analyzing legal costs for reasonableness - reasonable attorneys' fees

Analyzing Legal Costs for Reasonableness

Joe StuderLegal Fee Solutions GroupMeckler Bulger Tilson Marick & Pearson LLP

123 N. Wacker Drive, Suite 1800Chicago, Illinois 60606(312) 474-7900www.legalfeesolutions.comwww.mbtlaw.comjoe.studer@mbtlaw.com

Litigation Plans and Budgets

Legal Bill Review (Guideline Compliance)

Reasonableness Review

Analyzing Legal Costs

Litigation Plans & Budgets

A key ingredient for keeping costs reasonable

Require counsel to plan its strategy from the outset, and to “think before acting”

Allow for cooperative formulation of an effective and efficient defense strategy

Help minimize surprise

Provide a basis for measuring counsel’s progress, and the reasonableness of counsel’s fees



Effective Litigation Plans & Budgets

Provide a specific and comprehensive outline of planned defense activities

Are specifically tailored to the case at issue

Allow flexibility to accommodate case specific changes and to adapt to the unique flow of the individual lawsuit

Foster open communication to achieve a mutual understanding on litigation goals and the means for obtaining those goals


Legal Bill Review - Guideline Compliance

Guideline Compliance is different than a Reasonableness Review

While there is overlap between a review for compliance with billing guidelines and a general review for “reasonableness” -- because most billing guidelines incorporate reasonableness principles -- the baseline reference is not a set of billing guidelines, but the attorney’s ethical obligation to charge reasonable fees, and to not charge fees that are excessive or unconscionable.



Evaluating counsel’s compliance with billing guidelines is a vital component to ensuring effective cost management

Negotiating billing guidelines at the inception of the litigation sets the bar for how counsel will manage the litigation



A Guideline Compliance Review should identify:

What activities are properly billable, i.e.compensable work (answering discovery) versus administrative overhead (organizing discovery)

Whether billers were approved for case

Whether hourly rates are proper (and have not increased without agreement)

Whether expenses are proper and supported



The initial reviews of counsel’s bills are often the most important:

Establish that someone is watching

Can resolve questions about what is expected and what is allowed

Allow reviewer to “get a feel” for how counsel invoices fees and expenses


Legal Bill Review - Reasonableness ReviewCourts typically look at the following factors (“Rule 1.5. Factors”):

1. Time required, difficulty of questions involved, and skill needed;

2. Likelihood that the employment will preclude other employment;

3. Fee customarily charged in locality for similar legal services;

4. Amount involved and results obtained;

5. Time limitations imposed by client or circumstances;

6. Nature and length of the professional relationship with the client;

7. Experience, reputation and ability of the lawyer; and

8. Whether the fee is fixed or contingent

See, e.g., ABA Model Code of Professional Conduct (Rule 1.5).


Legal Bill Review - Reasonableness Review

“Lodestar” Analysis

“The initial estimate of a reasonable attorneys’ fee is properly calculated by multiplying the number of hours reasonably expended on the litigation times a reasonable hourly rate.”

Blum v. Stevenson, 465 U.S. 886, 888 (1984).



“Lodestar” Analysis - Reasonable Hourly Rate

When determining whether an hourly rate is reasonable, courts typically look at the “prevailing market rate in the relevant community.”




“[T]o determine ‘the prevailing market rates in the relevant community,’ a court must ‘assess the experience and skill of the prevailing party’s attorneys and compare their rates to the rates prevailing in the community for similar services by lawyers of reasonably comparable skill, experience, and reputation.’ ”

Interfaith Community Org. v. Honeywell Int’l, 462 F.3d 694, 708 (3d Cir. 2005).




Factors to consider for Prevailing Market Rate

Rates charged in forum where litigation is venued (not where counsel is located)

Rates charged by counsel competent to handle matter being litigation (not counsel’s claimed specialty)




Factors to consider for Prevailing Market Rate

“The reasonable hourly rate is the rate a paying client would be willing to pay. In determining what rate a paying client would be willing to pay, the district court should consider, among others, the Johnson factors; it should also bear in mind that a reasonable, paying client wishes to spend the minimum necessary to litigate the case effectively. The district court should also consider that such an individual might be able to negotiate with his or her attorneys... ” Arbor Hill Concerned Citizens Neighborhood Ass’n v. County of Albany, 522 F.3d 182, 190 (2d Cir. 2008).




Courts may apply “out-of-town” rates where competent counsel is not available in forum. “When fees are sought for an out-of-town specialist, courts must determine (1) whether hiring the out-of-town specialist was reasonable in the first instance, and (2) whether the rates sought by the out-of-town specialist are reasonable for an attorney of his or her degree of skill, experience, and reputation.” Hadix v. Johnson, 65 F.3d 532, 535 (6th Cir.1995).



“Lodestar” Analysis - Hours Reasonably Expended

“The district court also should exclude from this initial fee calculation hours that were not ‘reasonably expended.’ Cases may be overstaffed, and the skill and experience of lawyers vary widely. Counsel for the prevailing party should make a good-faith effort to exclude from a fee request hours that are excessive, redundant, or otherwise unnecessary, just as a lawyer in private practice ethically is obligated to exclude such hours from his fee submission.”Hensley v. Eckerhart, 461 U.S. 424, 434 (1983).



“Lodestar” Analysis - Hours Reasonably Expended “Once a reasonable hourly rate is determined, the Court must next

consider whether the time expended is reasonable. The court should exclude “hours that are not ‘reasonably expended’ by virtue of excessiveness, redundancy, or lack of necessity.” Aerogroup Int’l, Inc. v Ozburn-Hessey Logistics, LLC, 2010 WL 4746246 (D.N.J. Nov. 15, 2010).

“[A]ttorneys should spend the minimum time necessary to litigate the case effectively, and the court may reduce the award if it finds that the time spent was excessive, wasteful, or redundant.” Automobile Club of New York v. Dykstra, 2010 WL 3529235, at *3 (S.D.N.Y Aug. 24, 2010).



“Lodestar” Analysis - Hours Reasonably Expended

It is important to identify hours that are not reasonably expended. Courts typically look for “specific objections” to fee requests.

“The district court must provide a clear and concise explanation for its award, and may not ‘eyeball’ and decrease the fee by an arbitrary percentage because of a visceral reaction that the request is excessive.” Schlacher v. Law Offices of Phillip J. Rotche & Assocs. P.C., 574 F.3d 852, 857 (7th Cir. 2009).



“Lodestar” Analysis - Lodestar Enhancement

Although there is a strong presumption that the lodestar computation results in a reasonable figure for attorney’s fees, courts may apply an “enhancement.”

“[E]nhancements may be awarded in ‘rare’ and ‘exceptional’ circumstances.” Perdue v. Kenny A., 130 S. Ct. 1662, 1673 (2010).



“Lodestar” Analysis - Lodestar EnhancementPerdue v. Kenny, 130 S. Ct. 1662, 1674-1675 (2010).

“an enhancement may be appropriate where the method used in determining the hourly rate employed in the lodestar calculation does not adequately measure the attorney’s true market value, as demonstrated in part during the litigation.”

“an enhancement may be appropriate if the attorney’s performance includes an extraordinary outlay of expenses and the litigation is exceptionally protracted”

“an enhancement may be appropriate where an attorney assumes these costs in the face of unanticipated delay, particularly where the delay is unjustifiably caused by the defense.”



“Lodestar” Analysis - Lodestar Enhancement Rare“[W]e have noted that ‘the lodestar figure includes most, if not all, of the relevant factors constituting a ‘reasonable’ attorney’s fee,’... and have held that an enhancement may not be awarded based on a factor that is subsumed in the lodestar calculation. We have thus held that the novelty and complexity of a case generally may not be used as a ground for an enhancement because these factors ‘presumably [are] fully reflected in the number of billable hours recorded by counsel.’ We have also held that the quality of an attorney’s performance generally should not be used to adjust the lodestar ‘[b]ecause considerations concerning the quality of a prevailing party’s counsel’s representation normally are reflected in the reasonable hourly rate.’ ” Perdue v. Kenny A., 130 S. Ct. 1662, 1673 (2010).



The Rule 1.5 Factors and “lodestar” analysis make clear an important principle:

Context Matters!!



Common Indicia of Unreasonable Attorney Fees

Insufficient detail or vague time entries

Undisclosed fees in excess of budgeted hours

Minimum or formula time charges (e.g., using time increments of .25 hour rather than .10 hour)

Multiple billers/duplication of effort

Inefficient staffing or improper delegation

Undisclosed or unnecessary timekeepers




Excessive Reviews And Revisions

Excessive Intra-Office Conferencing

Unapproved Expenses or Overhead

Clerical, Administrative or Secretarial Tasks

Excessive efforts to “get familiar” with the matter

Efforts unrelated to defense of litigation (e.g., press relations, efforts to establish coverage)



Vague Entries - Billing entries should provide sufficient information to allow easy identification of the hours reasonably expended.

Attorneys have the “burden and responsibility to clearly, and in detail, present the hourly rate for legal services performed by various counsel, the specific services rendered, and the time spent in performing these services, to avoid the Court having to speculate or surmise this information.” Barry Mallin & Assocs. v. Nash Metalware Co., 849 N.Y.S.2d 752, 757 (N.Y. City Civ. Ct. Jan 10, 2008).



Vague Entries - Examples

Efforts “described as ‘attention to’ defendants’ opposition motion [does not permit Court to] determine whether such work was reasonable.” Mosaid Technologies, Inc. v. Samsung Electronics, Co., 224 F.R.D. 595, 597 (D.N.J. 2004).

“An entry of ‘telephone call’ or even ‘telephone call with Mrs. X’ is insufficient. The purpose of the conversation, and the person called or calling, must be clearly set out.... Similarly, an entry of ‘conference’ or ‘meeting,’ ‘conference with X’ or ‘conversation with X’ is insufficient. The entry should at the very least note the nature and purpose of the various meetings and conferences as well as the parties involved.” In re Wiedau’s, 78 B.R. 904 (Bankr. S.D. Ill 1987).



Vague Entries - Examples

“[Counsel’s] billing records contain numerous imprecise or incomplete entries. As Defendants point out, there are extensive records containing such limited descriptions as ‘office conference’; ‘telephone conference’; ‘review article’ or ‘review correspondence.’ Without further detail as to what was discussed and/or reviewed, the Court cannot determine whether the task was necessary for the litigation, whether the time expended on the task was reasonable, and whether the task was duplicated by other attorneys representing Plaintiffs.” Gratz v. Bollinger, 353 F. Supp. 2d 929, 939 (E.D. Mich. 2005).



Vague Entries - Redacted Entries

“It is the applicant’s responsibility to provide the court with contemporaneous billing records containing sufficient detail to all the Court to determine if the fees were reasonable and necessary. Obviously, this review becomes problematic when the supporting time records redact information essential to the task.” Oklahoma Natural Gas Co. v. Apache Corp., 355 F. Supp. 2d 1246, 1258 (N.D. Okla. 2004).



Vague Entries - Redacted Entries

“[Counsel’s] records contain significant redactions that prevent the Court from ascertaining the basis of many of the fees…. While the Court recognizes that confidentiality is essential, the failure to provide even a general description of the subject matter renders it impossible to assess the reasonableness of many of [counsel’s] entries.” Signature Networks, Inc. v. Estefan, 2005 WL 1249522 (N.D. Cal. May 25, 2005).



Billing in Quarter-Hour Increments - Courts have declared this practice “suspect,” and often results in inflated fees.

“Billing in quarter-hour increments generates a fee that is 15% higher than billing in a tenth of an hour.” Bench Billboard Co. v. City of Toledo, 2010 WL 4054390, * 7-8 (N.D. Ohio Oct. 15, 2010).

“As stated above, this Court believes that billing in increments of .1 leads to a more accurate record of the services performed. Therefore, without imposing an overly undue or harsh penalty on counsel for its choice in time recording practices, this Court will impose a 12.5% fee reduction to [counsel’s] request.” United States v. NCH Corp., 2010 WL 3703756, *9 (D.N.J. Sept. 10, 2010).



Duplicative Efforts - Courts look not simply for duplicative efforts, but unreasonably duplicative efforts

“[A] reduction for duplication of effort warranted only if the attorneys are unreasonably doing the same work.” Microsoft Corp. v. United Computer Resources, 216 F. Supp. 2d 383, 389 (D.N.J. 2002).

“[T]he mere fact that more than one lawyer toils on the same general task does not necessarily constitute excessive staffing.” Gay Officers Action League v. Puerto Rico, 247 F.3d 288, 297 (1st Cir. 2001).



Duplicative Efforts - Courts look not simply for duplicative efforts, but unreasonably duplicative efforts

“Though efficiency can sometimes be increased through collaboration ... overstaffing cases inefficiently is common, and district courts are therefore encouraged to scrutinize fee petitions for duplicative billing when multiple lawyers seek fees.” Schlacher v. Law Offices of Phillip J. Rotche & Assocs. P.C., 574 F.3d 852, 858 (7th Cir. 2009).

“While there is nothing inherently unreasonable about making an award for time spent by two or more lawyers engaged in the same [task], counsel bears the burden of showing his or her specific contribution.” Gratz v. Bollinger, 353 F. Supp. 2d 929, 942 (E.D. Mich. 2005).



Duplicative Efforts - Examples

“Assigning two partners to prepare the same witnesses for deposition approaches the definition of “chutzpah.” Microsoft Corp. v. United Computer Resources, 216 F. Supp. 2d 383, 395 (D.N.J. 2002).

“Although a private client may pay the additional fee to have all the attorneys attend a hearing, even if they are not actively participating, this practice is not necessarily reasonable when the extra expense will be borne by the other party to the proceedings.” Apple Corps Ltd. v. International Collectors Society, 25 F. Supp. 2d 480, 489 (D.N.J. 1998).



Duplicative Efforts - Examples

“The fact that many lawyers are sometimes needed does not mean many lawyers are always needed, however. The court noted throughout the decade of litigation in this case that several attorneys would frequently appear in court for ordinary status conferences, often dealing with mundane issues such as scheduling. This practice seemed wasteful to the court at the time, and it seems wasteful now.” Dupuy v. McEwen, 648 F. Supp. 2d 1007, 1020 (N.D. Ill. 2009).

“[Counsel] is being compensated at nearly $400 per hour. An attorney commanding such a rate should be capable of drafting a Settlement Agreement without requiring 6 hours of review by other attorneys.” Choike v. Slippery Rock Univ of Pennsylvania, 2010 WL 461410, at *7 (W.D. Pa. Nov. 5, 2010).



Duplicative Efforts - Examples (not duplicative)

“In addition to Defendant’s failure to provide any rational basis for the percentage reductions he calls for, the court finds that Defendant has generally understated the complexity of this lawsuit. That complexity is reflected in the numerous orders and reported decisions issued by this court and the Seventh Circuit over the last decade. A large amount of senior attorney time was required to shepherd this civil rights action through its complicated course. Reviewing many of the individual time record entries, the court finds that although several attorneys devoted time to the same issue, it is generally clear that they were not duplicating work.” Dupuy v. McEwen, 648 F. Supp. 2d 1007, 1020 (N.D. Ill. 2009).



Inefficient Staffing / Improper Delegation - Tasks should be performed by billers with appropriate level of experience and knowledge.

“Nor do we approve the wasteful use of highly skilled and highly priced talent for matters easily delegable to non-professionals or less experienced associates. Routine tasks, if performed by senior partners in large firms, should not be billed at their usual rates. A Michelangelo should not charge Sistine Chapel rates for painting a farmer’s barn.” Ursic v. Bethlehem Mines, 719 F.2d 670, 677 (3d Cir. 1983)



Inefficient Staffing / Improper Delegation - Examples:

“Defendants should not be asked to pay for counsel’s decision to assign the routine tasks of research and drafting to partners of the firm.” Microsoft Corp. v. United Computer Resources, 216 F. Supp. 2d 383, 392 (D.N.J. 2002).

“These attorneys [7th and 9th year associates] are all too senior and overpriced for the task of legal research. ... Plaintiffs’ counsel cannot charge senior attorney rates for basic legal services. Accordingly, ‘routine work [such as legal research] can and should be directed to low level attorneys.’ ” Apple Corps v. International Collectors Society, 25 F. Supp. 2d 480, 490 (D.N.J. 1998).



Excessive Efforts - Courts look for efforts that appear excessive and unreasonable to complete the relevant task.

“[H]ours are excessive if they represent more time than is reasonably necessary to complete the task.” Rode v. Dellaciprete, 892 F.2d 1177, 1192 (3d Cir. 1990).



Excessive Efforts - Examples:

“[Counsel] expended an incredible 1066.6 hours of attorney time and 73.6 hours of paralegal time investigating and prosecuting a civil contempt matter against an adversary with whom it was already familiar and who had a fraction of Microsoft’s resources, involving legal issues that Microsoft had previously argued and prevailed on in numerous similar proceedings in other courts. To say that this is “overkill” is an understatement.” Microsoft Corp. v. United Computer Resources, 216 F. Supp. 2d 383, 391 (D.N.J. 2002).



Excessive Efforts - Repeating work from prior cases

“An attorney is not entitled to be paid in a case for the work he or another attorney did in some other case.” ACLU of Georgia v. Barnes, 168 F.3d 423, 430 (11th Cir. 1999).

Where counsel litigated a similar case five months earlier, and recognizing that there “were, in fact, unique issues in this case, such as the differing language and legislative history of the statutes at issue, more than 150 hours of attorney time for what was largely repetition of work from the [prior] case is unreasonable.” American Broadcasting Co. v. Ritchie, 2011 WL 665858, at *8 (D. Minn. Feb. 14, 2011).



Excessive Efforts - Experience should translate to Efficiency

“This Court’s review of [counsel’s] time entries demonstrates that he spent most of his time preparing for the hearing by reading cases, drafting notes and questions, and outlining his argument for the hearing. Based on [counsel’s] skill and experience with this case and numerous other similar matters, the Court finds that 132.40 hours to prepare for the preliminary injunction hearing is not warranted.” Brown v. City of Pittsburgh, 2010 WL 2207935, at *13 (W.D. Pa. May 27, 2010).



Excessive Conferencing - A Recognized Problem

“The primary cause of the overbilling was over-conferencing. The time sheets are replete with conferences among co-counsel. These revealed near-constant bi-coastal efforts to coordinate case ‘strategy’ and ‘status.’ Telephonic and personal conferences occurred on a daily basis - often several times a day with different groups of plaintiffs’ attorneys.” Guckenberger v. Boston University, 8 F. Supp. 2d 91, 100 (D. Mass. 1998).

But...



Excessive Conferencing - Context Matters

Sometimes, the conferencing is reasonable...

“Though elimination of these hours is tempting, the Court declines to deduct fully the hundreds of hours spent conferencing because of the particular nature of this case. The heated disputes of this expedited and high profile case required herculean efforts by multiple counsel, and “[c]areful preparation often requires collaboration and rehearsal ....” Guckenberger v. Boston University, 8 F. Supp. 2d 91, 100-101 (D. Mass. 1998).



Excessive Conferencing - Context Matters

Sometimes, the conferencing is unreasonable...

“However, just as there can be too many cooks in the kitchen, there can be too many lawyers on a case. ... There was a great deal of ‘redundancy’ in the plaintiffs’ attorney structure, and the Court concludes that this was certainly a case when, at some point ‘there [came] a time of diminishing returns.’ ” Guckenberger v. Boston University, 8 F. Supp. 2d 91, 101 (D. Mass. 1998).



Clerical, Administrative or Secretarial Tasks - Nearly all litigation management guidelines prohibit billing for clerical, administrative or secretarial tasks. Courts typically follow suit

Counsel cannot recover fees for “purely clerical or secretarial tasks.” Missouri v. Jenkins, 491 U.S. 274, 287-88 (1989).

“It is well settled that costs associated with clerical tasks are typically considered overhead expenses reflected in an attorney’s hourly billing rate and are not properly reimbursable.” Brandt v. Astrue, 2009 WL 1727472, at *4 (D. Or. June 16, 2009).



Clerical, Administrative or Secretarial Tasks - Examples:

“A significant portion of the paralegal time plaintiff seeks to recover is for non-compensable tasks including: photocopying; preparing documents for delivery; faxing; hand-delivering documents; scanning documents; entering dates into a calendar; ordering a court reporter; scheduling telephone conferences.” Lee v. City of Chicago, 2008 WL 5377798, at *3 (N.D. Ill. Dec. 18, 2008).

“A number of tasks performed by defendants’ paralegals appear to have been clerical or secretarial in nature, such as copying, Bates labeling, and scanning documents.” General Chuck Yeager v. Bowlin, 2010 WL 2303273, at *8 (E.D. Cal. Jun 7, 2010).



Efforts to Get Familiar with Matter - Context Matters

“Defendant claims that over 92 hours of time spent by new attorneys familiarizing themselves with the file is excessive and that a private client would not stand for such waste. The court disagrees ... for the same reason that it did not accept Defendant’s general argument that the case was overstaffed: this litigation extended over many years and entailed a wide variety of issues.... Over such a period of time, it is not surprising that new attorneys must be brought in to work on the matter, nor that those attorneys need to spend some time educating themselves on the factual record and legal theories. In this court’s view, the time attorneys spend getting up to speed on the case are compensable so long as those attorneys devote a significant portion of time to the case.” Dupuy v. McEwen, 648 F. Supp. 2d 1007, 1022 (N.D. Ill. 2009).



Efforts to Get Familiar with Matter - Context Matters

“The court is less persuaded that time spent by law clerks and junior attorneys who performed little work on the case is compensable. Unlike the other attorneys included in this category, there is no indication that the law students continued working on the case for more than a few months. The time they spent reviewing the file therefore generated little value for the litigation and is not compensable. This constitutes a sizable amount of the hours Defendant claimed in this exception; indeed, nearly one-third of the hours in this entire category were spent by a single third-year law student reviewing past pleadings and opinions. The court has serious doubts about the overall utility of that time.” Dupuy v. McEwen, 648 F. Supp. 2d 1007, 1022 - 1023 (N.D. Ill. 2009).



Unrelated to Defense of Litigation - Fees and expenses must relate to defense of the subject litigation.

Efforts unrelated to defense of the subject litigation, or for the defense of a non-insured party, are not reasonable and necessary for defense of the insured.

Recoverable fees must be reasonably expended “on the litigation” itself. Webb v. Board of Education of Dyer County, 471 U.S. 234, 242 (1985).



Unrelated to Defense of Litigation - Press Relations

“The legitimate goals of litigation are almost always attained in the courtroom, not in the media. ... [T]he press efforts in this case were aimed, not at achieving litigation goals, but at minimizing the inevitable public relations damage to the company for suing the governor and the state police to alter the pro-labor police enforcement policies.” Rum Creek Coal Sales, Inc. v. Caperton, 31 F.3d 169, 176 (4th Cir. 1994).



Unrelated to Defense of Litigation - Press Relations

“If the purpose of counsel’s efforts was to prevent Plaintiffs from publicly saying something detrimental to their case or image, the Court cannot conclude that such advice was ‘necessary to the prosecution of the suit.’ Counsel simply could have advised their clients to avoid speaking to the media altogether. The fact that a plaintiff and/or his or her attorney decide to speak with the media does not mean the opposing party should bear the costs of those efforts. Moreover, the Court finds it more likely in this case that the media and public relations efforts reflect an effort by both sides to sway public opinion in this extremely socially and politically divisive matter.” Gratz v. Bollinger, 353 F. Supp. 2d 929, 941-942 (E.D. Mich. 2005).



Unrelated to Defense of Litigation - Ancillary Proceedings

“[The] categorical contention that federal law precludes recovery for work that was not part of the federal proceedings is incorrect. For example, an award of fees for ancillary proceedings is proper if the work was ‘useful and of a type ordinarily necessary’ to secure the relief requested in the primary proceeding.” Bench Billboard Co. v. City of Toledo, 759 F. Supp 2d 905,910 (N.D. Ohio 2010).



Other Issues - Fees for In-House Counsel

Fees for In-House Counsel are generally recoverable, if efforts are non-duplicative of work done by outside counsel, and otherwise reflect reasonable and necessary work for defense of the instant litigation.

Fees for In-House Counsel are not recoverable where efforts are duplicative of outside counsel, are otherwise unreasonable, and/or are unnecessary for defense of the instant litigation.



Other Issues - Fees for In-House Counsel - Examples:

“Fees for work performed by in-house counsel are generally recoverable upon a showing that such counsel contributed something of substantive value to the litigation. Recovery, however, is not permitted for fees devoted to acting as a ‘liaison’ between the company and outside attorneys who represent it.” Travelers Indemnity Co. of Illinois v. Millard Refrigerated Services, 2002 WL 2005717, at *1 (D. Neb. Sep. 3, 2002).



Other Issues - Fees for In-House Counsel - Examples:

“[M]uch of what [in-house counsel] did was simply performing the role of a client, i.e. keeping abreast of what was happening in the litigation, providing counsel with information known to the client, and advising counsel of client’s views as to litigation strategy. Plaintiff has not referred to a single specific act of in-house counsel that involved work that would otherwise have been performed by outside counsel. No fees are allowed for the work of plaintiff ’s in-house counsel.” Proctor & Gamble Co. v. Weyerhauser Co, 711 F. Supp. 904, 906 (N.D. Ill. 1989).



Other Issues - Fees for Travel Time

Courts generally discount hourly rate for time billed for non-working travel. See, e.g., In re Babcock & Wilcox, 526 F.3d 824, 828-829 (5th Cir. 2008) (affirming 50% reduction in hourly rate charged for travel).

Courts often question the reasonableness of all travel time billed by “out-of-town” firms. “[P]utting aside the issue of whether this litigation required representation by so many well-qualified attorneys from two out-of-state firms, the Court sees no reason why Defendants should bear the additional costs incurred because those firms are located in different and distant cities.” Gratz v. Bollinger, 353. F. Supp. 2d 929, 943 (E.D. Mich. 2005).



Other Issues - Fees to Learn Local Practices & Rules

“[C]ounsel should not be awarded for time spent in reading this Court’s local rules and practices, given that they declared to the Court in their pro hac vice motions that they had become familiar with the Local Rules and the ECF system. Furthermore, the Court assumes that ... local counsel [was retained] for the purpose of having co-counsel who was intimately familiar with the rules, policies, and practices of this Court. Brown v. City of Pittsburgh, 2010 WL 2207935, at *14 (W.D. Pa. May 27, 2010).

Use a litigation management plan and a litigation budget (amended as necessary) to establish what work will be done, who will be doing that work, and what will be charged for that work.

Review bills to ensure that counsel is complying with the billing guidelines, following the litigation management plan, and keeping the defense within the planned budget.

BE REASONABLE!

Keys to Reasonable Defense Costs


Common Reasonableness Issues

Mass Tort Litigation

Lack of Coordination

Excessive Coordination / Strategizing

Excessive Investigation / Initial Case Workup

Excessive Case Management / Case Administration

Fees and expenses unrelated to the litigation


Common Reasonableness Issues

Financial Litigation

Allocation of Costs / Costs Unrelated to Litigation

Defense Costs vs. Normal Business Costs

Defense Costs vs. Other Litigation

Coordination between Counsel / Consultants

Coordination of Investigation and Litigation roles


When to Use an Expert

Pre-Litigation

Large amount of fees to review

Complex litigation / mass litigation

Need independent opinion concerning reasonableness of fees and expenses

Counsel / insured unwilling to negotiate and/or compromise on fee issues

Significant disputes concerning fee reasonableness



Pre-Litigation

Large amount of fees to review

Expert can evaluate all fees and expenses, (rather than just latest invoice)

By reviewing all fees and expenses, a reviewer can better determine whether there is duplicative and/or excessive billing.

Alternatively, expert can review sample of fees and expenses. (See, Wyeth PPA Exhaustion Audit)



Pre-Litigation

Complex litigation / mass litigation

Expert can provide summary overview of litigation, outlining roles of different firms and vendors

By examining roles played by different firms and vendors, a reviewer can better determine whether there is duplicative and/or excessive billing.



Pre-Litigation

Need independent opinion concerning reasonableness of fees and expenses

Expert can provide independent (and objective) view of fee reasonableness issues, and quantify amounts associated with fee reasonableness issues

Expert can also support reasonableness of fees and expenses



Pre-Litigation

Significant disputes concerning fee reasonableness

Expert can identify areas of concern, to guide discussions with insured about fee reasonableness.

Expert can monitor fees on an ongoing basis, to ensure counsel continues to address issues identified as areas of concern.

Expert’s analysis can be used to demonstrate insurer’s good faith attempts to resolve fee issues.



Existing Litigation

Expert report can summarize underlying litigation, delineate roles of counsel, and identify and quantify fee reasonableness issues.

Expert report satisfies need to provide specific criticismsof fees at issue

Expert report can also support reasonableness of fees at issue