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
This material is for general information purposes only and it is not offered as legal advice.
Case law regarding reasonable legal fees will be posted periodically, so please visit our web site again.
Reasonable Hourly Rates
In determining the hourly rates for purposes of calculating the lodestar, the Court must determine a reasonable rate for each attorney at the prevailing market rates in the relevant community for similar services by attorneys of reasonably comparable skills, experience, and reputation. Blum v. Stenson, 465 U.S. 886, 895, 104 S.Ct. 1541, 79 L.Ed.2d 891 (1984). The burden is on the fee applicant to submit satisfactory evidence that the requested rate is aligned with prevailing market rates. Wheeler v. Mental Health & Mental Retardation Auth. of Harris County, Tex., 752 F.2d 1063, 1073 (5th Cir. 1985).
A reasonable hourly rate is the prevailing market rate in the relevant legal community for similar services by lawyers of reasonably comparable skills, experience, and reputation." Norman v. Housing Auth. of Montgomery, 836 F.2d 1292, 1299 (11th Cir. 1988). A reasonable hourly rate is one that is adequate to attract competent counsel in the relevant legal market, but yet does not produce a windfall to that attorney. See Blum v. Stenson, 465 U.S. 886, 894-95 (1984). With respect to the issue of hourly rates, this Court "is itself an expert on the question and may consider its own knowledge and experience concerning reasonable and proper fees and may form an independent judgment either with or without the aid of witnesses as to value."Norman, 836 F.2d at 1303. Several well established factors may be considered in arriving at that prevailing market rate, as set forth in Johnson v. Georgia Highway Express, Inc.
The Eleventh Circuit has instructed that a reasonable hourly rate is "the prevailing market rate in the relevant legal community for similar services by lawyers of reasonably comparable skills, experience, and reputation." Norman v. Housing Auth. of City of Montgomery, 836 F.2d 1299 (11th Cir. 1988) The `relevant market' for purposes of determining the reasonable hourly rate for an attorney's services is the place where the case is filed." The Court, which is familiar with the prevailing rates in the local market, may act as its own expert and rely on its "knowledge and experience" to determine the reasonableness and propriety of the requested fees. Loranger v. Stierheim, 10 F.3d 776, 781 (11th Cir. 1994).
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)
Fee applicants should exercise billing judgment with respect to the number of hours worked and billed.Hensley v. Eckerhart, 461 U.S. 424, 437, 103 S.Ct. 1933, 76 L.Ed.2d 40 (1983). Billing judgment consists of winnowing hours actually expended down to hours reasonably expended. Case v. Unified School Dist. No. 233, Johnson County, 157 F.3d 1250 (10th Cir.1998).
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
Bankruptcy courts will typically disallow lumped entries. In re The Leonard Jed Company, 103 B.R. 706 (Bankr. D. Md. 1989) and other courts reviewing block-billed and/or vague time entries have typically performed a percentage reduction either in the number of hours or in the lodestar figure, ranging from 10% to 30%.
BARBU v. Life Insurance Company of North America, Dist. Court, ED New York 2015 (33 percent reduction)
Charles v. City of New York, No. 13 Civ. 3547, 2014 U.S. Dist. LEXIS 124056, at *15-16 (S.D.N.Y. Sept. 4, 2014) (30 percent reduction)
Lil' Joe Wein Music Inc. v. Jackson, 2008 WL 2688117, at *13 (S.D. Fla. July 1, 2008) (20 percent reduction)
Blanco v. TransAtlantic Bank, 2009 WL 2762361, at *4 (S.D. Fla. Aug. 31, 2009) (20 percent reduction)
Bujanowski v. Kocontes, 2009 WL1564263, at *4 (M.D. Fla. Feb. 2, 2009) (30 percent reduction).
In re Pierce, 190 F.3d 586, 594 (D.C. Cir. 1999) (10 percent reduction)
ATC Distrib. Group, Inc. v. Ready-Built Trasnmissions, Inc., No. 03 Civ. 2150 (GWG), 2007 U.S. Dist. LEXIS 65963, at *20 (S.D.N.Y. Sept. 7, 2007) (33 percent reduction)
United States ex rel.; Kirsch v. Fleet St., 148 F.3d 149, 173 (2d Cir. 1998) (20 percent reduction).
Lahiri v. Universal Music & Video Distrib. Corp., 606 F.3d 1216, 1222 (9th Cir. 2010) (upholding a 20% reduction)
Torres-Rivera v. O'Neill-Cancel, 524 F.3d 331, 340 (1st Cir. 2008) (upholding a 15% reduction)
Courts have reasoned that these deficient billing entries do not allow a court to review the legal bills for reasonableness.
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.