an explanation for the error on the draft timesheet, and it was now apparent that the corrected entry on the final timesheet was not made contemporaneously with the performance of the work.
The contemporaneous recording of all work performed results in a reliable time record that is more difficult for a court, or even a client, to question. In practice, it may seem difficult or unnecessary to keep contemporaneous time records. However, this case illustrates the importance of recording time as the work is performed. The Court reduced the total time billed by nearly 20% because it was obvious that plaintiff’s counsel did not contemporaneously record their time as the work was performed. Even if the time billed on the final timesheet was accurate as stated, plaintiff’s counsel seemed to lose all credibility once the Court determined that the timesheet submitted to the Court was created long after the work was performed. Work that was otherwise billable became unbillable because contemporaneous records were not kept.

The Edge of Reason

 Posted by at 2:59 pm  Court Decisions, Interesting Fee Cases, Overbilling  Comments Off on The Edge of Reason
Mar 212017

Reasonableness of attorneys’ fees and the number of hours billed are at issue in LHF Productions, Inc. v. DOES 1-19, Case No. C16-1175RSM, 2017 WL 615197 (W.D. Wash. Feb. 15, 2017). . Here, the Court reduced an attorney’s rate because it did not find that the legal work required extensive skill or experience. The attorney up-charged his fees in this case after disposing of identical cases at a lower rate. The Court even alleged that the attorney, who had litigated many identical complaints to this case, had ‘recycled pleadings’ used in other cases. To make matters worse, the attorney received little to no opposition from the named Defendants and ended up getting a default judgment when a number of named Defendants did not respond to the amended complaints. The moral of the story for attorneys is when you handle a number of similar cases, which require very little work, be prepared for the Court to look to those similar cases for instruction of fees. If you are using recycled pleadings, they are viewed as no more than form pleadings to the Court and the fees associated will be viewed as requiring basic legal skills.

Since numerous identical complaints were filed by this attorney, the Court balked at the attorney billing for hundreds of hours of legal work preparing identical complaints and motions. In this case, the attorney billed hundreds of hours for his own work and billed for hundreds of hours of work by an associate and legal assistant. The Court found this billing practice to be unreasonable and even “extravagant” to believe that identical complaints and motions for dozens of Defendants took that much time. In its opinion, the Court estimated that preparation of each complaint took no more than an hour to create.

In the end, the Court found that the work performed by the legal assistant amounted to administrative work and would not be compensated. Due to massive overbilling, the Court only deemed it reasonable to compensate the attorney one hour’s worth of work and one hour’s worth of his associate attorney’s work on each complaint filed. Had the upcharge on these cases been slight, the court may not have noticed such a disparity and would have found the fees reasonable.

Former Attorneys Receive No Reimbursement for Unsuccessful Claims

 Posted by at 10:11 am  Court Decisions, Interesting Fee Cases, Legislation, Overbilling  Comments Off on Former Attorneys Receive No Reimbursement for Unsuccessful Claims
Jan 302017

The Court recognized Plaintiff’s former attorneys, Swick & Shapiro, P.C., billed at reasonable rates for the nature of the case and skill required in Smith v. Loundon County Pub. Sch., 2017 WL 176510 (E.D. Va. Jan. 17, 2017). However, the former attorneys failed to reduce their fees in relation to Plaintiff only prevailing on one of her three claims. The Court found the attorneys reduced arbitrary amounts from their billing simply claiming “lost claim time” with no further explanation and which only amounted to ~10 and ~22% of their total billing, respectively. In addition, the remaining time entries contained block billed and various vague entries, prompting the Court, for those reasons, to reduce the overall billed time by Swick & Shapiro by 50%. The Court next recognized the firm’s work in the case provided assistance in Plaintiff’s current counsel’s preparation, but ultimately, since Plaintiff only prevailed on one claim, it required “a substantial reduction for ‘lack of litigation success,’” and the Court took an additional 2/3 reduction. Finally, an attorney who billed for Plaintiff’s representation before the EEOC received nothing of her requested $8,400 since the Court found it troublesome the attorney billed nearly all time to the nearest hour and, based on the time sheets, it was impossible to determine how much time billed was actually expended on the one successful claim.

Their Saving Grace was Reducing Duplicative and Unnecessary Fees

 Posted by at 9:58 am  Court Decisions, Interesting Fee Cases, Overbilling  Comments Off on Their Saving Grace was Reducing Duplicative and Unnecessary Fees
Jan 252017

Over the last decade, the Courts have routinely found block billing to be inadequate and have been reducing attorney fees because of it. The Courts’ reasoning for the reductions is because block billing hinders their ability to determine the amount of time spent on each fee, and the reasonableness of those fees, since many unrelated tasks are “lumped” together. In 2012, the Court in Project Vote stated that while block billing is not prohibited it does not provide a “sufficient breakdown to meet [the applicant’s] burden to support its fee request.” 887 F. Supp. 2d 704, 716 (E.D. Va. 2012). That Court stated it was not their role to spend their time dissecting blocked billed entries to determine if the time and fees were reasonable. In 1988, the Court in EEEOC v. Nutri/System, Inc. stated that entries should be “described with reasonable particularity” to allow the Court to determine what is a reasonable time spent on a task. 685 F. Supp. 568, 573 (E.D. Va. 1988).
In December of 2016, the Court in Griffin v. Areva, Inc. found several instances of block billing of multiple unrelated tasks by Troutman Sanders. 2016 WL 7736953 (W.D. Va. Dec. 15, 2016). The Court stated it was unable to distinguish time spent on each task and, therefore, it was unable to determine the reasonableness of the time billed. The Court cited some precedent where courts have found block billing “consistently warranted” a reduction in fees. Those Courts reduced a percentage of the total fees requested.
The defendants argued that they had already reduced their fees that could be “deemed duplicative and unnecessary” which ended up being their saving grace. Because the Court in Griffin v. Areva stated the defendants had already reduced their fees and Troutman Sanders fee submission, which was “not replete with block billing,” they would not reduce the attorney fees further.

Unreasonableness and Overstaffing Cause Fee Reduction

 Posted by at 9:25 am  Court Decisions, Interesting Fee Cases, Overbilling, Uncategorized  Comments Off on Unreasonableness and Overstaffing Cause Fee Reduction
Dec 082016

Courts have the discretion to reduce attorneys’ fees if the application is unreasonable or ambiguous and the hourly rate is not reasonable. In Mosley v. Nordquist, 2016 WL 5794480 (S.D. Miss. Sept. 30, 2016), the Court determined that while the substance of the underlying litigation was complex, the issue of the return of confidential documents subject to a protective order certainly was not. This case exemplifies the notion that firms must base staffing decisions on the complexity of the issue at hand and not on the overall complexity of the case.

The Court reviewed the billing records and found that the total hours billed were excessive. The Court determined that the time expended by the plaintiff on the Motion to Compel (22.5 hours), the Motion for Order to Show Cause (22.4 hours), and the Motion for Attorneys’ Fees and Costs (28.7 hours) was “light on case law and legal argument” and the Court also concluded that none of the billing attorneys used “billing judgment.” Billing judgment is usually shown by the attorney writing off unproductive, excessive, or redundant hours. Therefore, the Court reduced the total time billed for these motions by half.

A number of itemized entries were inadequately documented with vague or otherwise unproductive descriptions; therefore, the Court concluded that these hours were un- reasonably expended. These items included descriptions such as “analyze…,” “work on…,” “outline…,” “follow up…,” and “prepare to work on…” As the Court concluded, these entries were unreasonable, and thus, not compensable.

Lastly, it was evident from the billing records that partners and “of counsel” billed for work that associates could have done, attorneys billed for work that paralegals could have done, and even clerical work was occasionally billed A number of itemized entries by attorneys appeared to resemble paralegal work. These items included descriptions such as “prepare materials…” and “work on materials…” The Court reduced these entries to the paralegal rate.

There were also entries that included tasks such as calling the court regarding the process for the motion to compel, to check court reporter availability, and to check transcript status. The clerical work reflected in these entries was not compensable.

Billing Judgment-A Necessary Legal Skill?

 Posted by at 9:38 am  Court Decisions, Interesting Fee Cases, Overbilling, Uncategorized  Comments Off on Billing Judgment-A Necessary Legal Skill?
Nov 142016

In Thatcher v. OakBend Medical Center, a prevailing plaintiff in an employment retaliation suit sought an award of attorneys’ fees. 2016 WL 5848889 (S.D. Texas, Oct. 6, 2016). In discussing the reasonableness of the requested fees, the Court addressed the affirmative duty of plaintiff’s counsel to demonstrate that billing judgment was exercised. Id. at 3. As a part of the reasonableness analysis, the plaintiff’s attorney seeking an award of attorneys’ fees must prove that they exercised billing judgment. The exercise of billing judgment is shown by “documentation of the hours charged and of the hours written off as unproductive; excessive, or redundant.” If plaintiff fails to meet this burden, then the Court will impose its own billing judgment by reducing the fees appropriately. Id. In this case, the Court did not find evidence of billing judgment and reduced the requested fees significantly. Id. at 3-6. The Court reduced the requested fees from $190,250.00 to $124,464.14 as a result of plaintiff’s counsel’s lack of billing judgment. Id. at 7. The Court reduced the plaintiff’s requested fees for time billed for work on a failed claim, work on a motion that was never filed, general attorney education time, vague time entries, and excessive communications. Id. at 3-6.

Law firms and their billing practices are under growing scrutiny from their clients and the courts. Even under this ever-increasing scrutiny, the exercise of billing judgment is not a skill many attorneys would deem vital to the practice of law. Reducing your own fees may seem counterproductive. However, as demonstrated in this case, exercising billing judgment may be more beneficial than letting the court or the client impose its own judgment. Documentation of hours written off as unproductive, excessive or redundant is a simple way for attorneys to demonstrate to the court or client that restraint was used in determining the fees charged. The evidence of restraint makes it easier for the court or client to trust the attorney’s invoice and ultimately pay the amount billed by the attorney. Before documenting hours written off, attorneys must become familiar with the types of activities that should be written off or reduced as excessive or unreasonable. Understanding and demonstrating billing judgment is a skill every attorney should strive for in the modern practice of law.