Law firms often lose credibility even after successfully litigating for their clients. Isn’t it strange? But it’s the reality in many cases; let’s see how.
Award for Attorney Fees and Cost
As a general rule in U.S.A, each party in a legal proceeding should pay for its own attorney. However, the common law as well as various statutory provisions provides certain exceptions to this rule that a court may order the losing party who acted in bad faith to pay the attorneys’ fees for the prevailing party. Almost every prevailing party in litigation does claim for attorneys’ fees. However, the burden of establishing such entitlement for attorney’s fees and to produce sufficient documents to support such claim is on the prevailing party. Attorney’s bills for the service plays a significant role in determining the amount to be awarded as fees and expenses. Unfortunately, in many cases, the prevailing parties claim for attorney’s fees and expenses are significantly reduced by the courts due to the law firm’s improper billing practice.
Recent Court Decisions
On June 14, 2012 a federal court in Tennessee, while determining an award for attorney’s fees and expenses reduced 15% of the attorney’s time entry because of block billing and vagueness of the billing records.1 The court while explaining how the time entries lacked specificity due to block billing analyzed the following time entries:
04/14/11 4.00 Telephone conferences with clients, Meyers, paralegal; emails re same; conference with Meyers; Telephone conference with Chambers re hearing; review back pay and related research.
04/15/11 6.00 Prepare for and attend court; review Casad backpay issues; emails and telephone conferences with clients, counsel.
04/18/11 6.00 Telephone conferences with Meyers, client; prepare for and attend hearing re backpay; related emails; upload exhibit; work on order; prepare file order re counsel.
04/20/11 5.00 Draft and revise order; emails and telephone conference with counsel, clients re same.
Further, the court analyzed the following time entries to determine the vagueness of the time entries:
02/23/11 1.00 Emails.
04/24/11 1.50 Telephone conferences with clients, Mr. Meyers; emails.
03/24/11 1.00 Emails with counsel, clients.
04/04/11 0.70 Emails with counsel, clients.
04/22/11 0.60 Emails with clients.
04/26/11 0.40 Emails.
05/03/11 0.50 Telephone conference with client; emails with counsel.
Similarly, in 2011, another federal court in Tennessee reduced fees by 20% because counsel’s block billing made it impossible to “ensure with a high degree of certainty that the hours allegedly expended were in fact expended in a reasonable, non-duplicative fashion.”2
On June 2012, a federal court in Florida reduced an attorneys’ fees award by 20% which included a reduction of $37,965 stating that the law firm billed for clerical and administrative work which is part of a law firm’s overhead and should not have been reflected in the fees ledger.3 The court observed that the attorneys and paralegals billed for clerical tasks and many entries where block billed and the descriptions were vague. To cite as an example, one of the attorneys in this case billed an entry for 11 hours as follows:
Trial preparation; review and revise motion for use of Diane Davis deposition; research burden of proof re availability of witnesses; critique trial-run of opening statement; meet with Geno Knowles regarding model issues and fixes; move various exhibits to federal courthouse.
In 2011, a federal court in Hawaii made some interesting observation regarding improper billing in a claim for attorneys’ fees and expenses. A motion was filed by the prevailing party claiming attorneys’ fees and expenses for a sum of $1.5 million based on the law firm’s bill. Although the court denied the motion as a matter of law, it went ahead and analysed the reasonableness of the amount claimed and held that the billing was improper and would have resulted in substantial reduction. The court found the hourly rate charged by the junior associate and senior partner i.e., $400 and $900 respectively, are far excessive than the attorneys of comparable experience in Hawaii i.e., $160 and $350 respectively. Further the court observed that the time billed by other professionals such as librarians, litigation specialists, litigation coordinators or legal assistants are non-compensable. Various clerical activities billed such as time spent reviewing court-generated notices, notifying clients of court hearings, filing documents with the court, communication with court staff, scheduling, and corresponding regarding deadlines were also opinioned by the court as non-compensable. Further, the court stated that it would have denied the claim for expenses because the disbursements for research lacked supporting documents and no justifiable reasons existed for utilizing first class airfare and luxury accommodation. In 2011, the U.S. District Court for the Eastern District of Louisiana reduced a claim for attorneys’ fees and expenses by over $500,000 for block billing, vagueness and billing for overhead expenses.5
On August 4, 2011 the US District Court for Eastern District of Michigan reduced a fees award by 10% because block billing made the court “unable to determine exactly how much time was spent performing many tasks, whether the tasks were necessary for the litigation and whether the tasks were duplicated by other attorneys.”6 On January 23, 2012, the Supreme Court for New York County reduced a fees award by 34% because of block billing.7 In 2012, the U.S. District Court for the Western District of Virginia made a 30% reduction to the attorneys’ fees because the attorney performed paralegal tasks and billed at attorney’s rate.8
On April 19, 2012, the U.S. District Court for Eastern District California reduced a fees award by 19.3 hours because the time entry reflected unreasonable amount of time for reviewing documents, unreasonable accumulation of time, block billing and duplicative work.9 In 2012, the U.S. District Court for the District of Maryland reduced a 135 hours bill to 28 hours because the law firm overstaffed for a simple litigation.10
Legal Bill Review – a solution to improper billing practice
During the 90’s – at the inception of the electronic billing era, it was the insurers and corporate legal departments who wanted to use the electronic billing to get better understanding of services provided by the outside counsels. The insurers and corporate legal departments could achieve better control over their legal vendors’ billing practice with the help of UTBMS11 based e-billing and Legal Bill Review. Because UTBMS code has been divided into phase codes, task codes, activity codes and expenses code; bills prepared in compliance with this code are well itemized and block billing are avoided. Further, legal bill review helps to ensure compliance with the billing guidelines, identify improper billing practices and avoid the same.
The constant development of the UTBMS clearly suggests how increasingly electronic billing and legal bill review are getting adopted globally.12 The case study of the recent cases clearly suggests that it is no longer the insurers or corporate legal departments who are the only beneficiaries of Legal Bill Review; but the law firms as well.
1. Joe Oakley, et al. v. City of Memphis, No. 06-2276 A/P (W.D. Tenn., June 14, 2012).
2. Heath v. Metro. Life Ins. Co., No. 3:09-cv-0138, 2011 WL 4005409, at *10-11 (M.D. Tenn. Sept. 8, 2011).
3. Hiscox Dedicated Corporate Member v. Matrix Group, 2012 WL 2226441 (M.D. Fla. 2012).
4. HRPT Properties Trust v. Lingle, 775 F. Supp.2d 1225 (D. Haw. 2011)
5. Hornbeck Offshore Services, L.L.C. v. Salazar, 2011 WL 2214765 (E.D. La. 2011).
6. EEOC v. Cintas Corp., Nos. 04-40132, 06-12311, 2011 WL 3359622, at *7-8 (E.D. Mich. Aug. 4, 2011).
7. Northern Leasing Systems, Inc. v. Estate of Edward M. Turner and SB Restaurants, No. 602006/4, 2012 NY Slip Op 30156(U).
8. Brown v. Astrue, 2012 WL 775854 (W.D. Va. 2012).
9. Jose Coronado v. Michael J. Astrue, No. 1:10-cv-00594-AWI-SKO(E.D.Cal. April 19, 2012).
10. Dause v. Broadway Services, Inc., 2012 WL 1131524 (D. Md. 2012).
11. Unified Task Based Management System.
12. In 1997, the UTBMS code was adopted with slight modifications to match the Canadian legal system. In 2005, the LOC rectified UTBMS codes for Patent and Trademark. In 2010, the LOC ratified the Universal UTBMS Definitions to be used by the non-US based legal vendors. In 2011 the e-Discovery code was ratified. In 2012, now the LEDES® Oversight Committee is on the ratification process of the proposed changes to the Activity and Expenses Codes which shall be applicable universally.