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Seeking Indemnification: Who Bears the Burden of Showing that Legal Fees are Reasonable?

Posted by Judie Bronsther | May 19, 2014 | 0 Comments

The burden of establishing the reasonableness of the attorney's fees and costs falls squarely upon the party seeking the fees.

See Deutsche Bank Trust Co. of Americas v. Tri-Links Investment Trust, 837 N.Y.S.2d 15 (N.Y. App. Div. 2007) (holding that the party seeking contractual indemnification had placed at issue the reasonableness of the attorney's fees incurred and the amounts paid in settlement); Hyeon Soon Cho v. Koam Med. Servs. P.C., 524 F. Supp. 2d 202, 209 (E.D.N.Y. 2007) (finding that the party seeking the award bears “the burden of documenting the hours reasonably spent by counsel”); Cohen v. Ryan, 34 A.D.2d 789, 311 N.Y.S.2d 644 (1970).

The determination of the reasonableness of the attorneys' fees and costs requires an examination of the time records reflecting the legal services for which indemnification is sought.  The time records must be contemporaneous and set forth the date, the hours expended and a description of the nature of the work done.  Lunday v. City of Albany, 42 F.3d 131 (2d Cir. 1994) and F.H. Krear & Co. v. Nineteen Named Trustees, 810 F.2d 1250, 1265 (2d Cir. 1987).

Failure to maintain and present adequate contemporaneous attorney fees records justifies calls for a substantial reduction in any award and, in extraordinary cases, the denial of the full amounts requested.  F.H. Krear & Co., 810 F.2d at 1265); see also Grendels Den, Inc. v. Larkin, 749 F. 2d 945 (1st Cir. 1984).

In addition, any ambiguities arising out of poor time records should be resolved against the applicant.  For instance, if one timekeeper claims to have made a telephone call to another attorney and that attorney does not have a corresponding entry, the inconsistencies in the tine records will be cut out.  See New York State Assoc. For Retarded Children v. Carey, 711 F.2d 1142 (2d Cir. 1983) and Carrero v. New York City Housing Authority, 685 F. Supp. 904, 909 (S.D.N.Y 1988), aff. in part, rev. in part on other grounds, 890 F.2d (2d Cir. 1989).

About the Author

Judie Bronsther

Ms. Bronsther began her career in 1979 as an associate with Finley, Kumble, Wagner, Heine, Manley & Underberg specializing in corporate finance. In 1984, she joined forces with a client, Empire Securities, a brokerage house specializing in oil and gas transactions, and became Executive Vice President and General Counsel. In 1989, she joined Kaye, Scholer, Fierman, Hayes and Handler. Ms. Bronsther graduated from University of Rochester, magna cum laude, and New York University School of Law. Ms. Bronsther has written extensively on the subject of legal cost control and lectures frequently on this subject.

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