Legal fee disputes arising in a fee-shifting context or contract dispute have reached unprecedented levels, with no signs of abating. Regardless of whether you are submitting or opposing a fee application, there are some hard and fast rules you need to know.
First, the party seeking attorneys' fees has the burden of submitting billing records that establish reasonableness of the fees and expenses. Courts nationwide use the “lodestar” approach to assess reasonableness. The number of hours reasonably expended is multiplied by a reasonable hourly rate to get to a reasonable fee. In most cases, the lodestar computation is presumed to be the reasonable fee. However, sometimes courts adjust the lodestar computation up or down.
Courts routinely exclude hours that it considers excessive, redundant, unnecessary or inadequately documented. In large part, that determination is in the hands of the trial court judge and usually is reversible only upon a showing of abuse of discretion. Appealing an attorney fee award is like swimming upstream. For that reason, fee litigants should scrupulously their fee applications or oppositions. Courts often review a law firm's billing method to determine whether the firm's legal fees were artificially increased by some of the following factors:
1) large minimum billing increments;
2) block billing, where a single block of time is shown for working on more than one discrete task;
3) time estimates;
4) lack of detail;
5) formula billing; and
6) standardized work descriptions.
Courts also scrutinize matter staffing. In Democratic Party of Wash. State v. Reed, 388 F.3d 1281, 1286 (9th Cir. 2004) the Circuit Court of Appeals said, “courts ought to examine with skepticism claims that several lawyers were needed to perform a task, and should deny compensation for such needless duplication as when three lawyers appear for a hearing when one would do." Of course some duplication in effort is inevitable. Most large firms staff matters with multiple timekeepers. There is nothing inherently unreasonable about having multiple attorneys working on the same issue or document, but they should not be doing the same work and there should be a distinct contribution for each lawyer.
I have actually done some audits where there were over 100 individuals assigned to a matter and this alone did not mean there was duplication in effort. But, the firm staffed every deposition with 3 people, every hearing with 3 to 6 people in attendance, and every document had 4 or more draftspersons. I can assure you that in my opinion, which was validated by the Ninth Circuit, there was unreasonable duplication in effort.
When a trial court determines that the legal fees are unreasonable, the court can conduct an hour-by-hour analysis of the fee request, and exclude those hours for which it would be unreasonable to compensate the firm. For instance, in Greene v. ALAN WAXLER GROUP CHARTER SERVICES, LLC, Dist. Court, D. Nevada 2014, the court reduced the 11 hours that were requested for a motion to strike a supplemental brief to one (1) hour, reasoning that the brief contained roughly 3 pages of arguments and such motions are routine. Alternatively or in addition to the line-by-line reductions, a court can make across-the-board percentage cuts in the number of hours claimed or in the final lodestar figure. In Rosenfeld v. United States DOJ, 903 F. Supp. 2d 859, 877 (N.D. Cal. 2012, the court said “the district court has the authority to make across-the-board percentage cuts . . . in the number of hours claimed . . . as a practical means of trimming the fat from a fee application.” Note however that when a trial court chooses the percentage reduction, it must explain its reasons for selecting a given percentage.