CASE LAW REGARDING ATTORNEY'S FEES

Although legal auditors are not engaged in the practice of law, they must be familiar with the case law surrounding reasonable attorney's fees and their opinions should be supported by law.

When auditing legal bills to assess the reasonableness, some of the issues that Accountability Services reviews are:

• Exercise of Billing Judgment
• Billing Methodology
• Reasonableness of Time Expenditures
• Staffing Issues
• Management Style
• Billing Rates
• Other Issues that Effect Legal Fees, such as travel time, clerical and administrative tasks and internal conferences
• Appropriateness of Disbursements
  

Set forth below is some of the case law involving exercise of billing judgment and billing methodology. This material is for general information purposes only and it is not offered as legal advice.

Case law for other issues regarding reasonable legal fees will be posted periodically, so please visit our web site again.

Exercise of Billing Judgment
Courts assume that attorneys routinely exercise billing judgment on behalf of their client and expect that same treatment with respect to the legal bills presented to one’s adversary. Hensley v. Eckerhart, infra; Ecos, Inc. v. Brinegan 671 F. Supp. 381 (M.D.M.C. 1987); LeRoy v. City of Houston, 906 F.2d 1068 (5th Cir. 1990)

The falsification in any manner of legal bills to clients is unethical and reprehensible
Billing practices, like every other aspect of client dealing, should be conducted in a scrupulously honest manner." Florida Bar v Herzog, 521 So.2d 1118 (Fla. 1988)

Billing Methodology

• Contemporaneous Time Journals
  The burden is on counsel to keep and present records from which the court may determine the nature of the work done, the need for it, and the amount of time reasonably required; where adequate contemporaneous records have not been kept, the courts should not award the full amount requested. F.H.Krear & Co. V. Nineteen Named Trustees, 810 F2 1250,1265 (2nd Cir. 1987)
  
  Courts have held that the absence of detailed contemporaneous time records, except in extraordinary circumstances, will call for a substantial reduction in any award or, in egregious cases, disallowance. Grendel’s Den, Inc. v. Larkin, 749 F. 2d 945 (1st Cir, 1984)
  
  When the Second Circuits contemporaneous time record requirement is not satisfied, courts have seen fit to adopt a roughly 30% fee reduction rule for an attorney’s failure to keep contemporaneous time records of [his] services. Ragin, 870 F.Supp at 521 (listing cases).
  
  The court decided that even a 30% reduction in the claimed time may be too generous in light of the vagueness of the law firm’s records. Bonnie & Co Fashion Inc. v Bankers Trust Co.,970 F. Supp 333 (S.D.N.Y. 1977) at 343.
  
  Any ambiguities arising out of poor time records should be resolved against the applicant. New York State Assoc. For Retarded Children v. Carey, 711 F.2d 1142 (2d Cir. 1983)
  
  "Inconsistencies in the attorney’s records will be cut, for example telephone calls one claims to have made to the other that do not appear in the other’s records." Carrero v. New York City Housing Authority,685 F. Supp. 904, 909 (S.D.N.Y 1988), aff’d in part, rev’d in part on other grounds 890 F. 2d (2d Cir 1989)
  
  
• Block Billing
  Bankruptcy courts will typically disallow lumped entries. In re The Leonard Jed Company, 103 B.R. 706 (Bankr. D. Md. 1989)
  
  "[When] more than a single service was provided, the services are combined, and there is no information concerning what part of the total charge is allocated to each service.Hercules’ challenge of cleansing the Augean Stabels pales by comparison with the task presented." Mokover v. Neco Enterprises, Inc., 785 F. Supp. 1083 (D.R.I. 1992)
  
  
• Large Billing Increments
  The practice of billing in quarter hour increments "inherently inflates and distorts the time actually expended, and hence is unacceptable." In re Price, 143 B.R. 190 (Bankr. N.D. Ill 1992)
  
  One court reduced the legal fees awarded by 10% to adjust for overcharging through the use of minimum billing increments of .25 hours. In re Tom Carter, 55 B.R. 548 (Bankr, C.D. Cal. 1985)

Disclaimer: Accountability Services, Inc. is not engaged in the practice of law. We have provided the above materials for general information purposes only and it is not offered as legal advice. For legal advice on specific billing practices, the law of specific jurisdictions and the interpretation and continued validity of the cited cases, please consult your attorney.