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August 2010

GENERAL

Plaintiffs Lawyers in 9/11 Cases Lose Bid to Recoup $6.1 Million in Interest

Mark Hamblett, New York Law Journal

08-30-10 -- Plaintiffs lawyers in the 9/11 respiratory cases cannot pass on to clients some $6.1 million in interest costs associated with financing the massive litigation, Southern District Judge Alvin K. Hellerstein ruled Friday. . . . Even though lead lawyer Paul Napoli marshaled opinions by bar associations, court cases and experts to show that borrowing to finance litigation and passing the cost to clients is both legal and ethical, Hellerstein said he would not allow it. / Read Napoli's filing. / "Mr. Napoli, I can tell you now, I'm not going to allow this charge," the judge said. "I'm not saying it was unethical. I'm not saying you didn't try to stay attuned to the rules of professional responsibility. What you're getting is too much." . . . The judge's decision came as all sides in the litigation are pressing to convince some 10,000 plaintiffs who suffered respiratory and other illnesses in the response to and cleanup after the Sept. 11, 2001, terror attacks to accept a settlement that could run as high as $712.5 million.

CALIFORNIA  

Judge slashes Calif. election case attorney fees

By Michael R. Blood Associated Press Writer, San Jose Mercury News

08-26-10 -- A Madera County judge slashed more than $1.6 million from legal fees sought by attorneys who filed a lawsuit against a school district over the way it conducted elections, officials said Thursday. . . . The Madera Unified School District did not contest the 2008 lawsuit, but lawyers billed the district for $1.2 million, a fee later increased to $1.8 million, according to district officials. The district called the attorneys' bill a money grab and feared it would force administrators to cut money for books and lunches to pay it. . . . In an order issued Monday, Superior Court Judge James Oakley reduced the amount to $162,500 for the Lawyers' Committee for Civil Rights of the San Francisco Bay Area, law professor Joaquin Avila and the firm of Gibson, Dunn and Crutcher, which sought the fees.

NEW JERSEY  

Master in Prudential Fraud Case Lowers His Fees as Plaintiffs Seek His Ouster

Judge defends appointment of special master and the hours billed

Charles Toutant, New Jersey Law Journal

08-26-10 -- The special master appointed to handle discovery in a mammoth fraud and bribery suit against Prudential Life Insurance Co. has agreed to reduce his fees, even as the plaintiffs lawyers are trying to dispense with him altogether. . . . William Hunt said in an Aug. 19 letter to the parties that he would cut his hourly rate from $450 to $350. The concession came after plaintiffs lawyer Angela Roper sounded alarms over the $77,265 bill Hunt submitted for his first three weeks on the job. The rate reduction, retroactive to Hunt's appointment, will shave about $17,000 off the total. . . . But Roper says she will nonetheless proceed with her motion, filed July 30, for an emergent interlocutory appeal of Hunt's appointment in the case, In re Prudential Life Insurance Co. of America Litigation, AM-00820-09.

NEW YORK  

Already Under Fire, Lawyers for 9/11 Workers Are Ordered to Justify Some Fees

By Mireya Navarro   New York Times

08-27-10 -- The lawyers representing most of the ground zero workers who sued the city over health issues will be appearing in court in a new role: defending themselves. . . . The federal judge overseeing the cases has summoned the law partnership of two firms, Worby Groner Edelman and Napoli Bern Ripka, to a hearing on Friday to justify $6.1 million in legal expenses that they are charging their clients. . . . Next week, the lawyers are due back in federal court to respond to accusations of overcharging made by the other leading law firm representing workers. That firm, Sullivan Papain Block McGrath & Cannavo, alleges that its co-counsel is trying to inflate its fees by inappropriately charging clients more than $400,000 for publicists, lobbyists and legal and medical experts as case-related costs.

Claiming Excessive Fees, Patent Holder Sues Law Firms for $10 Million

Nate Raymond, New York Law Journal

08-26-10 -- A retired university professor who has pursued dozens of electronics companies for patent infringement on Monday filed a notice to sue her former attorneys for $10 million, accusing them of misusing escrow funds and charging her excessive fees. . . . Gertrude Neumark Rothschild filed a summons in Manhattan Supreme Court against Troutman Sanders; an intellectual property boutique chaired by Albert L. Jacobs Jr. before he became a partner at Troutman; and Jacobs.

Read the Troutman Sanders and Albert Jacobs LLP complaints.

GENERAL

Pepper Hamilton Sues FDIC Over Legal Fees

Gina Passarella, The Legal Intelligencer

08-25-10 -- Pepper Hamilton has sued the Federal Deposit Insurance Corp. after it classified as unsecured Pepper Hamilton's claims for legal fees involving work for a division of bankrupt Advanta Corp. and the FDIC. . . . The firm asserted a claim against the FDIC as receiver of Utah-based Advanta Bank Corp. -- a division of Spring House, Pa.- based parent company Advanta Corp. -- for a total of $260,338. That included a $139,233 administrative claim and a $121,105 unsecured claim, according to the complaint filed last week in the U.S. District Court for the District of Columbia in Pepper Hamilton v. FDIC. . . . The work was done before and during the time Advanta Bank went into receivership, as ordered by the Utah Department of Financial Institutions. The FDIC was named receiver of the bank.

MINNESOTA   

Minneapolis attorney's $1.6 million award upheld

Brian L. Williams had sued his former employers, claiming they didn't cut him enough of a settlement that he helped to negotiate.

By Abby Simons, Star Tribune 

08-25-10 -- The Minnesota Court of Appeals has upheld a $1.6 million award to a Minneapolis attorney who claimed his law firm failed to give him a proper cut of a large settlement he helped negotiate for the state of Minnesota and others in a securities fraud suit. . . . However, the court also ruled that Brian L. Williams is not entitled to collect punitive damages from his former employer, Heins Mills & Olson. . . . A Hennepin County jury awarded Williams $1.6 million in June 2008, based on his claim that he had been cut out of some of the legal fees he earned in a securities fraud case against AOL Time Warner.

OHIO  

Ohio Lawyer Suspended for Billing More than 24 Hours in a Day

By Debra Cassens Weiss, ABA Journal

08-25-10 -- An Ohio lawyer has been suspended for overbilling local courts for her representation of poor clients, submitting bills for more than 24 hours a day on three different occasions. . . .. . The lawyer, Kristin Ann Stahlbush of Toledo, will be suspended for two years, with the second year stayed if she completes a one-year probationary period, the Legal Profession Blog reports. / Here is the court's opinion.

GENERAL

Judge Approves Less Than Half of Milberg's 'Unusual' Added Fees Request

Nate Raymond, New York Law Journal

08-23-10 -- A federal judge has slashed what he called an "unusual" request for additional fees by Milberg for a 2006 settlement of a securities class action against Nortel Networks Corp. . . . Milberg, along with its Canadian co-counsel and the settlement's claims administrator, asked for $2.77 million in fees and expenses not included in their 2007 fee applications. Southern District of New York Judge Richard M. Berman, citing the "very substantial" $38 million in fees and expenses already awarded to Milberg and Koskie Minsky, based in Toronto, approved only 41 percent of the request. . . . The settlement stemmed from lawsuits filed in 2001 over an accounting scandal at Nortel, a Canadian-based manufacturer of telecommunications equipment.

CALIFORNIA  

Firm Says Its Fee in Beverly Hills Divorce Will Hit $1 Million

Amanda Bronstad, The National Law Journal

08-23-10 -- Lawyers at a boutique family law firm in Beverly Hills, Calif., are touting a judge's award of $1 million in legal fees as one of the largest granted in a divorce case prior to trial. . . . Steven Knowles and Michael Collum, who founded Knowles Collum last year, received the fee award during a hearing on Aug. 12. Los Angeles County, Calif., Superior Court Judge David Cunningham granted more than $20,000 in temporary monthly spousal and child support to Kathrin Saadian in her divorce from Beverly Hills real estate investor George Saadian. A trial is scheduled in December. . . . "This is a large fee award by any standard, even for a large firm," said Collum, whose firm represents Kathrin Saadian. "For a small firm, I've never heard of it."

FEDERAL COURTS

Judge Won't Enjoin Fee Fight Between Firms in Cell-Phone Contract Litigation

Lakin Chapman claims it has a right to fees as damages for breach of contract by Freed & Weiss in 'Larson v. Sprint Nextel Corp.'

Mary Pat Gallagher, New Jersey Law Journal

08-20-10 -- A U.S. judge in Newark on Wednesday allowed an arbitration to proceed between two Illinois firms over a portion of $5.775 million in legal fees approved as part of a class action settlement. . . . Lakin Chapman of Wood River, Ill., claims it has a right to one-third of the fees, or $1.925 million, as damages for breach of contract by the Chicago firm of Freed & Weiss, class counsel in Larson v. Sprint Nextel Corp., 07-cv-5325. . . . The suit challenged the imposition of flat-rate, early-termination fees on cell-phone contracts. . . .U.S. District Judge Jose Linares denied Freed's motion to enjoin the arbitration on the basis that it would essentially re-litigate Linares's earlier decision approving the settlement and allocating fees.

9th Circuit Reverses $29 Million Fee Award Over Procedural Problem

Leigh Jones, The National Law Journal

08-20-10 -- A federal appeals court has snatched away a $29 million fee award that two law firms received for serving as lead plaintiffs counsel in a California backdating securities class action. . . . The 9th U.S. Circuit Court of Appeals on Wednesday vacated a lower court ruling granting the fee award to New York's Labaton Sucharow and Glancy Binkow & Goldberg of Los Angeles. In a 2-1 decision, an appeals panel held that U.S. District Judge Jeremy Fogel denied the plaintiffs in the backdating case the opportunity to argue for reducing the fee. The panel remanded to Fogel, who sits in the Northern District of California.

ALABAMA  

Ala. Governor Limits Attorney Fees in Oil Spill Lawsuit

The Associated Press, Law.com

08-17-10 -- Alabama Gov. Bob Riley has signed an executive order limiting attorney fees in lawsuits the attorney general has filed over the massive oil spill in the Gulf of Mexico, a decision that reignites a political feud between the two politicians. . . . Riley signed the order Thursday, shortly before Attorney General Troy King sued British oil company BP PLC and three other companies involved in an April 20 explosion aboard the Deepwater Horizon drilling rig. The accident triggered the nation's worst offshore oil spill, closed fisheries and sent oil washing onto Alabama's coastline. . . . King sued against the wishes of Riley, who had hoped to reach an out-of-court settlement with the companies.

NEW JERSEY  

Fight Continues Over Split of $4.8 Million Fee in Dram Shop Case

Court disputes judge's analysis of hours, criticizes his 'dismissive manner'

Mary Pat Gallagher, New Jersey Law Journal

08-16-10 -- Two law firms fighting over nearly $5 million in legal fees in a record-setting dram shop case will battle on, thanks to an appeals court decision Thursday that reversed the award of more than $4.6 million to one of them. . . . At issue are the fees in Verni v. Lanzaro, A-4058-07, in which a jury in 2005 awarded $105 million in damages over a 1999 drunken-driving crash that paralyzed Antonia Verni, then 2 years old. . . . The verdict was overturned on appeal and the case ultimately settled for $25 million in June 2007, with $4,853,146 designated for legal fees. . . . Since then, Rosemarie Arnold, whose firm originated the case, and David Mazie, who took it over and brought it to trial and settlement, have been vying over their share of the money.

TEXAS  

Judge Approves Nearly $500,000 for Counsel Who Won Title VII Suit

John Council, Texas Lawyer

08-16-10 -- If there's a lesson to be learned in Naiel Nassar v. University of Texas Southwestern Medical Center it is that a plaintiffs attorney who puts on a "superb" civil rights case can win nearly all of her requested attorney fees -- even when she charges $750 an hour. . . . That's what happened on July 27 when U.S. District Judge Jane Boyle of Dallas approved nearly all of the half-million dollars in attorney fees requested by four lawyers who represented a plaintiff in a successful employment discrimination and retaliation suit against UT Southwestern. . . . Dr. Naiel Nassar sued UT Southwestern alleging violations of Title VII of the Civil Rights Act of 1964. One of Nassar's lawyers, Charla Aldous, says UT Southwestern offered to settle the suit for $40,000, but Nassar declined. In May, Nassar won a $3.6 million jury verdict. And now UT Southwestern must pay his legal fees.

FEDERAL COURTS

In $22 Million Fee Swing, 9th Circuit Vacates Attorney Fee Award to EchoStar

EchoStar ordered to pay $18 million to opposing counsel from NDS

Alison Frankel, The American Lawyer

08-12-10 -- In 2002, when the digital satellite company EchoStar joined a suit against pay-TV provider NDS, EchoStar aimed high. Its lawyers at DLA Piper and T. Wade Welch & Associates accused NDS of breaching EchoStar's programming security codes and posting them on the Internet for sale to pirates across the globe. EchoStar demanded about $1 billion from NDS in damages and disgorgement penalties and another $1 billion in statutory damages. . . . Six years later a federal district court jury in Santa Ana, Calif., found that NDS had, in fact, intercepted EchoStar's satellite signal in a single test of piracy methods. Jurors deemed the interception a technical violation of the federal Communications Act and a California statute. . . . But they awarded EchoStar a whopping $45.69 in actual damages and $1,500 in statutory damages -- not exactly the $2 billion EchoStar sought. The verdict suggested that the jury entirely rejected EchoStar's theory that NDS illicitly assisted the pirating of EchoStar's signal.

GEORGIA  

Firms Fight Over $1 Million Contingency After Attorney Move

Greg Land, Fulton County Daily Report

08-06-10 -- A pair of law firms are fighting over a $1 million contingency fee from a suit in which a lawyer started working on the case at one firm but completed it at a second. . . . The second firm, the Kopelman Sitton Law Group, is winning the fight so far. On July 9, a Fulton County, Ga., jury awarded the first firm, Martin & Jones, only $20,750. . . . But the debate is not over. Martin & Jones, based in Raleigh, N.C., with a small Atlanta outpost, is expected to appeal the Fulton verdict. And Clint W. Sitton, the lawyer who switched firms, has asked a Fulton judge to declare that he owes his former firm nothing. . . . Martin & Jones has removed that action to federal court -- and filed a counterclaim.

VIRGINIA  

Judge: Nixon Peabody Charged Excessive Fees in Aviation Legal Battle

Leigh Jones, The National Law Journal

08-03-10 -- A federal judge has ruled that Nixon Peabody charged excessive fees in a legal battle between aviation companies operating at Washington Dulles International Airport. . . . U.S. District Judge James Cacheris of the Eastern District of Virginia determined that Nixon Peabody's $1.57 million in fees was too high and slashed about $440,000 off that amount, awarding $1.13 million. . . . The ruling stemmed from a court fight between Signature Flight Support Corp., Nixon Peabody's client, and Landow Aviation.

July 2010

NEW YORK  

Suit Challenging Bills From Constantine Cannon Goes Forward

Client seeks return of $628,000 in previously paid fees

Nate Raymond, New York Law Journal

07-30-10 -- The claim of a former client of Constantine Cannon that the law firm excessively billed for legal fees is moving forward. . . . The decision by Manhattan Supreme Court Justice Carol Edmead came in what began as a lawsuit by Constantine Cannon to recover $359,000 in unpaid legal bills from the family of Howard L. Parnes, a White Plains, N.Y., real estate executive. The Parnes family struck back, contending the firm did not execute an engagement letter and overbilled the family. . . . Edmead dismissed the family's affirmative defense and counterclaim that the law firm and client had not executed an engagement letter, saying the law does not prevent Constantine Cannon from collecting the fees without a proper retainer agreement. But the judge said the Parnes family had sufficiently pleaded that it had been overcharged, demanding that nearly $628,000 in "improperly earned" fees be returned.

PENNSYLVANIA  

A lawyer in the Lower Merion webcam case wants to be paid now

By Derrick Nunnally, Inquirer Staff Writer  

07-27-10 -- The Lower Merion webcam case is far from over, but the plaintiffs' legal costs already exceed $400,000 - and the lawyers are asking to be paid now. . . . Mark S. Haltzman, lead attorney for student Blake Robbins, asked a federal judge Monday to order the Lower Merion School District to pay $418,850.60 while the case is pending. . . . The request comes on top of expenses - estimated in June at $780,000 - Lower Merion has covered for outside lawyers and computer experts since the lawsuit over privacy violations was filed Feb. 16. . . . The court, Haltzman wrote, has already ordered the district to end the monitoring of students' school-issued laptops' cameras, as Robbins requested when the lawsuit was filed Feb. 16.

WISCONSIN    

Ambac case lawyers, advisers get $18 million

Doyle donors draw high share; lawyer say ties played no role

By Cary Spivak of the Journal Sentinel

07-26-10 -- With more than $67 billion of its insurance coverage placed into a special receivership fund, Ambac Assurance Corp. is flirting with financial ruin. Yet at the same time, lawyers and consultants helping Wisconsin regulators navigate the complex case have collected nearly $18 million for their efforts. . . . And the meter is still running. . . . At the top of the billing list, state records show, is Foley & Lardner, the Milwaukee-based law firm with close ties to Gov. Jim Doyle. Employees of Foley have contributed $355,596 to Doyle's campaigns since 1999, more than any other group from one employer, according to data analyzed by the nonpartisan Wisconsin Democracy Campaign at the Journal Sentinel's request.

NEW YORK  

Prevailing Party's Bid for Fees Fails 'Exacting' Test, N.Y. Court Finds

Daniel Wise, New York Law Journal

07-23-10 -- The prevailing plaintiff in a contract dispute cannot invoke an indemnification clause to recover more than $700,000 in attorney fees under an "exacting" test set by the New York Court of Appeals in 1989, a unanimous panel of the state Appellate Division, 1st Department, ruled Tuesday. . . . Even though a lower court's interpretation of the indemnification clause was not "irrational," Justice David B. Saxe concluded in Gotham Partners v. High River Limited Partnership, 2582/04, that a $737,000 fee award must be reversed because of "the strict standard" imposed by the Court of Appeals in Hooper Associates v. AGS Computers, 74 NY2d 487. Saxe, interpreting Hooper, said that "for an indemnification clause to serve as an attorney's fee provision, the provision must unequivocally be meant to cover claims between the contracting parties rather than third-party claims."

NEW YORK  

Where the Money Went in Settlement Gets NY Law Firm Sued by Litigation Lender

By Nate Raymond | New York Law Journal | New York Lawyer

07-14-10 -- A litigation funding company may move forward with a lawsuit against Parker Waichman Alonso, a personal injury law firm, over monies the company says it is owed from a 2007 settlement. Justice Joseph Maltese of Richmond County Supreme Court denied the law firm's motion in PS Finance LLC v. Parker Waichman Alonso LLP, 100292/2010, to dismiss a suit by PS Finance LLC. . . . PS Finance had lent $34,750 to Timothy Farmer, a client of Parker Waichman, while the suit was pending in Queens County Supreme Court. When the suit settled in 2007 for $192,000, Mr. Farmer asked that the settlement be broken down with $92,000 going to his current wife, Ruth Ann Farmer, who was not a signatory to PS Finance's funding agreements but was a plaintiff in the case. After deducting attorney's fees and a child support lien, PS Finance received $30,440 from Mr. Farmer's share of the award, which was not deposited.

CALIFORNIA  

Novel Fee Fight Lands at Calif. Appeals Court

Mike McKee, The Recorder

07-12-10 -- One side calls a case going before a state appeal court this week an "ordinary fee dispute," while the other insists it raises issues about contingency agreements and arbitration that no court has ever addressed. . . . At the very least, the case involves millions of dollars in attorney fees and a novel agreement based not on the client's recovery of damages, but on the estimated damages the client might suffer. . . . "We've not been able to locate a published decision that provides for that type of contingency fee agreement," Gibson, Dunn & Crutcher partner Daniel Kolkey, who will argue the case for Universal Paragon Corp., a San Francisco-based real estate development company, said Thursday. . . . He also said the fee award of more than $8 million "appropriates 100 percent of the value" of Universal Paragon's settlement in the case, which is valued at $7.8 million.

DISTRICT OF COLUMBIA  

D.C. Fights $3.1 Million Fee Request in High Court Gun Case

Mike Scarcella, The National Law Journal

07-12-10 -- Lawyers for the District of Columbia are fighting a request from a private attorney who wants more than $3.12 million in fees for successfully challenging the city's handgun ban. . . . The attorney, Alan Gura, who argued and won D.C. v. Heller in the U.S. Supreme Court, said in court papers that prosecuting the case was "far more protracted and difficult" than anticipated. Gura, who recently won another landmark handgun case, is pushing for a fee enhancement. . . . In response, lawyers for the district have filed papers calling Gura's petition for fees "a study in unreasonableness." Attorneys with the city's Office of the Attorney General filed court papers Friday in federal district court in Washington opposing Gura's request. Click here for a copy of the city's court filing.

NEW YORK  

N.Y. Firm Sued for Advising Clients to Invest in Ponzi Scheme

Plaintiff seeks at least $700,000 from the law firm and its partners

Nate Raymond, New York Law Journal

07-12-10 -- A Tarrytown, N.Y., law firm has been sued for fraud and breach of contract by a New Jersey woman who claims the firm advised her to place substantial funds with a money manager who was operating a Ponzi scheme that collapsed last year. . . . In a lawsuit filed earlier this month in Westchester County Supreme Court (See Complaint), Patricia Romano claims her former lawyers at Cushner & Garvey advised her to invest funds from an $875,000 settlement with her ex-husband with Edward Stein, a purported money manager, who embezzled the funds. Under the settlement agreement, the funds were supposed to be placed in trust accounts at Morgan Stanley. . . . Last year Stein was arrested and charged with running a $30 million Ponzi scheme. . . . Romano also alleged that Cushner & Garvey did not disclose that Stein was a client, from whom it also took fees for referrals.

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NEW YORK  

NY Lawyer Indicted for Overbilling Dead Clients

By Daniel Wise | New York Law Journal | New York Lawyer

07-09-10 -- Michael Lippman, who had been counsel to the public administrator in the Bronx for more than 30 years when he was terminated in April 2009, pleaded not guilty yesterday to charges of taking excessive fees for his work on five estates, amounting to $300,000. . . . A 15-count indictment brought by the Bronx District Attorney's Office also accused Mr. Lippman of filing false documents to conceal the excessive fees. . . . Mr. Lippman surrendered yesterday and prosecutors agreed to his release without bail by Acting Supreme Court Justice Steven L. Barrett. . . . Mr. Lippman's lawyer, Murray Richman, said "there is no basis for the charges." The alleged thefts took place before guidelines set in 2002 by the Administrative Board of the Offices of the Public Administrators were adopted, he added.

Simpson Legal Fees for KKR, Blackstone IPOs Seem Worlds Apart

Brian Baxter, The American Lawyer

07-09-10 -- Wednesday was a big day for news involving two prominent private equity clients of Simpson Thacher & Bartlett. . . . The Blackstone Group announced that Simpson M&A partner John Finley would become its new chief legal officer in September, replacing Robert Friedman, who joined the New York-based private equity firm in 1999 after 25 years as an M&A partner at Simpson. . . . And The New York Times detailed the differences in compensation packages to executives in Blackstone's mammoth $4 billion IPO in June 2007 and in the hotly anticipated planned offering by Kohlberg Kravis Roberts & Co. scheduled for next week. Former Simpson M&A partner David Sorkin became KKR's first-ever general counsel in November 2007. Recent SEC filings by KKR show that he earned nearly $4.5 million in 2009. . . . The gulf in compensation isn't the only surprise found when comparing the two IPOs. When we looked at SEC filings by Blackstone and KKR leading up to their respective IPOs, we noticed some stark differences in the legal fees listed by Simpson for the work done on both offerings. Three years, it seems, makes a world of difference.

GENERAL

Lawyers in Wiretapping Suit Submit Their Bill: $2.6 Million

Dan Levine, The Recorder

07-08-10 -- The plaintiffs' tab in a widely watched state secrets case has arrived. Whether it will ever be paid is still an open question. . . . Lawyers representing Al-Haramain Islamic Foundation in a suit over illegal wiretapping are seeking more than $2.6 million in fees, the result of thousands of hours spread over several years, including a trip to the 9th U.S. Circuit Court of Appeals. Lead counsel Jon Eisenberg requested that Northern District Chief Judge Vaughn Walker award him over $1.2 million, based on 2,497 hours at $506 per. That hourly rate is based on a standard fees matrix, adjusted to approximate Bay Area rates.

GENERAL

Fee Fight Breaks Out Over Multimillion-Dollar Microsoft Case

A settlement in the underlying lawsuit, alleging that Microsoft had engaged in anti-competitive conduct, was announced in 2007

Michael J. Crumb, The Associated Press, Law.com

07-07-10 -- Attorneys representing 23 states involved in a class action lawsuit against Microsoft Corp. have filed a lawsuit over attorney fees against the Iowa lawyer who spearheaded a $179.5 million settlement with the software company. . . . Roxanne Conlin of Des Moines negotiated the 2007 settlement that included $75 million in attorney fees that she split with attorney Richard Hagstrom and the Zelle Hoffmann law firm of Minneapolis. . . . Conlin and Hagstrom filed the lawsuit against Microsoft, which is based in Redmond, Wash., claiming the company engaged in anti-competitive conduct that caused consumers to pay more for software between 1994 and 2006. The settlement was announced in August 2007. . . . The lawsuit claims that attorneys in 23 states provided advice, pleadings, participation and prosecution in the class action case in their states, and in the Iowa case against Microsoft.

NEW YORK  

Chadbourne Sues Ex-Partner in Fee Dispute

Nate Raymond, New York Law Journal

07-06-10 -- Chadbourne & Parke has sued a former partner over a fee awarded in a matter involving trusts for descendents of department store magnate Marshall Field. . . . The suit, filed last week in Manhattan Supreme Court (See Complaint), targets Charles F. Gibbs, a veteran trusts and estates lawyer who left Chadbourne in 2000 to join Holland & Knight. Gibbs had been appointed by Surrogate's Court as guardian ad litem in the Field matter in 1992. Chadbourne, which continued to provide legal services on the matter after Gibbs left the firm, claims Gibbs refuses to split an $875,000 fee awarded by the court in September 2009. . . . The award was reduced 25 percent from an initial fee application for $1.16 million based on work performed by Gibbs and Chadbourne from 1992 to 2002. Chadbourne said it is owed at least $768,000 based on the reduced award. . . . In a statement, a firm spokesman said the court-awarded monies "are owed to Chadbourne" and "the firm has asked for those monies to be attached so that they can be preserved pending the court's resolution of this matter."

June 2010

NEW YORK  

Law Firms Seek Reward for Creating 'Common Benefit' in N.Y. Ferry Crash Litigation

Mark Fass, New York Law Journal

06-29-10 -- Two law firms that claim they are entitled to as much as 13 percent of the nearly $90 million the city of New York has paid out to victims of the 2003 Staten Island Ferry disaster suffered a minor setback in Brooklyn federal court last week. . . . The two firms, Dougherty, Ryan, Giuffra, Zambito & Hession in Manhattan and Bosco, Bisignano & Mascolo on Staten Island, served respectively as maritime counsel and liaison counsel for the 171 cases against the city stemming from the crash of the Andrew J. Barberi, which killed 11 people and injured at least 70. . . . In the long-running fee dispute, the firms argue that, in most of those 171 cases, they are entitled to between 8 percent and 13 percent of the total recovery for their efforts in creating a "common benefit." . . . Most significantly, Dougherty Ryan successfully fought the city's attempt to use a 19th century maritime law to cap its total liability for the accident at $14 million.

NEW YORK  

Firms in Ferry Disaster Cases Suffer Fees Setback

By Mark Fass | New York Law Journal | New York Lawyer

06-28-10 -- Two law firms that claim they are entitled to as much as 13 percent of the nearly $90 million the City of New York has paid out to victims of the 2003 Staten Island Ferry disaster suffered a minor setback in Brooklyn federal court last week. . . . The two firms, Dougherty, Ryan, Giuffra, Zambito & Hession in Manhattan and Bosco, Bisignano & Mascolo on Staten Island, served respectively as maritime counsel and liaison counsel for the 171 cases against the city stemming from the crash of the Andrew J. Barberi, which killed 11 people and injured at least 70. . . . In the long-running fee dispute, the firms argue that, in most of those 171 cases, they are entitled to between 8 percent and 13 percent of the total recovery for their efforts in creating a "common benefit."

WASHINGTON   

$250K for attorneys of activist arrested on way to protest

Posted by Matt Kreamer, From staff reporter Jennifer Sullivan,  Seattle Times 

06-28-10 -- Attorneys for an anti-war activist who was awarded $169,000 from the State Patrol, the City of Aberdeen and Grays Harbor County in May have been awarded $248,817 for fees and costs, according to the American Civil Liberties Union (ACLU) of Washington. . . . Philip Chinn was arrested on suspicion of drunken driving by State Patrol troopers in May 2007 while traveling to an anti-war protest at the Port of Grays Harbor in Aberdeen. . . . According to court documents, Chinn was pulled over after police had broadcast an "attempt to locate" his car, which was described as containing "three identified anarchists."

GENERAL

Bankruptcy Judge Scolds Latham Attorney Over Disclosure Of Fee

Christie Smythe is a staff writer at Law360  Forbes (blog)

06-25-10 -- A bankruptcy court judge has approved pigment maker Tronox Inc.'s request to extend debtor-in-possession financing by three months but chided a Latham & Watkins LLP lawyer representing the lenders for failing to disclose a $250,000 fee for his firm's work. . . . Judge Allan L. Gropper of the U.S. Bankruptcy Court for the Southern District of New York told Latham attorney Richard A. Levy on Thursday to "get out of the business or get out of my courtroom" if he didn't want to reveal the fee in public filings. . . . The desire to keep this number confidential is extremely counterproductive to the bankruptcy process as a whole," Judge Gropper added, saying both creditors and the public have interests in the cost of Chapter 11 proceedings. . . . Along with signing off on the request to extend the financing, which had been scheduled to mature on Thursday, Judge Gropper advised Levy to submit fee-related filings to the public record.

$56 Million Fee Approved in Class Action Over Backdating

Nate Raymond, New York Law Journal

06-25-10 -- A federal judge in Brooklyn has approved a $56 million fee for Pomerantz Haudek Grossman & Gross for its work as lead counsel in a class action over alleged backdating against Comverse Technology Inc. . . . Eastern District of New York Judge Nicholas Garaufis on Thursday approved a fee of 25 percent of a $225 million settlement, which the judge also signed off on in In re Comverse Technology Inc. Securities Litigation (pdf), 06-CV-1825. . . . A state retirement fund in Pennsylvania had objected to the fees as too large (pdf), but the judge said he was unwilling to interfere with an award negotiated openly between the law firm and its client, lead plaintiff Menora Group.

Supreme Court takes a bite out of attorney's fees

By Amanda Becker, Washington Post

06-21-10 -- A U.S. Supreme Court decision last week that will make it more difficult for attorneys to collect fees in claims brought by low-income individuals against the government could undermine the intent of the statute at the heart of the case, attorneys say. . . . In Astrue v. Ratliff, the justices ruled unanimously that attorney fee awards under the Equal Access to Justice Act are payable directly to the client -- not the litigant's attorney -- and can therefore be seized to pay debts owed to the federal government. The act was designed to increase access to the courts by awarding attorney's fees and costs if an individual prevails in a claim against the government. Now, if that client has debt, those fees could go unpaid. . . . "It's going make it more difficult for these people to get attorneys if the money is used to pay debts owed to the government," said Barbara Jones, an attorney with the AARP, which signed onto a friend-of-the-court brief in the case.

PENNSYLVANIA  

Family Court deal: Some Obermayer lawyers knew about Rotwitt's codeveloper role

By Joseph Tanfani, The Philadelphia Inquirer Staff Writer     

06-20-10 -- When real estate lawyer Jeffrey B. Rotwitt surfaced on both sides of a deal to develop a $200 million Family Court building in Center City, he was abruptly fired by his law partners. . . . They said they had no idea that Rotwitt, a longtime partner at Obermayer, Rebmann, Maxwell, & Hippel L.L.P., had also been earning fees as a codeveloper. . . . But some lawyers at the firm did know about Rotwitt's dual roles - and found out more than two years ago, an internal firm e-mail shows. In November 2007, when the project was still in its early stages, Rotwitt told several fellow Obermayer lawyers that he planned to become partners with developer Donald Pulver. . . . "The developer . . . will be a to-be-formed entity controlled by Don and me," Rotwitt wrote. . . . Obermayer partner Walter W. Cohen said the four lawyers who got that e-mail all worked under Rotwitt in the firm's corporate division. They assumed that he had permission to work on the other side of the deal, he said.

DISTRICT OF COLUMBIA  

Terror Case Settlement Sparks $2 Million Fee Fight

Nonprofit, attorney spar in federal court over fair shares of $65 million award from Libya

Mike Scarcella, The National Law Journal

06-17-10 -- The American Center for Civil Justice hired Baltimore lawyer Joshua Ambush to file a wrongful death and personal injury suit against Libya over a 1972 terrorist attack at Tel Aviv, Israel's Lod Airport that killed 26 people. . . . But when it came time to dole out $65 million in settlement money, the two had different ideas about who should get the legal fees. Ambush said he's owed $2 million for staying with a case that the center had abandoned. Lawyers for the center claim that Ambush had already been "fully paid" for his time on an hourly arrangement. . . . Both are now suing each other in Washington, D.C., federal court in a dispute that has gotten more hostile with every new filing. The latest: dueling motions for sanctions. In court papers, Ambush said the center violated a judge's order preventing the organization from contacting claimants to the settlement. The center accuses Ambush of secretly negotiating new retainer agreements with the clients in an attempt to boost his share of the fees. "In arranging to line his own pockets at the claimants' expense, Ambush has victimized the very victims he now claims he represents," the center's president, Michael Engleberg, said in court papers last month.

NEW JERSEY  

Lawyers' Fees Slashed by $2.2 Million in Suit Over Blue Cross Claims Practices

Henry Gottlieb, New Jersey Law Journal

06-17-10 -- A class action settlement requiring Horizon Blue Cross Blue Shield of New Jersey to make billing reforms is fair and reasonable, a judge ruled Tuesday, but he cut $2.2 million from the fee award to the plaintiffs lawyers. . . . The health insurer was prepared to pay $6.5 million in legal fees to class action lawyers when the case settled. But after an appeal by nine doctors groups who objected to the deal, the case was remanded to the Essex County judge who had approved it in 2007. . . . Superior Court Judge Stephen Bernstein reduced the fee award to Roseland, N.J.'s Mazie Slater Katz & Freeman to $4.3 million. . . . Horizon was the biggest winner in Sutter v. Horizon Blue Cross Blue Shield of New Jersey, Esx-L-385-02, a class action suit brought on behalf of doctors who alleged the giant insurer denied legitimate claims and, when it did pay, paid slowly, increasing providers' administrative costs.

NEW YORK  

Law Firm Not Entitled to Fees From Client's Ex-Wife, Says Judge

Noeleen G. Walder, New York Law Journal

06-17-10 -- A law firm cannot recover fees from a woman who may have indirectly benefitted from the firm's representation of her former husband, a New York state judge has ruled. David Addison hired the Scarsdale-based law firm of Haas & Gottlieb to represent him in a bankruptcy litigation involving 251 W. 121 St. Corp. A retainer agreement provided that Addison would pay the firm one-third of any money recovered in the proceeding. . . . Following a five-day trial, Addison received more than $145,000 for his 25 percent share in the corporation. Under an equitable distribution agreement, Addison's ex-wife, Ieda Fuller, was slated to receive one half of his interest in the corporation. . . . Lawrence M. Gottlieb, a name partner at Haas & Gottlieb, and his firm then brought an action against Fuller, claiming she owed them 33 percent of the money paid to her in the bankruptcy proceeding.

ALASKA  

But A $90 Million Contingency Fee Should Help Pay That Tab

By Andrew Longstreth | The American Lawyer | New York Lawyer

06-16-10 -- In February, Paul, Weiss, Rifkind, Wharton & Garrison said that 2009 was the most profitable year in its history. That record could be broken in 2010, now that the firm has won a $90 million contingency fee as the result of a $500 million settlement it won for Alaska's pension board. . . . Last Friday, a month before the Alaska Retirement Management Board's case against Mercer Inc., the consulting unit of Marsh & McClennan, was headed for trial in Juneau superior court, Mercer agreed to a $500 million settlement. According to Paul Weiss partner Lewis Clayton, who would have served as Alaska's lead trial counsel, the firm's sliding-scale fee agreement with the pension board means the firm is entitled to about 18 percent of that recovery, or about $90 million. Total revenue at Paul Weiss in 2009 was $665.5 million.

CALIFORNIA  

Quinn Emanuel Faces Trial in Dispute With Ex-Client Over $15 Million Bill

Kate Moser, The Recorder

06-16-10 -- Lawyers for Quinn Emanuel Urquhart & Sullivan were unable to knock out a fraud suit Tuesday in which a former client accuses the firm of running up a $15 million bill. . . . A San Francisco judge denied most of the firm's motion for summary judgment, reasoning that there is evidence that S.F. partner David Eiseman had told client Tele Atlas that it could recover attorney fees in an antitrust dispute with a rival GPS company. Judge Peter Busch also said there was triable evidence that Tele Atlas relied on that assurance in choosing a strategy that caused it to spend, in the judge's words, "lots and lots of money." . . . Quinn Emanuel partner Terry Wit tried to change the judge's mind, arguing that the firm had told Tele Atlas that the damages side of the case was weak. . . . "Damages and attorneys' fees are different," Busch replied.

UNITED STATES SUPREME COURT

High Court Lets Government Take Fee Awards for Clients' Debts

Marcia Coyle, The National Law Journal

06-15-10 -- Attorney fee awards under a major federal fee-shifting statute are paid to the client, not to the attorney, and can be offset to pay a client's debt to the federal government, a unanimous U.S. Supreme Court ruled on Monday. . . . The Court's decision in Astrue v. Ratliff (pdf) will affect primarily lawyers and law clinics who successfully represent clients seeking Social Security or veterans benefits and who earn fee awards under the Equal Access to Justice Act. . . . In recent years, more than 12,000 civil actions have been filed annually to challenge administrative denials of Social Security claims alone, representing 5 percent of all civil claims filed in federal court, according to an amicus brief filed by the National Organization of Social Security Claimants' Representatives, AARP, National Senior Citizens Law Center and other organizations. They also note that "over half of fee awards under the EAJA are in Social Security cases."

GENERAL

Senator Turns Up the Heat Over Attorney Fees in Cobell Settlement

David Ingram, The National Law Journal

06-14-10 -- The U.S. Senate is poised to vote soon on a jobs-and-tax package that would also authorize a settlement in long-running litigation over American Indian trust accounts. Still to be decided: what the cap will be for attorney fees in that case. . . . Lawyers in the case, named for lead plaintiff Elouise Cobell, agreed to cap fees at $100 million. Sen. John Barrasso, R-Wyo., is proposing to set the cap at $50 million, and he introduced an amendment (PDF) last week to do so. . . . Senators could vote on the amendment as soon as this week, or they might not consider it at all. A spokeswoman for Senate Majority Leader Harry Reid, D-Nev., said Friday that no agreement has been reached.

3rd Circuit Tosses Out Attorney Fees Leveled at JPMorgan Chase

Shannon P. Duffy, The Legal Intelligencer

06-14-10 -- Chalk up a victory for JPMorgan Chase & Co. now that a federal appeals court has ruled that the bank never should have been ordered to pay more than $17,000 in attorney fees as a punishment for improperly removing a state court suit to federal court. . . . Voting 2-1, the 3rd U.S. Circuit Court of Appeals ruled that since JPMorgan's legal position in seeking the removal was "objectively reasonable," the lower court abused its discretion in awarding fees. . . . Third Circuit Judge Dolores K. Sloviter found that the lower court erred by failing to recognize that it had the power to "realign" the parties so that the case could qualify for federal diversity jurisdiction. . . . "We cannot fault JPMorgan for its effort to realign the defendants," Sloviter wrote in an opinion joined by 3rd Circuit Judge Jane R. Roth. . . . But in dissent, visiting 9th Circuit Judge A. Wallace Tashima said he would have upheld the fee award against JPMorgan because he believed the lower court was correct in rejecting both of JPMorgan's arguments for justifying the improper removal.

DISTRICT OF COLUMBIA  

After Settlement of Terrorism Suit, Lawyer and Nonprofit Spar Over Fees And BigLaw Joins In

By Mike Scarcella | The National Law Journal | New York Lawyer

06-14-10 -- The American Center for Civil Justice hired Baltimore lawyer Joshua Ambush to file a wrongful death and personal injury suit against Libya over a 1972 terrorist attack at Tel Aviv, Israel's Lod Airport that killed 26 people. . . . But when it came time to dole out $65 million in settlement money, the two had different ideas about who should get the legal fees. Ambush said he's owed $2 million for staying with a case that the center had abandoned. Lawyers for the center claim that Ambush had already been "fully paid" for his time on an hourly arrangement. . . . Both are now suing each other in Washington federal court in a dispute that has gotten more hostile with every new filing. The latest: dueling motions for sanctions. In court papers, Ambush said the center violated a judge's order preventing the organization from contacting claimants to the settlement. The center accuses Ambush of secretly negotiating new retainer agreements with the clients in an attempt to boost his share of the fees. "In arranging to line his own pockets at the claimants' expense, Ambush has victimized the very victims he now claims he represents," the center's president, Michael Engleberg, said in court papers last month.

GENERAL

Lawyers Offer to Reduce Fees in 9/11 Health Case

The Associated Press, Law.com

06-02-10 -- Lawyers for thousands of Ground Zero workers suing over their exposure to dust from the destroyed World Trade Center have offered to lower their legal fees in an attempt to salvage a major settlement in the case. . . . The law firm Worby Groner Edelman & Napoli Bern was initially poised to take home a third or more of a $657 million settlement negotiated on behalf of the workers this spring, but the future of that payout was put in doubt when U.S. District Judge Alvin Hellerstein rejected the deal in March. . . . Hellerstein said the settlement contained too much money for the legal team and too little for people who are legitimately ill. . . . Now, the lawyers have told the judge in a letter that they are willing to cap their fees at 20 percent, or about $115 million if the dollar amounts from the original settlement remain unchanged.

MICHIGAN  

Get rules right on lawyer fees

By Larry Dubin,  Detroit Free Press 

06-02-10 -- One of the most common complaints filed against lawyers with the Michigan Attorney Grievance Commission -- the entity created by the Michigan Supreme Court to prosecute lawyers for acts of misconduct -- is that a lawyer charged an unreasonable fee or failed to return an unearned fee. . . . The ethics rules that lawyers are mandated to follow, as ordered by the Michigan Supreme Court, require lawyers to charge clients only reasonable fees. If a lawyer receives a retainer as an advance payment for the performance of future services, the lawyer is required to place the fee in a client trust account and withdraw the funds for the lawyer's use only when the fees have actually been earned. . . . If the lawyer is discharged by the client before the lawyer completes the agreed-upon services, the lawyer must refund to the client any unearned portion of the fees remaining in the trust account. These ethics rules protect clients from greedy lawyers who want to keep fees previously collected though the fees have not been earned, in whole or in part.

TEXAS  

Alleged Ponzi Schemer Tells Judge He Doesn’t Know How His Lawyers Have Billed $6M So Far

By Sarah Randag, ABA Journal

06-01-10 -- In the last year, insurance companies have paid out more than $6 million to lawyers for Texas billionaire R. Allen Stanford, who is accused of masterminding a $7 billion Ponzi scheme. . . . Yet at a hearing last week in an insurance coverage suit, Stanford said he didn't know what some of his lawyers had done for him, he didn't know much their work had cost, and he had not even met all of them, Texas Lawyer reported. . . . "I don't know who was and who wasn't on the case," Stanford told U.S. District Judge Nancy Atlas, who is determining whether insurance companies should pay for Stanford's defense in a criminal case and Securities and Exchange Commission civil suit. "I think it's an obscene amount of money for what's been produced." . . . Atlas scheduled a hearing for Thursday to determine which lawyers are currently on Stanford's legal team and ordered Lloyd's of London and Arch Specialty Insurance Co. to give Stanford a copy of all invoices from all lawyers and what they were paid.

May 2010

Why Law Firms Are Like Hotels: ‘Rack Rates’ Are Negotiable, Real Rates Vary by Client

By Debra Cassens Weiss, ABA Journal

05-26-10 -- Law firms, it appears, are like hotels. There is a higher “rack rate” that is held out as the norm, but the amount charged is often lower. And law firms have different billing rates for different clients, even when the work is similar. . . . Those are the findings of an analysis of more than $4 billion in law firm corporate billings between 2007 and 2009 by CT TyMetrix and The Corporate Executive Board. A press release outlines the preliminary findings, based on information from 4,000 law firms: . . . —Seventy-eight percent of partners, associates and paralegals bill different hourly rates to different clients for similar work. The largest rate differences range from $350 to $1,000 an hour. . . . /In 2009, law firm partners charged up to $1,590 per hour for work for major corporate customers, but the median partner rate was $340 per hour. That means “rates billed by partners were much lower than the typical ‘rack’ rates reported by commissioned surveys,” the press release says.

Survey Shows Law Firms Charging Different Rates for the Same Work

Largest rate differences range from $350 an hour to $1,000

Amy Miller, Corporate Counsel

05-26-10 -- Law firms' corporate clients are not created equal, if billing rates are any indication. . . . Firms are charging different hourly rates to different clients for doing similar work, according to an analysis of more than $4 billion in law firm billings that will be released in September. . . . Differences in billing rates are just some of the preliminary findings in the "Real Rate Report" by CT TyMetrix and The Corporate Executive Board. The report examines billing from more than 4,000 law firms, 50,000 individual billers and 18.9 million invoice items from 2007 to 2009.

UNITED STATES SUPREME COURT

High Court Smooths Path to Plaintiff Fees in Disability Cases

Marcia Coyle, The National Law Journal

05-25-10 -- Workers suing over disability and other benefits under the federal law known as ERISA may win attorney fees and costs if they achieve "some degree of success on the merits," a unanimous U.S. Supreme Court ruled on Monday. In Hardt v. Reliance Standard Life Insurance Co. (pdf), the justices rejected a tougher standard imposed by the 4th U.S. Circuit Court of Appeals (pdf) on fee claimants under the Employee Retirement and Income Security Act. The lower appellate court had ruled that a claimant must be a "prevailing party" before seeking a fee award. . . . The justices' ruling came in a case brought by Bridget Hardt, who sought long-term disability benefits as a result of job-related carpal tunnel syndrome. Hardt was awarded the benefits, but in March 2006, Reliance informed her that she was ineligible for continued long-term benefits. She sued the insurance company, claiming ERISA violations.

GENERAL

Alternative Billing Arrangements Putting Down Deep Roots, General Counsel Say

Jeff Jeffrey, The National Law Journal

05-17-10 -- Pressures to rein in legal costs have pushed more and more in-house counsel's offices to require law firms to bill by way of arrangements outside of the billable hour, and the number of those arrangements is only likely to go up. . . . That was the consensus during a panel discussion Friday morning at Jackson Lewis' annual corporate counsel conference. Friday morning's panel "The Death of the Billable Hour?" focused on what the alternatives to the billable hour are and what it takes to put those arrangements together. . . . Michael Roster, chair of the Association of Corporate Counsel's Value Challenge steering committee and a former general counsel of Stanford University, opened his remarks by citing a study conducted by the Corporate Executive Board which found that costs to U.S. companies have risen 20 percent over the past decade. During the same time period, however, legal costs have risen 75 percent.

DISTRICT OF COLUMBIA  

BDO Seidman Seeks $9 Million in Fees Back From Morgan Lewis

Malpractice case sets off rounds of finger-pointing among major firms

Jeff Jeffrey, The National Law Journal

05-17-10 -- DLA Piper says Morgan, Lewis & Bockius bungled representing one-time client BDO Seidman LLP. Gibson, Dunn & Crutcher says DLA Piper should be sanctioned for articulating that fantasy. And Bingham McCutchen argues Gibson Dunn shouldn't be allowed in the case at all. . . . The firms are pointing fingers at one another in a $9 million malpractice lawsuit brought by BDO against Morgan Lewis in the District of Columbia Superior Court. The Chicago-based accounting and consulting firm accuses Morgan Lewis of professional negligence, breach of contract, breach of fiduciary duty, fraud and constructive fraud. BDO argues that, over a period of several years, Morgan Lewis breached its professional obligations to BDO "with disastrous results." The $9 million accounts for the fees that BDO paid to Morgan Lewis. BDO, which is represented by Lucinda Bach, a Washington partner at DLA Piper, has also asked for as-yet-uncalculated damages.

NEW JERSEY  

Interim Attorney Fees Awarded in Consumer Fraud Suit Over Mortgage

Charles Toutant, New Jersey Law Journal

05-13-10 -- In a case of first impression, an Essex County, N.J., judge has awarded counsel fees during a pending Consumer Fraud Act suit, brought by a couple who claim they were scammed by two foreclosure-rescue companies. . . . Superior Court Judge Kenneth Levy made the award after granting preliminary injunctive relief for the plaintiffs, saying "the question is ... can the court award counsel fees at this stage in the proceeding, and there is really no case law that's been presented to me that says I cannot do that." . . . In his motion for the pre-judgment fee award, plaintiffs lawyer Abraham Borenstein, who heads a firm in Springfield, N.J., said there is precedent for interim awards in other fee-shifting cases though none under the applicable Consumer Fraud Act section, N.J.S.A. 56:8-19.

CONNECTICUT  

Case of Infamous Murder Paid for by Local Lawyer Has A Few More Twists

By Douglas S. Malan | The Connecticut Law Tribune | New York Lawyer

05-12-10 -- There’s nothing unusual about a lot of lawyers being involved in a murder case. But far fewer cases have an ex-lawyer as the convicted killer, and fewer still see that ex-lawyer sue one of her defense attorneys for allegedly trying to defraud her. . . . But then again, the case of Beth Carpenter, convicted in a 1994 murder-for-hire plot that targeted her exotic dancer brother-in-law, has never been typical. . . . The latest twist comes with the dismissal of a grievance complaint filed by Carpenter against veteran Boston defense attorney Bernard M. Grossberg in 2006. Grossberg had been hired to prepare a habeas petition for the imprisoned Carpenter. She paid him nearly $100,000. A year later, she fired him, complaining of “glacial progress” in the case. . . . But that wasn’t the end of the relationship. Carpenter sued Grossberg in federal court and also filed the grievance. Carpenter’s goal was to get her money back so she could hire another lawyer to file a habeas petition claiming she received inadequate representation during her 2002 trial. . . . Grossberg was ordered by the Statewide Grievance Committee to appear before a judge for discipline after a local grievance panel found evidence that he violated several Rules of Professional Conduct. Though he disputed the findings, Grossberg acknowledged that there was enough evidence to prove that he didn’t provide a written fee arrangement to Carpenter and that he wasn’t diligent enough in pursuing her case.

NEW JERSEY  

No Conflicts Found in Congoleum Paying $2 Million Fee to Asbestos Plaintiffs Lawyers

Mary Pat Gallagher, New Jersey Law Journal

05-12-10 -- Two lawyers for asbestos victims can keep the $2 million Congoleum Corp. paid them to help resolve tens of thousands of claims against the company shortly before it filed for bankruptcy, thanks to a judge's May 7 ruling. . . . U.S. District Judge Joel Pisano in Newark, N.J., found no conflict by the lawyers, who he said were working "to negotiate a prepackaged plan of reorganization under which asbestos personal injury claimants would likely recover more than they would have if Congoleum had gone into a 'free fall' bankruptcy." . . . No plan has been confirmed even though the bankruptcy case, In re Congoleum Corp., 09-cv-4371, has been pending since Dec. 31, 2003, has been through at least 12 failed reorganization attempts and was filed with a prepackaged reorganization plan.

N.J. Supreme Court Spares Partner From Disbarment Over Fee Dispute With Firm

David Gross draws 3-month suspension for keeping $50,000 bonus from firm partners

Michael Booth, New Jersey Law Journal

05-11-10 -- Rejecting a recommendation of disbarment, the New Jersey Supreme Court on Thursday suspended veteran litigator David Gross for three months for not telling his law firm partners about a $50,000 bonus from a satisfied client. . . . The court found a lack of "clear and convincing" evidence that Gross failed to safeguard funds or knowingly misappropriated funds in violation of Rule of Professional Conduct 1.15 (a) and (b), as the Disciplinary Review Board had found. . . . However, the 4-2 majority said there was clear and convincing evidence of conduct involving dishonesty, fraud, deceit or misrepresentation. . . . Two justices said only a censure was warranted, echoing two dissenters on the DRB who found Gross had a reasonable belief that he was entitled to keep the $50,000 bonus in 1998.

Madoff Judge Awards Another $25 Million in Fees

Noeleen G. Walder, New York Law Journal

05-10-10 -- A federal judge has awarded trustee Irving H. Picard and his team of lawyers liquidating Bernard L. Madoff's investment firm some $24.6 million in interim counsel fees. Southern District of New York Bankruptcy Judge Burton Lifland on Thursday awarded about $672,000 in fees to Picard and $23.9 million in fees to Baker & Hostetler for Oct. 1 through Jan. 31. All told, the judge has awarded Picard and his attorneys about $62 million in fees.

GENERAL

Lowered Fee Cap May Scuttle $3 Billion Settlement

Brian Baxter, The American Lawyer

05-07-10 -- Congressional approval of one of the largest class action settlements in U.S. history is getting hung up on the issue of legal fees for plaintiffs lawyers. . . . The $3.4 billion Indian trusts settlement agreed to in December could be scuttled if Congress doesn't approve the terms of the agreement by May 28, according to The Associated Press. . . . The tentative settlement would close the books on a class action filed in 1996 on behalf of 300,000 American Indians. The plaintiffs in the suit claimed that as trustee for 145 million acres of land under the Dawes Act of 1887, the U.S. Department of the Interior mismanaged trust accounts and allowed the federal government to give the best land to white settlers. The settlement calls for plaintiffs to be paid $1.4 billion -- about $1,500 per class member- -- and for a $2 billion fund to be set up to buy American Indian land.

Lehman Bankruptcy Charges: $2,100 for Limo Rides, $48 to Leave a Message

By Debra Cassens Weiss, ABA Journal

05-03-10 -- Weil, Gotshal & Manges has billed more than $164 million for its work as lead counsel so far on the Lehman Brothers bankruptcy, including more than $500 a day for limo drivers, billed for services in the month’s after Lehman’s collapse. . . . But new limits are now in place due to the efforts of Kenneth Feinberg, the New York Times reports. Known as the “pay czar” who is monitoring banks that received bailout money, Feinberg also has a role in the Lehman Brothers bankruptcy as the court-appointed fee monitor. His counterpart in the General Motors bankruptcy is Brady Williamson. . . . The Times detailed the work of Feinberg and Williamson in a story that also delved into the charges in the Lehman Brothers and other bankruptcies, including $2.54 charged by the Huron Consulting Group for “gum in airport.” . . . Charges by law firms in the two bankruptcy cases included more than $2,100 for late-night rides home by one partner at Jones Day, and $685 a night for one Weil lawyer’s week-long stay at the Sherry-Netherland hotel in Manhattan, the story says. Other charges by unnamed consultants and firms included more than $263,000 for photocopies in four months and $48 to leave one message.

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April 2010

MISSISSIPPI  

$10 Million in Attorney Fees Upheld in Microsoft Case

The Associated Press

04-30-10 -- A Mississippi judge has upheld $10 million in fees paid to lawyers for handling a state lawsuit against computer software manufacturer Microsoft. . . . Hinds County Chancellor Denise Owens on Wednesday dismissed the challenge filed by State Auditor Stacy Pickering. . . . Microsoft reached a $100 million settlement with the state last June. It agreed to pay $10 million to lawyers hired by the attorney general's office to handle the case. . . . Pickering sued, arguing the fees should be paid with money appropriated by the Legislature. . . . Owens said state law allows the attorney general to hire outside lawyers. Those lawyers received no funds from the state, Owens said, and the legal fees were separate from the settlement.

FEDERAL COURTS

Wyoming Senator Pitches $50 Million Cap on Fees in Cobell Case

Mike Scarcella, The National Law Journal

04-29-10 -- Ever since Judge James Robertson of Washington, D.C., federal district court urged Congress to act on the Cobell settlement, there's been a lot of buzz on Capitol Hill about the proposed deal, which would award more than $1.4 billion to a class of hundreds of thousands of Indians. . . . The deal, announced in December, can't move forward without congressional approval, and the deadline for Congress to pass the necessary legislation has been extended three times already. Robertson pushed back the latest deadline to the end of May, and he said he would invite members of Congress to testify before him if nothing is done about approving the settlement before then. . . . Tuesday, Sen. John Barrasso, R-Wyo., proposed five changes to the settlement -- including imposing a $50 million cap on pre-settlement attorney fees, costs and expenses. That's half of the $100 million cap that the plaintiffs lawyers had agreed to with Justice and Interior department attorneys. Barrasso first voiced concern over the amount of attorney fees during a Dec. 17 hearing of the Senate Indian Affairs Committee.

UNITED STATES SUPREME COURT

High Court Hands Lawyers a Mixed Bag in
Rulings on Fees, Errors

Tony Mauro and Marcia Coyle, The National Law Journal

04-22-10 -- The U.S. Supreme Court had good and bad news for lawyers Wednesday in a pair of decisions, one on attorney fee awards, and the other on lawyers' liability for errors in debt-collection cases. . . . In Perdue v. Kenny A. (pdf), much anticipated by civil rights and public interest groups that depend on fee-shifting statutes when they win, the Court said judges may award fee enhancements above the "lodestar" amount to lawyers for superior performance -- but only in rare and well-documented circumstances. The 5-4 majority rejected the fee enhancement in the case before it and sent it back to lower courts with the possibility that, with enough justification, the additional award could be revived. . . . In Jerman v. Carlisle (pdf), involving a debt-collection law firm, the Court held that debt collectors and their lawyers do not have a good-faith defense to liability when they misinterpret the legal requirements of the federal Fair Debt Collection Practices Act.

UNITED STATES SUPREME COURT

Supreme Court Overturns ‘Essentially Arbitrary’
Attorney-Fee Boost of $4.5M

By Debra Cassens Weiss, ABA Journal

04-21-10 -- The U.S. Supreme Court has reversed an award of an extra $4.5 million in attorney fees for good lawyering in a case that uncovered deficiencies in Georgia's foster care system. . . . In his majority opinion (PDF), Justice Samuel A. Alito Jr. said fee enhancements are allowed in extraordinary circumstances, but the district court failed to apply established standards that determine when they are available and didn't provide sufficient details to justify its decision. . . . Children's Rights Inc. and Atlanta's Bonduran, Mixson & Elmore were awarded $10.5 million under a fee-shifting statute for their work in the case, the National Law Journal reported in a prior story. Of that amount, they received $4.5 million above the lodestar fee of $6 million, in part because of the extraordinary results achieved. The lodestar is based on the number of hours worked multiplied by the prevailing hourly rate for attorney fees. . . . The 75 percent fee enhancement “appears to have been essentially arbitrary,” Alito said. “Why, for example, did the court grant a 75 percent enhancement instead of the 100 percent increase that respondents sought? And why 75 percent rather than 50 percent or 25 percent or 10 percent?” The effect of the enhancement, he said, was to hike the hourly rate for the top attorneys to more than $866.

NEW YORK  

Nation seeks records on Madison Co. attorney fees

At issue: Billing related to land-into-trust case

By Elizabeth Cooper, Observer-Dispatch   

04-20-10 -- The Oneida Indian Nation is studying the billing practices of the Madison County attorney for work he performed while fighting the Nation’s land-into-trust plans. . . . The Albany-based Boies, Schiller & Flexner law firm filed a Freedom of Information request on March 25 seeking a slew of records about Madison County attorney S. John Campanie’s work and payments related to the Nation case. . . . The documents were sought to “determine compliance” with laws that “limit county attorneys to their county salaries as payment for county work and prohibit them from receiving payment from the state of New York or any other source,” according to the request. . . . Nation spokesman Mark Emery said George Carpinello, who filed the FOI request, was working for the Nation on the matter. In the letter, Carpinello stated that an advance payment for copies of up to $2,500 would be made if requested. . . .  “Many of the Oneida Nation’s employees who live in Madison County have concerns about the amount of their tax dollars that are being used to fund this ongoing litigation, and they are particularly concerned that lawyers in the case may have a financial motivation to stall its resolution or recommend against a settlement,” a statement from the Nation said.

FLORIDA  

Bankruptcy Trustee Settles With Former Rothstein Firm Lawyers Over Future Fees

Julie Kay, Daily Business Review

04-19-10 -- The trustee in the bankruptcy case of Ponzi operator Scott Rothstein's defunct law firm has settled disputes with seven attorneys over future legal fees from cases they handled while employed at Rothstein Rosenfeldt Adler. . . . In motions filed late Thursday, trustee Herbert Stettin seeks approval of settlement agreements with Russell Adler and six attorneys who banded together when they left RRA: Gary Farmer, Steven Jaffe, Matthew Weissing, Brad Edwards, Mark Fistos and Seth Lehrman. . . . The agreements submitted to U.S. Bankruptcy Judge Raymond Ray for approval provide for the trustee to get a percentage of recoveries on unresolved cases the former RRA attorneys are handling for clients in the door before Rothstein's $1.2 billion fraud collapsed last Nov. 1. . . . No dollar amounts are listed, but Farmer said the total uncollected fees could exceed $10 million. That would include several class action cases and qui tam actions his new firm is working on, including cases against NationsRent, a home health care agency and Palm Beach millionaire Jeffrey Epstein, who has been sued for allegedly abusing teenage girls.

ALABAMA  

Plaintiffs' lawyers in discrimination suit want DeKalb to pay $2 million in fees

By Bill Rankin, The Atlanta Journal-Constitution 

04-16-10 -- Lawyers representing former DeKalb County parks employees in a discrimination and hostile workplace lawsuit asked a federal judge on Thursday to award them at least $2.02 million in fees and expenses. . . . The lawyers also are asking U.S. District Judge Bill Duffey to increase the award of legal fees on claims the county hid evidence in the case and denied the plaintiffs their right to a fair trial. . . . "Defendant's misconduct is deep and it has existed throughout this litigation," the motion said. "Some of the misconduct was only discovered during the trial itself; some will never be known." . . . DeKalb has already paid a high cost in attorneys fees for defending the case. Through January, the county had paid more than $2.5 million to lawyers defending DeKalb and the individual county defendants in the six-year-old case.

CALIFORNIA  

Court Backs Silicon Valley Law Group in Malpractice Mess

Mike McKee, The Recorder

04-16-10 -- Silicon Valley Law Group will have to settle for nearly $200,000 in fees -- not the almost $1.5 million it sought -- for litigation that turned on an alleged error by lawyers at another firm. But SVLG won't stand liable for malpractice either. . . . In a 47-page, unpublished ruling, San Francisco's 1st District Court of Appeal concluded Wednesday that former Contra Costa County Superior Court Judge Richard Patsey, sitting by designation in San Francisco, committed no legal error by awarding the lesser fees to Silicon Valley Law Group. . . . But the court also upheld Patsey's conclusion that the law firm's clients -- Don Beck and Don L. Beck Associates Inc. -- had failed to prove the firm was liable for malpractice for allegedly giving bad advice about a malpractice action against San Jose, Calif.'s Hoge, Fenton, Jones & Appel. . . . "The factual findings with which Beck Inc. takes issue," Justice Paul Haerle wrote, "are all supported by substantial evidence."

FLORIDA  

Law Firm, Former Associate Reach Settlement Over Pay Holdback Program

Julie Kay, Daily Business Review

04-14-10 -- The battle between Becker & Poliakoff and a former associate over $2,000 in back pay appears to be over. . . . Becker and former associate Richard Valuntas agreed to settle their Palm Beach, Fla., small claims court dispute last weekend. Neither side would reveal the settlement terms. A trial had been set to start Tuesday. . . . "It has been resolved presumably satisfactorily to both parties," firm managing partner Alan Becker said in a statement Monday. . . . Valuntas said: "It has been amicably resolved. That's all I'm going to say." . . . The case is over after months of depositions and an estimated $100,000-plus in legal fees.

NEW YORK  

Judge Reverses Course, Approves Contingency Fee in Staten Island Ferry Disaster Case

Difference between reinstated fee and reduced fee will be put in escrow for possible payment to attorneys who oversaw litigation's liability phase

Mark Fass, New York Law Journal

04-13-10 -- A Manhattan attorney who secured an $18.3 million verdict in a case stemming from the 2003 Staten Island Ferry disaster is entitled to the full one-third fee called for in his retainer agreement, a federal judge has ruled. . . . The decision, by Eastern District of New York Judge Jack B. Weinstein, marks the latest in a series of ups and downs for attorney Evan Torgan, who has fought for nearly two years to have his retainer agreement upheld. . . . In September 2008, Weinstein cut Torgan's fee to 20 percent from the 33 percent set forth in his retainer, a reduction to just over $3.6 million from about $6 million. The judge stated that the reduced fee was appropriate because the litigation required less effort and constituted less risk than a typical personal injury action, as the city's liability for the ferry crash had been determined in a prior proceeding handled by other attorneys.

DISTRICT OF COLUMBIA  

Winston's Fee Dispute Gets Lofty Scrutiny

Instead of paying the firm $84,000, a former client has taken its case to the D.C. Circuit

Jeff Jeffrey, The National Law Journal

04-12-10 -- Fee disputes don't usually merit an appeal to a federal circuit court. Sums less than $100,000 would seem to be negotiable for a law firm with 2009 revenues of $705 million. But barring a late settlement, Winston & Strawn will square off against former client Doley Securities Inc. in the U.S. Court of Appeals for the D.C. Circuit next month over an unpaid bill of $84,412.19. . . . The case rests on an engagement letter, signed by Doley Securities in 2007, that stated an hourly rate for Winston partner Thomas Buchanan and ranges of rates for other lawyers, should they need to be brought in. Buchanan, who chairs the firm's litigation practice in Washington, said the engagement letter was "almost identical to the ones every law firm everywhere gives to every client." . . . Doley's counsel disagrees. Claude Roxborough, a name partner at Washington's Kimmel & Roxborough, said the ranges were unenforceably vague. Moreover, he said, the dispute shouldn't even be in court; it should be in arbitration.

CONNECTICUT  

Law Firms Resort to Suing Their Clients to Collect Fees

Douglas S. Malan, The Connecticut Law Tribune

04-09-10 -- It is often the ugly end to a once-promising relationship, and it's a step that law firms try to avoid taking. But when economic times aren't flush, some law firms are getting aggressive and filing lawsuits against clients to collect fees. . . . "It's not something we do lightly," said Julia B. Morris, managing partner of O'Connell, Flaherty & Attmore in Hartford, Conn. "Clients are having a tough time across the board, and our preference is to find some middle ground" to resolve fee disputes. . . . But there comes a point when firms must push hard to get money they believe is owed to them. O'Connell, Flaherty & Attmore has been suing clients in superior court since 2008, and the firm has 29 pending cases seeking about $523,000 in unpaid fees. In the past two years, the firm has closed at least 11 fee dispute cases seeking about $145,000, with some claims going to trial and others settling beforehand.

GENERAL

Two Firms Sue Libya for $4.9 Million in Legal Fees

Jordan Weissmann, The National Law Journal

04-08-10 -- Two law firms filed suit against the government of Libya on Tuesday, seeking more than $4.9 million in unpaid legal fees and costs related to defense work in a slew of terrorism-related cases. . . . Paris-based Cabinet Sefrioui and Washington, D.C.'s Law Offices of Arman Dabiri & Associates claim Libya failed to make good on a 2008 settlement agreement in which it promised to pay about 3.7 million euros, or roughly $4.9 million, to law firms that handled lawsuits accusing the country of supporting terrorist attacks, including the 1988 bombing of Pan American Flight 103 over Lockerbie, Scotland.

March 2010

CALIFORNIA  

BAR/BRI Plaintiffs Firms Take Fee Request Back to the 9th Circuit

Amanda Bronstad, The National Law Journal

03-24-10 -- Plaintiffs lawyers who obtained a $49 million settlement in an antitrust class action against the parent company of BAR/BRI are gearing up for another fight before the 9th U.S. Circuit Court of Appeals -- this time, involving their attorney fees. . . . Class counsel McGuireWoods, which settled the litigation in 2007, filed a notice of appeal on March 8 after U.S. District Judge Manuel Real of the Central District of California eliminated all the firm's attorney fees over an apparent conflict of interest. Two other firms serving as class counsel, New York's Zwerling, Schachter & Zwerling and Washington's Finkelstein Thompson, whose fees the judge reduced, filed a separate appeal on March 15. . . . Another lawyer filed an appeal on March 9 on behalf of the estate of Eliot Disner, the plaintiffs attorney who brought the original case.

ILLINOIS  

Greenberg to Repay $3.2 Million in Fees due to Ex-Partner's Bill-Padding

Brian Baxter, The American Lawyer

03-24-10 -- Greenberg Traurig earlier this month agreed to pay a Chicago suburb $3.2 million after state prosecutors charged former government affairs partner Mark McCombs with inflating legal bills, reports the Southtown Star. (Hat Tip: ABA Journal.) . . . The Am Law Daily previously reported on the theft-of-services charges levied against McCombs, who joined the firm in September 2002. McCombs served as economic development counsel, special village attorney for investigations and administrative hearing officer for Calumet Park, a southeast suburb of Chicago. . . . Burt Odelson, an attorney for Calumet Park and name partner at local firm Odelson & Sterk, told the Southtown Star that "this is a repayment for all of the attorney's fees back to 2002." In a previous story by the same newspaper, Odelson estimated that only about 10 percent of the fees billed by McCombs billed were legitimate.

GEORGIA  

Attorney Wins Empathy but Not Fees

Federal judge denies acquitted attorney's request for reimbursement for legal fees stemming from money laundering case

R. Robin McDonald, Fulton County Daily Report

03-23-10 -- A federal judge has rejected a request to reconsider if the government must reimburse a Columbus, Ga., attorney for the legal fees he paid to win his acquittal on money laundering charges. . . . But U.S. District Judge Clay D. Land said he understands the frustration that led Columbus defense attorney J. Mark Shelnutt to make the request. . . . Land has criticized federal prosecutors who prosecuted Shelnutt based on his acceptance of legal fees from his drug-dealer clients. Accepting such fees to pay for a criminal defense is not a crime. . . . But the judge denied Shelnutt's bid for more than $225,000 in fees, finding there was insufficient evidence to prove that the prosecution was frivolous or conducted in bad faith.

PENNSYLVANIA  

A Year Later, Wolf Block Committee Still Seeking Fees

Gina Passarella, The Legal Intelligencer

03-23-10 -- On the one-year anniversary of the vote to dissolve Wolf Block, the firm's wind-down committee and outside attorneys are focused on two things that have proven challenging for the legal industry in the last year -- collections and making deals. . . . Meanwhile, many Wolf Block alumni who have moved on to several new firms across Pennsylvania still carry with them anger and sadness over the fact the firm shut its doors. . . . The committee, led by former Wolf Block partners Brian P. Flaherty, Patrick Matusky and Stuart Pachman along with consultant Brad Hildebrandt and Greenberg Traurig attorney Leslie Corwin, is reportedly close to signing a few deals with the former Philadelphia landlord at 1650 Arch St. and some other creditors.

FLORIDA  

Fla. House passes limits on lawsuits, lawyer fees

By Bill Kaczor, Associated Press, BusinessWeek

03-18-10 -- The Florida House handed trial lawyers a double defeat Thursday by passing a pair of bills to limit "slip-and-fall" lawsuits against businesses and cap fees the state pays to outside attorneys. . . . The slip-and-fall bill would make it harder for injured people to win lawsuits by undoing a 2001 Florida Supreme Court ruling in the case of Evelyn Owens, an Osceola County woman who slipped and fell in a Publix grocery store on what was later identified as a small part of a banana. The measure would require victims in the future to prove a business knew or should have known a dangerous condition, such as the piece of banana, had existed for sufficient time to have fixed or removed it or that it was foreseeable hazard. The justices had removed a similar requirement in the Owens decision. . . ."We have been operating under the current law for eight years and what we have found simply is that the cost of defending frivolous slip and fall lawsuits have risen dramatically when compared with the same businesses operating in other states," said Rep. Rep. Gary Aubuchon, a Cape Coral Republican who sponsored the bill, which passed 110-2.

Google’s Top Lawyer Makes More than $2M in Bonus and Pay

By Debra Cassens Weiss, ABA Journal

03-08-10 -- Google’s chief legal officer is getting a $1.73 million discretionary bonus this year, on top of a base salary of $500,000. . . . The compensation is outlined in a filing with the Securities and Exchange Commission, according to PaidContent.org and the San Jose Mercury News. . . .Proxy materials released last year showed Drummond earned a $450,000 salary in 2008 and made a $1.38 million bonus. He also had $3.29 million in stock and option awards, according to the proxy materials.

NEW JERSEY  

Shareholders Cry Conflict of Counsel in Class Action
Over Merck Merger

Charles Toutant, New Jersey Law Journal

03-08-10 -- A law firm faces conflict allegations over its projected $3.5 million fee for representing shareholders who obtained no monetary or equitable relief in a class action settlement over the merger of drug giants Merck and Schering-Plough. . . . Class member Allan Marain, a lawyer in New Brunswick, N.J., filed papers Wednesday opposing the settlement, which a federal judge has tentatively approved, and seeking sanctions against the firm, Carella, Byrne, Cecchi, Olstein, Brody & Agnello in Roseland, N.J. . . . The parties settled the claims in In re Schering-Plough/Merck Merger Litigation, 2:09-cv-1099, last July, and Carella Byrne and Merck reached the agreement for the $3.5 million fee in talks with a court-appointed mediator last November. A final approval hearing is set for March 24. . . . Metuchen, N.J., solo Mark Silber, who represents Marain, argues that certifying the class serves no purpose except to make Carella Byrne eligible for attorney fees. Because the class members are now holders of Merck stock, they would benefit more if the class were not certified, because then Carella Byrne would not be eligible to apply for fees, says Silber. . . . "They didn't accomplish anything at all. They go from representing a class to achieving nothing and wanting their clients to pay them three-and-a-half million dollars. They switched their allegiance," says Silber.

CALIFORNIA  

High cost of McCourts' divorce: $19 million in fees

Dodgers' case could be one of the most expensive in California history. Even other high-profile divorce attorneys are surprised.

By Bill Shaikin, Los Angeles Times 

03-05-10 -- Frank and Jamie McCourt's divorce could become one of the costliest splits in California history, with attorneys and accountants commanding as much as $19 million in fees — more than the Dodgers will spend on their starting infield this season. . . . Frank McCourt has estimated his "divorce-related expenses" at $5 million to $10 million, according to court filings. Jamie McCourt has estimated her expenses at $9 million — and asked that her estranged husband be ordered to pay them. . . . Although records of salaries and statistics are omnipresent in baseball, specific information about divorce costs is largely unavailable. The Times consulted with several family law experts, none of whom could recall a divorce costing $19 million. . . . "I'm pretty sure there's not been any litigation in a California divorce where they've spent so much on attorneys' fees," said Lynn Soodik, a Santa Monica family law attorney who represented Meg Ryan in her divorce from Dennis Quaid.

Big Bankruptcies' Big Fees Raising Questions

Brian Baxter, The American Lawyer

03-05-10 -- The Chapter 11 cases of copper miner Asarco and casino operator Station Casinos have been a gold mine for bankruptcy lawyers. Baker Botts broke the $100 million billable mark in the five-year-old Asarco case last August, and the legal bills in the seven-month-old Station Casinos case are approaching $20 million for a dozen law firms. But future fees might not be paid out so easily as the bills have come under increasing scrutiny. . . . We've taken a close look at fee filings in both cases. Hourly billing rates for attorneys, when available, are listed in parentheses. . . . Station Casinos / When we first reported on the Chapter 11 filing of Station Casinos last summer, it struck us as one of the more twisted and complex bankruptcy cases around. And not for nothing. Since Station filed for bankruptcy on July 28, nearly a dozen law firms have landed some piece of the work for the struggling Las Vegas-based casino operator. Station has paid out nearly $20 million in legal bills in less than eight months.

NEW YORK  

Judge Praises Lawyer in Lawsuit Over Staten Island Ferry Crash but Retains Cut Fee

Mark Fass, New York Law Journal

03-05-10 -- Manhattan personal injury attorney Evan Torgan should not face disciplinary action for the circumstances under which he signed a paralyzed victim of the 2003 Staten Island Ferry disaster to a retainer agreement, a U.S. magistrate judge in Brooklyn has recommended. . . . There "is no evidence whatsoever that Torgan acted improperly or sought to take advantage of the claimant in any way in the discussions leading to the signing of the retainer agreement," Eastern District of New York Magistrate Judge Viktor V. Pohorelsky wrote in a report and recommendation issued Thursday in McMillan v. City of New York, 08-cv-2887. . . . "Indeed, the evidence all points to the conclusion that Torgan acted entirely professionally and honorably in commencing his representation of the claimant. There is accordingly no basis for considering any disciplinary action whatsoever." . . . However, the magistrate judge also recommended that Eastern District Judge Jack B. Weinstein reject Torgan's motion to reverse Weinstein's decision to reduce Torgan's fee to 20 percent from 33 percent of the $18.3 million verdict -- a reduction from about $6 million to just over $3.6 million.

CALIFORNIA  

Court Tosses $5 Million Fee Award, Saying Trustee Overpaid for 'Rolls Royce' Defense

Leigh Jones, The National Law Journal

03-04-10 -- A California appeals court has snatched away $5 million in fees from attorneys at three top firms in a dispute over the riches of a deceased shopping mall magnate. . . . The state's 4th District Court of Appeal ruled that the trial court erroneously "rubber stamped" requests for attorney fees by Loeb & Loeb, Jones Day and Greenberg Traurig. The law firms represented the former trustee of Daniel W. Donahue's estate. Donahue, who died in 2002, was chairman of Donahue Schriber Realty Group Inc., a Costa Mesa, Calif., real estate firm that owned numerous shopping centers in California and other western states. . . . Reversing the fee award on Feb. 24, the three-judge panel said that the firms' client, Patrick Donahue, had embarked on a "spare no expense strategy" by hiring the three firms at once. The panel, in remanding the case, ruled that although the client's strategy may have benefited him, it was questionable whether it benefited the Donahue trust.

NEW JERSEY  

Superfund Case Tests if Law Firm Can Seal Affidavit Supporting Fee Application

Mary Pat Gallagher, New Jersey Law Journal

03-03-10 -- A multimillion-dollar fee fight in a Superfund case is testing whether a firm can file a secret affidavit supporting its fee application, so as to keep its special billing practices from the eyes of competitors in the environmental bar. . . . Eight months after a federal judge in Newark, N.J., ordered fees shifted in U.S. v. NCH Corp., 98-5268, and gave the parties a deadline to decide on a reasonable amount, they are back in court -- disputing not only the $3 million demanded but whether the fee affidavit can be sealed. . . . On Feb. 11, Sun Pipe Line Co., the party seeking fees, filed a paper copy of the affidavit with U.S. District Judge Susan Wigenton in Newark and e-filed a motion asking her to seal it. . . . The stated ground was that the affidavit and accompanying exhibits "contain highly confidential, competitive business information regarding the special billing practices of Sun's counsel, Beveridge & Diamond, ... the disclosure of which would cause clearly defined and serious injury to Beveridge & Diamond." . . . The information sought to be protected concerns hourly rates, fee arrangements, and competitive billing and pricing information from Sun's experts.

February 2010

FEDERAL COURTS

7th Circuit Worries -- but Not Too Much -- About Insurer Influence in Attorney Fees Case

Lynne Marek, The National Law Journal

02-25-10 -- The 7th U.S. Circuit Court of Appeals reversed two lower court decisions on the awarding of attorney fees in a decision last week consolidating three cases in which private parties sought fees after they prevailed over the U.S. government. . . . The appeals court also took a stand for the first time on whether an insurance company's paying for litigation should make a difference in the awarding of fees. . . . The three cases were brought under the Equal Access to Justice Act, which allows the granting of fees to parties of limited means "unless the court finds that the position of the United States was substantially justified," said the unanimous Feb. 18 decision written by Judge Richard Posner in U.S. v. Thouvenot, Wade & Moerchen.

DISTRICT OF COLUMBIA  

What the New White House Counsel Made Last Year

David Ingram, The National Law Journal

02-22-10 -- White House counsel Robert Bauer made just under $1 million last year as the head of the political law group at Perkins Coie, according to a financial disclosure form he filed this month. . . . Bauer reported $958,788 in salary and bonuses from the firm, where he was a partner in its Washington office. That's almost 20 percent above the firm's 2009 profits per equity partner of $802,111, as reported this month by The AmLaw Daily. He also reported $14,000 in speaking honoraria and a $7,500 fee from teaching at Yale University last spring.

MISSISSIPPI  

Miss. judge upholds $14M lawyers' fees in MCI case

The Associated Press, BusinessWeek       

02-19-10 -- Mississippi judge has upheld $14 million in fees paid to two former attorneys for handling a state lawsuit against telecommunications giant MCI. . . . Hinds County Circuit Judge Winston Kidd dismissed the challenge filed by State Auditor Stacy Pickering. . . . Pickering said Friday that he is considering an appeal to the Mississippi Supreme Court. . . . "From the very beginning of this case, we had expected the Mississippi Supreme Court would have the final say no matter who won at the circuit court level in Hinds County," he said. . . . It's our belief that the lower court didn't address the issues we raised in the dispute. Contingency fees should be paid for by money appropriated by the Legislature."

Judge agrees to funds distribution

Associated Press, WXVT 

02-19-10 -- A federal judge has signed off on a split of $425,000 seized as part of the judicial corruption investigation in Mississippi. . . . The money was taken from former Hinds County District Attorney Ed Peters. Peters allegedly was paid $1 million on behalf of former Mississippi attorney Richard "Dickie" Scruggs to influence Hinds County Circuit Judge Bobby DeLaughter in a civil case. . . . U.S. District Judge David Hittner, in an order signed Wednesday, approved a settlement between the government and attorney William Roberts Wilson Jr. Wilson will get $280,000. The government will keep the rest.

TEXAS  

FDR, Batman Cars Pay Houston Lawyer’s Debt to Implant Victims

By Laurel Brubaker Calkins, Bloomberg 

02-19-10 -- Some of the world’s most expensive cars will be auctioned in Florida next month, the legacy of a Houston attorney who amassed 870 museum-quality vehicles before being killed in an automobile accident in October. . . . John O’Quinn owned classic Rolls-Royces, a limousine for presidents, and the world’s biggest collection of Duesenbergs, said Gerald Treece, executor of his estate. The O’Quinn Law Firm represented clients injured by tobacco, breast implants and diet drugs, earning fees that Forbes magazine estimated at $1.5 billion. . . . The estate is selling some of the autos to provide liquidity to settle debts, Treece said. One of the biggest is a $46.5 million arbitration settlement owed to more than 3,000 clients who accused O’Quinn of overcharging for expenses in winning their breast-implant cases. . . . “I’ve already had somebody call me offering $150 million to take the whole collection,” Treece said. “But the experts told me the worst thing I could do was sell the cars as a whole or flood the market with them all at once.”

NEW YORK  

Work in Similar Cases Justifies Cut in Fee Request, 2nd Circuit Finds

Vesselin Mitev, New York Law Journal

02-18-10 -- Attorneys who settled a class action lawsuit over impermissible strip-searching of county jail inmates were properly awarded a smaller counsel fee than they sought due to their prior experience in filing similar cases, a federal appeals court has ruled. . . . In a decision issued Tuesday, a three-judge panel of the 2nd U.S. Circuit Court of Appeals held that Northern District Judge Gary L. Sharpe properly considered the settling of two earlier strip-search cases by plaintiffs counsel to discount their fee in a third case. . . . "The district court's decision to consider the benefit afforded to counsel by this experience ... does not constitute an error of law," Judge Debra A. Livingston wrote for the circuit in McDaniel v. County of Schenectady, 07-5580-cv. Judge John M. Walker Jr. and Southern District Judge Lewis A. Kaplan, sitting by designation, joined the ruling.

TEXAS  

Inside Lyondell Bankruptcy's Texas-Sized Legal Bills

Brian Baxter, The American Lawyer

02-18-10 -- Houston-based Lyondell Chemical is hoping that its yearlong Chapter 11 case is nearly over after reaching a $450 million settlement with creditors early this week. The Am Law Daily did some docket-digging this afternoon to see how much firms have profited from the pharmaceutical giant's bankruptcy court odyssey.

It turns out Lyondell has paid more than $58 million in fees and expenses to six firms through Aug. 31 of last year.

Click for  a quick breakdown of the biggest breadwinners

CALIFORNIA  

BigLaw Firm Violated Ethics Laws, Won't Get Fees in BAR/BRI

By Amanda Royal | The Recorder | New York Lawyer

02-17-10 -- BAR/BRI may be paying $49 million to law students who overpaid for test materials, but it won’t be paying the lawyers at Los Angeles-based McGuireWoods who secured the class action settlement. . . . McGuireWoods lost its latest round of appeals when U.S. District Judge Manuel Real ruled earlier this month that the firm violated ethics laws and denied its $12 million in attorneys fees. McGuire Woods had offered incentive payments to some, but not all, of the named plaintiffs in the class action against BAR/BRI, Ryan Rodriguez v. West Publishing Corp., No. 05cv3222 (C.D. Calif.).

NEW JERSEY  

Merck Pays $12 Million in Lawyer Fees to End Vioxx Suits

Charles Toutant, New Jersey Law Journal

02-16-10 -- Merck & Co. has agreed to pay $12.15 million in plaintiffs' legal fees to settle two shareholder derivative suits over its painkiller Vioxx -- one in state court in New Jersey and the other in the 3rd U.S. Circuit Court of Appeals. . . . The suits charged the Whitehouse Station, N.J., manufacturer's current and former directors and officers with breaches of their fiduciary duty in connection with the promotion of Vioxx despite evidence that it caused heart problems. . . . As part of the settlement, Merck agreed to create two committees to address product safety. One would identify and address risks that could impact customers and require immediate action. The other would draft and implement procedures to monitor the safety of drugs marketed or studied by the company and would establish and publicize internally procedures by which employees can raise concerns about drug safety.

January 2010

MASSACHUSETTS   

Mass. Judge Orders Two Lawyers to Refund $329K in Excess Fees to Client's Estate

Sheri Qualters, The National Law Journal

01-04-10 -- A Massachusetts probate judge recently ordered prominent Boston family lawyer Gerald Nissenbaum and another attorney to refund a client's estate nearly $329,000 in excess legal fees. . . . Plymouth County Probate and Family Court Judge Stephen Steinberg's Jan. 14 order gave the attorneys 30 days to make the payments. . . . The Barnstable County probate case, In re Guardianship of Kenneth E. Simon, ended up on Steinberg's docket after the Massachusetts Appeals Court recused Judge Robert Scandurra of the Barnstable Probate and Family Court in December 2007. The decision does not address the basis for that recusal. . . . According to Steinberg's order, Simon's guardian, E. James Veara of Dennis, Mass.-based Zisson & Veara, and Nissenbaum sought about $500,000 in attorney and guardian fees for an 83-day guardianship of Simon, which ended with Simon's death on Nov. 2, 2005.

FEDERAL COURTS

A Small Law Firm ... But an Oh-So-Big Payout in United Airlines Case

Lynne Marek, The National Law Journal 

01-28-10 -- The $44 million payday coming for some United Airlines pilots next week from the settlement of a pension dispute will include a $16.4 million payout for their Illinois lawyers. . . . Myron M. Cherry & Associates of Chicago will get the lion's share of the Feb. 3 payment, raking in $9.8 million as class counsel in the long-shot labor dispute. Korein Tillery, a St. Louis-based firm, will take home $6.6 million for chipping in over three years. They represented 2,200 senior United pilots who claimed in a December 2006 federal lawsuit filed in Chicago that they were shortchanged by their union in a distribution of pension benefits related to the airline's bankruptcy. . . . "We thought that was a wrong that was so clear that we could squeeze it into some legal theory," said Myron "Mike" Cherry, who said the award is among the top three biggest ever for his firm. . . . The two small firms triumphed over big-law rivals. Once the pilot plaintiffs defeated a motion for summary judgment last July by the union Air Line Pilots Association International, which was represented by Mayer Brown, and won denial of a motion for reconsideration in September, the case preliminarily settled in October and reached final settlement last month. The settlement was announced last week after a period for appeals had lapsed.

MASSACHUSETTS   

Court Blasts K&L Gates Team's Huge Fee and 'Unnecessary Lawyering'

Posted by Robert J. Ambrogi, Law.com Legal Blog Watch

01-28-10 -- Is it excessive for lawyers to collect more than $800,000 in fees and costs from an estate valued at $1.2 million? Noting that would add up to 67 percent of the estate's total value, the Massachusetts Supreme Judicial Court made no bones about its opinion on the fee request, saying that it represented "unnecessary lawyering." . . . That does not mean that the lawyers from K&L Gates in Boston who made the request will go penniless. In an opinion issued yesterday, In the Matter of the Estate of Bartley J. King, the SJC sent the case back to the trial judge to decide a "fair and reasonable" fee award. But the court did not let go of the matter without first letting the litigants know its distaste for the fees requested.

NEW JERSEY  

Lawyer Seeks to Hold Client to Alleged Vow to Pay Fees Even If Bankrupt

Mary Pat Gallagher, New Jersey Law Journal

01-28-10 -- Legal fees, like other debts, are usually wiped clean in a Chapter 7 bankruptcy, but Jason DiBattista's $35,000 debt to his divorce lawyer, Gregg Sodini, was not typical. . . . For one thing, DiBattista is himself a lawyer, concentrating in bankruptcy, and was once Sodini's colleague at Cuyler Burk in Parsippany, N.J. . . .For another, Sodini contends he handled the divorce based on DiBattista's promise to pay the fees even if his precarious finances landed him in bankruptcy. . . . Whether DiBattista made the promise is unclear; he has neither admitted nor denied it. But what is certain is that when he filed for bankruptcy last July, he listed the fees as an unsecured, nonpriority claim, and they were discharged along with his other debts on Aug. 21. . . . Sodini tried to block the discharge, filing an adversary action on July 24, but U.S. Bankruptcy Judge Donald Steckroth granted DiBattista's motion to dismiss on Oct. 13. Sodini is appealing that decision to the district court.

Federal Judge Calls 2nd Circuit's Approach to Calculation of Attorney Fees 'Condescending'

Mark Fass, New York Law Journal

01-27-10 -- A federal judge in Brooklyn has launched another volley in the ongoing dispute between the judges of the Eastern District of New York and the 2nd U.S. Circuit Court of Appeals regarding the standards for calculating awards of attorney fees. . . . Faced with a remand of an award ordering him to "apply a presumption in favor of" the prevailing fee rate for attorneys in the Eastern District, Judge Frederic Block has affirmed in Luca v. County of Nassau (pdf), 04-CV-4898 (FB), his earlier award of $400 per hour for Hempstead litigator Frederick K. Brewington. . . . In a critical and cutting 16-page decision, Block wrote that "numerous recent cases in the Eastern District convince the Court that a reasonable paying client would gladly pay $400 per hour for an attorney of Brewington's caliber." . . . The decision, as well as the dispute between the Eastern District and the 2nd Circuit, center on last August's circuit decision in Simmons v. New York City Transit Authority (pdf), 575 F.3d 170, which held that "when faced with a request for an award of higher out-of-district rates, a district court must first apply a presumption in favor of" the district's own prevailing rates.

FLORIDA  

A Cap On Lawyer Fees Roils Florida Politics

Peter C. Beller, Forbes

01-27-10 -- Awash in lawyer money, Florida agrees to compensation limits for class action lawyers. . . . In what could be a big victory for advocates of public pension reform, Florida officials on Tuesday did something sensible and altogether rare: They capped their legal fees. . . . Now, securities law firms hoping to sue corporations on behalf of the Sunshine State's retired civil servants will have to make do with a measly $50 million, plus expenses, per case. That big number is a giant step away from the status quo, in which law firms shower state officials, their parties and pension employees with all manner of sweeteners in order to convince them to become plaintiffs in class actions. . . . The fee cap was proposed by Florida's attorney general, Bill McCollum, one of three statewide officials who oversees the nation's third-largest public pension system ($136 billion in assets).

NEW YORK

NY Firms Earn $6 Million in Fees on Bond Sales for New Brooklyn Arena for Nets

By Nate Raymond | New York Law Journal | New York Lawyer

01-27-10 -- Three law firms earned nearly $5.7 million in fees advising on last month's $511 million bond sale used to finance construction of the Nets' arena at the Atlantic Yards project in Brooklyn. Mintz, Levin, Cohn, Ferris, Glovsky and Popeo earned $2.73 million as bond counsel to the Brooklyn Arena Local Development Corporation, according to master closing documents made public Monday and first reported by the blog Atlantic Yards Report. Nixon Peabody, which represented lead underwriter Goldman Sachs, earned $2.33 million. Mintz's team was headed by Jonathan Ballan, and Nixon's was headed by partners Mitchell Rapaport and Peter White.

How Badly Did Am Law Firms Really Fare Last Year?

Drew Combs, The American Lawyer

01-26-10 -- Many in the legal industry are eager to close the book on 2009. That isn't surprising given that low demand for legal services and missed budget projections forced many firms to reassess partner pay packages, lay off attorneys and staffers, cut associate salaries, and delay start dates for law school graduates. . . . But there remains one final chapter to write before that book can officially be closed -- and The Am Law Daily is in the process of writing that chapter with its posts on the financial performance of individual Am Law 100 and 200 firms in 2009. . . . We've already reported on profits and revenue figures for several firms, including Sonnenschein Nath & Rosenthal, where profits per partner dropped by 3 percent, and K&L Gates, where profits per partner rose by 1 percent.

TEXAS  

Judge tells insurer in Stanford case to pay lawyers

By Mary Flood Copyright 2010 Houston Chronicle

01-26-10 -- A federal judge on Tuesday ordered Lloyd's of London to pay for the criminal defense lawyers for R. Allen Stanford and other officers of his company who were indicted for allegedly operating a $7 billion Ponzi scheme. . . . Senior U.S. District Judge David Hittner issued a preliminary injunction and told the Lloyd's insurers to pay the lawyers for Stanford and two co-defendants within 10 days for work already billed, and to keep paying them under a company policy that covers legal costs for directors and officers. . . . Lloyd's has refused to pay for criminal defense after August, when the company's former chief financial officer, James Davis, pleaded guilty to a role in the scheme. Lloyd's insurers determined that the accused defendants participated in money laundering and thus it need not pay. But Davis did not plead guilty to money laundering, and no court has found that anyone involved in the case laundered money.

FEDERAL COURTS

Federal Judge OKs $17.5 Million Settlement in Class Action Over Sprint Fees

Class counsel, led by Carella Bryne, to be paid 33 percent of settlement fund

Mary Pat Gallagher, New Jersey Law Journal

01-22-10 -- A $17.5 million class action settlement against Sprint Nextel over the flat rate fees charged to people who bail out of their cell phone contracts early has won the blessing of a federal judge. . . . The agreement in Larson v. Sprint Nextel Corp., 07-cv- 5325, approved by U.S. District Judge Jose Linares in Newark, N.J., on Jan. 15, provides for $14 million in cash and $3.5 million in activation fee waivers, bonus minutes and credit forgiveness. Any money left over will be used to buy phone cards for U.S. soldiers and their families. . . . The class counsel, led by Carella Byrne Bain Gilfillan Cecchi Stewart & Olstein in Roseland, N.J., will be paid out of the settlement fund. Their cut -- $5,775,000, or 33 percent -- includes $169,518 in expenses.

Click here for a copy of the Court's Order and Opinion .

ILLINOIS  

Not Enough Is Enough:
Firm Sues Client Over $747,500 in Fees

By Lynne Marek | The National Law Journal | New York Lawyer

01-22-10 -- Lawyers sometimes cut clients a little slack when it comes to paying bills on time, but every law firm has its limits. Chicago-based Freeborn & Peters hit the end of its rope this month with one client. . . . On Jan. 11, the firm sued Vehicle Safety & Compliance LLC of Memphis and related entities, including Pittco Capital Partners LP and J.R. Pitt Hyde III, in federal court in Chicago to collect $747,515 in unpaid fees plus interest and the cost of bringing the lawsuit. Freeborn & Peters alleges that it worked out agreements in December 2008 and January and March 2009 with the client for payment of the fees, but the client still fell short after making good on a portion of the charges.

PENNSYLVANIA  

Drinker Biddle Nets $1.8 Million Award in Fee Fight

Gina Passarella, The Legal Intelligencer

01-21-10 -- Drinker Biddle & Reath won a $1.78 million verdict against a former client late last year after the client disputed the alternative fee arrangement the two sides agreed to in a patent litigation matter. . . . Details of the case, Drinker Biddle & Reath v. AgriZap Inc., came to light earlier this month and highlight a type of dispute that rarely makes it to trial and one firms rarely want publicized. . . . After three hours of deliberation shortly before Thanksgiving, a Philadelphia jury found, on a 10-2 vote, that the firm's fees were reasonable. The jurors said client AgriZap had to pay the firm $1,785,876 to cover around $1.5 million in fees and more than $200,000 in costs accrued during two months of preparation and the ensuing February 2007 trial in AgriZap v. Woodstream.

Despite Down Economy, Law Firms Say
They'll Raise Billing Rates

Meredith Hobbs, Fulton County Daily Report

01-15-10 -- Many large law firms are raising billing rates this year despite the recession, according to an Altman Weil survey (pdf). But it's not clear from the survey how much clients' bills will actually increase, if at all.

About 90 percent of the firms that responded said they are raising rates in 2010. The average rate increase was 3.2 percent. . . . Only 8.5 percent of the firms said they were not raising rates this year, and just 1 percent said rates would go down. . . . "It really was surprising," said Ward Bower, a principal at Altman Weil. "When I saw the results, I thought to myself, 'What are these guys thinking?'"

Lehman Bankruptcy Lawyers, Advisers Paid $588.4 Million So Far

By Linda Sandler, Bloomberg

01-15-10 -- Lehman Brothers Holdings Inc. has paid its lawyers and other bankruptcy advisers $588.4 million in the 15 months since it started liquidating, according to a regulatory filing. . . . The restructuring firm Alvarez & Marsal LLC, which provided Lehman with its current chief executive officer, Bryan Marsal, led the payments with $218.3 million in fees for “interim management” through December, according to the filing yesterday with the U.S. Securities and Exchange Commission. . . . Weil Gotshal & Manges LLP of New York was reported by Lehman to have collected $127.1 million through December for acting as the investment bank’s lead bankruptcy law firm, the same amount as Lehman said it had paid through November. Harvey Miller, Lehman’s lead lawyer at Weil Gotshal, didn’t immediately respond to an e-mail seeking comment yesterday.

PENNSYLVANIA  

K&L Gates Passes $1 Billion in Revenue

Richard Lloyd, The American Lawyer

01-15-10 -- K&L Gates passed the $1 billion revenue mark in 2009, the firm announced Friday. The Pittsburgh-based firm saw gross revenue increase by 8 percent, to $1.034 billion, while profits per equity partner (PPP) also increased to $861,000, up 1 percent from $855,000 last year. . . . Revenue growth was driven largely by the firm's March 2009 merger with Chicago-based Bell Boyd & Lloyd, which added 250 lawyers and an office in San Diego. The firm also continued its overseas expansion with new offices in Frankfurt, Singapore and Dubai. . . . Headcount increased from 1,552 attorneys to just over 1,700, including 605 nonequity partners -- the firm added 495 nonequity partners in 2008. With the growth in the total number of lawyers, revenue per lawyer dipped slightly to $610,000, down from $620,000 in 2008.

ILLINOIS  

7th Circuit Blasts Lawyer in 'Mortal Combat' Fee Dispute With Ex-Partners

The court also took to task the plaintiff's appellate attorney for a number of missteps

Lynne Marek, The National Law Journal

01-14-10 -- Illinois class action lawyer Rex Carr's drive to squeeze $20 million in compensatory damages out of his former law firm partners in a fee dispute slammed into a major barrier this week. . . . The 7th U.S. Circuit Court of Appeals not only upheld the lower court's dismissal of the case, but also overturned that court's rejection of sanctions against Carr and his son Bruce Carr. The father and son, who are partners at the East St. Louis, Ill.-based Rex Carr Law Firm, represented the senior Carr in the U.S. District Court for the Southern District of Illinois. . . . "The litigation is groundless," Judge Richard Posner wrote in the unanimous Jan. 12 decision. "The plaintiff is out of control and his lawyers are neglecting their duties as officers of the state and federal courts by failing to rein him in. The district court is directed to assess a proper monetary sanction."

NEW YORK  

Ex-Debevoise Client Raises Nasty Counterclaims in Unpaid Bills Case

Andrew Longstreth, The American Lawyer

01-14-10 -- Last month, when the New York Law Journal ran a front page article about Debevoise & Plimpton 's suit against a former client for $6 million in unpaid legal bills, the NYLJ's Nate Raymond astutely noted the risks associated with such a move. "If I were advising any law firm, I would tell them suing a client over fees is a no-win situation," John Marquess, president of Legal Cost Control, told Raymond. "It's going to get you adverse publicity you may or may not recover from. And if it went before a jury, juries hate lawyers." . . . Marquess's point about adverse publicity has turned out to be prescient. On Wednesday morning, Debevoise's erstwhile client, Candlewood Timber Group, filed an answer and counterclaims (pdf) against Debevoise, seeking damages of $55 million. And some of Candlewood's allegations about its former law firm aren't very flattering.

Howrey Collects $1 Million Fee From Weld for Counsel in Kentucky School Probe

Nate Raymond, New York Law Journal

01-14-10 -- William Weld, the former governor of Massachusetts and a one-time New York gubernatorial hopeful, is in the process of paying a legal bill of more than $1 million to Howrey following a fee dispute that went to arbitration last year. . . . Howrey had represented Weld in a grand jury investigation and other litigation arising from an accreditation and student-loan scandal at Decker College in Louisville, Ky. . . . Weld served as a Decker board member and as chief executive officer for the school for 10 months before it filed for bankruptcy in 2005.

GENERAL

Great Responsibility Comes With Great Pay,
GC Survey Shows

Amy Miller, Corporate Counsel

01-13-10 -- It's one of the big taboos -- don't ask anyone about his or her salary. But we don't mind when other people do the asking. In fact, when we publish our annual GC Compensation survey, a lot of our readers seem very, very interested in what their counterparts elsewhere earn. . . . We aren't the only nosy ones, poking around in corporate proxy statements. The executive compensation firm Equilar has just done its own survey. Main finding? General counsel earned on average about $1.4 million in 2009. . . . "Pay and focus on the GC role looks like it is growing because of greater responsibility," said Aaron Boyd, compensation research manager at Equilar. "You've got the increase in traditional effort as companies look to protect IP and have had more M&A activity along with the legal group's required focus in other areas."

Slew of Client, Fee Details Found in Proposals From Fla. Pension Fund Beauty Contest

Alison Frankel, The American Lawyer

01-13-10 -- We sincerely wish that every state pension fund would follow Florida's lead in picking a panel of plaintiffs firms for securities class actions. As we've previously reported, the Florida selection process has been conducted with unprecedented transparency, with even an anonymous letter accusing one contestant, Bernstein Liebhard, of financial impropriety made public. (Bernstein Liebhard will offer an equally public defense at a hearing scheduled for Thursday.) . . . Now we've got our hands on the complete responses of 11 leading plaintiffs firms to Florida's detailed request for proposals, thanks to those good folks at the Florida State Board of Administration. They're filled with interesting tidbits about the firms' history and records -- Grant & Eisenhofer's response (pdf), for instance, reports that only two cases initiated by the firm have been dismissed. We hadn't previously known, as Berman DeValerio's proposal (pdf) indicates, that the firm actively lobbied California state legislature on behalf of pension fund clients, or that Richard Kilsheimer is not an equity partner at the firm that bears his name, according to Kaplan Fox & Kilsheimer's submission (pdf) .

PENNSYLVANIA  

Attorney goes after Whitman group for nonpayment: Bochetto owed 122G; debt could shutter Council

By Chris Brennan, Philadelphia Daily News

01-11-10 -- The Whitman Council, a South Philly community group, was visited last week by sheriff's deputies who took a good look around the office and tallied up all the stuff that can be seized. . . . It's payday for attorney George Bochetto, who represented three members of the group's board of directors in a 2005 lawsuit and has been seeking payment for his legal fees since. . . . Whitman Council president Mark Squilla said that Bochetto's efforts may shutter the group, which gets most of its funding from government grants. . . . Bochetto won a court judgment of $122,789 against the Whitman Council in July after the group didn't respond to a lawsuit. A judge last week allowed Bochetto to seize the group's bank accounts and other assets. . . . "We don't have the money to pay him and we'll never have $100,000," Squilla said. "What he has done in turn is try to close down the organization."

NEW JERSEY  

$165 Million Schering-Plough Class Action Settlement Includes $37 Million in Fees

Mary Pat Gallagher, New Jersey Law Journal

01-08-10 -- A federal judge in Newark, N.J., has approved a $165 million settlement of a securities fraud suit against Schering-Plough Corp. that includes more than $37 million for the plaintiffs lawyers. . . . U.S. District Judge Katharine Sweeney Hayden, in signing off on the deal Dec. 31, noted it was one of the five largest securities class action recoveries in the District of New Jersey. The largest was an agreement by Cendant Corp., approved in 2000, to pay $2.85 billion. . . . The suit just settled, In re Schering-Plough Securities Litigation, 01-cv-0829, accused the Kenilworth company -- now a part of Merck & Co. -- of misleading investors by failing to disclose deficiencies in the manufacture of Clarinex that led the Food and Drug Administration in 2001 to delay its approval.

DISTRICT OF COLUMBIA  

Former Partner Gets a Second Shot at Sonnenschein in Fees Dispute

Leigh Jones, The National Law Journal

01-06-10 -- Former Sonnenschein Nath & Rosenthal partner Douglas Rosenthal will get a second shot at litigating damages in a compensation battle against his old firm -- if he wants to. . . . The D.C. Court of Appeals has granted Rosenthal, now a partner at Constantine Cannon in Washington, a new trial for a portion of what he claims the firm owes him for generating about $18 million in fees while representing clients suing the Libyan government for the terrorist bombing of a Pan Am jet over Lockerbie, Scotland, in 1988. . . . Rosenthal turned to the appeals court last year after a D.C. Superior Court judge slashed his $3.7 million jury award against to just $65,639. . . . In an unusual step, the appeals court also offered Rosenthal the option of accepting the jury's original decision for some of those fees -- without the trial judge's reductions -- and moving on. It noted that although Rosenthal had not argued for such an option, it would give him the choice since a failure to do so would be "a gross mismanagement of the resources of a busy trial court."

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December 2009

NEW JERSEY  

Bullet-Point Summary of Services Ruled Inadequate for Enhanced Fee Award

Michael Booth, New Jersey Law Journal

12-30-09 -- A plaintiffs lawyer fired midway through a personal injury case will have to provide a court with more than just a conclusory presentation of the work he did if he wants to share in the settlement, says a New Jersey appeals court. . . . In Monday's ruling, Ostretsov v. R. Fraley & R. Mortensen Inc. , A-3021-08, the court said Hackensack, N.J., solo Alexander Fishbeyn's "bullet point" recitation of services performed did not state the monetary value of his time, identify the approximate time spent on each task or set forth the overall hours devoted to the plaintiff's case. . . . The panel directed Bergen County Superior Court Judge Richard Donohue to conduct a more thorough hearing to determine whether Fishbeyn deserved more than the $13,000 awarded him out of the $217,000 settlement.

NEW YORK  

Lawyer's Misconduct Costs Him Any Share of $1.2 Million Fee

Daniel Wise, New York Law Journal

12-29-09 -- A maritime lawyer's misconduct, including his flight from New York to avoid arrest on contempt charges, has disqualified him from sharing in a contingency fee for work performed prior to his disbarment, a Southern District of New York bankruptcy judge ruled last week. . . . Disbarred lawyer Kenneth Heller's refusal to turn over files in a matter that ultimately was resolved with a $3.7 million settlement was "symptomatic" of a 24-year record of "utter contempt for the judicial system," Southern District Bankruptcy Judge Stuart M. Bernstein wrote, quoting from an opinion of the appeals court in Manhattan that disbarred Heller in 2004. . . . Bernstein's ruling in In re Ruby G. Emanuel, 97-44969, denied Heller any share in the $1.2 million the judge had awarded to the law firm of Jacoby & Meyers, which took over from Heller the wrongful death case of James Emanuel, a stevedore who was fatally injured in a 1992 accident at the Brooklyn Navy Yard.

MICHIGAN  

Michigan Faces Constitutional Case Over Cash-Strapped Public Defenders

Tresa Baldas, The National Law Journal

Are Michigan's public defenders improperly pushing the poor into copping pleas? The Michigan Supreme Court will consider that question this spring when it hears a case challenging how publicly appointed lawyers represent poor criminal defendants. . . . At issue is whether cash-strapped public defenders are violating the constitutional rights of defendants by allegedly too eagerly encouraging plea bargains, as opposed to vigorously fighting the charges. Indigent defendants in three Michigan counties -- Muskegon, Berrien and Genesee -- are suing the state over what they claim is an underfunded and inadequate public defender system.

CALIFORNIA  

Small Law Firm Woos Clients With Monthly Subscription Fees
Petra Pasternak, The Recorder

12-23-09 -- When lawyers Todd Smithline and Raj Jha negotiate terms with a new client, they never bring up the billable hour anymore. For the last two years, their five-lawyer San Francisco firm, Smithline Jha, has made an almost complete switch from traditional billing to a monthly subscription model. . . . "We did find all this tracking of hours and dealing with conversations around rates to be distracting, and we didn't think the billable hour was a good way to measure the value of the services we provided," said Smithline, who estimates that more than 90 percent of the firm's revenue can now be attributed to such monthly subscriptions. . . . Alternative billing of all stripes is becoming more popular, particularly given the economic climate -- and client leverage -- of the last couple of years. But observers say few firms are focusing on monthly flat fees to the extent that Smithline Jha does.

GENERAL

A Look Back at Law Firm Profits Over the Last Decade

Karen Sloan, The National Law Journal

12-23-09 -- The past decade was bookended by the dot-com bubble burst and the present economic crisis, but it's easy to forget that the bulk of the decade was pretty darn good for the legal industry. . . . Rising profits and headcounts, abundant work, overseas and domestic expansion, mergers and stability marked the period between 2003 and 2007 for most large law firms. The largest 250 law firms in the country added 35,438 attorneys to their ranks between 2000 and 2008. That nearly 37 percent increase outpaced the growth of the 1990s, when the largest 250 firms grew 30 percent with an additional 20,559 attorneys. . . . Headcount growth allowed law firms to capitalize on the strong demand for legal services that came along with the prospering national and international economies, said DLA Piper managing partner Frank Burch.

NEW YORK  

Attorney Can Seek to Recover Fees Despite Faulty Retainer, Panel Says

Daniel Wise, New York Law Journal

12-23-09 -- An appeals panel in Manhattan last week ruled that an attorney who failed to comply with a court rule covering retainer agreements and who was discharged by his client can nevertheless recover the value of services provided to the client. . . . The Appellate Division, 1st Department's unanimous ruling in Nabi v. Sells, 1378, 1378A, narrowed a lower court ruling that would have permitted the lawyer, Derek S. Sells, who had not complied with the 2002 court requirement that clients be given retainer letters, to recover on the terms outlined in an agreement he claimed he had with Massod Nabi. . . . Nabi, a native of Pakistan who was the vice president of a financial firm, was on the verge of finalizing a $1 million settlement for employment discrimination in 2006 when he discharged his lawyer, Sells.

CALIFORNIA  

In FedEx Fee Fight Case, Judge Finds Lawyer Solicited Cash From Clients

Dan Levine, The Recorder

12-22-09 -- Meeting a client at McDonald's to pick up $15,000 in cash has landed San Francisco plaintiffs lawyer Waukeen McCoy in serious trouble. . . . After settling part of a civil rights claim against FedEx Corp., McCoy solicited cash payments from three plaintiffs above and beyond his contractual fees, according to an order from Northern District of California Judge Susan Illston. McCoy engineered the payments just weeks after he promised Illston - verbally and in writing -- that he would not seek additional money, Illston wrote Friday. . . . "Regardless of whether he did or did not technically perjure himself, there is no question that Mr. McCoy violated the spirit of that declaration as well as his representations to this court," the judge wrote.

Attorneys Fees in Cobell Case 'Well Below the Norm' in Class Actions

Mike Scarcella, The BLT: Blog of Legal Times 

12-18-09 -- The lawyers suing the government in the Indian trust litigation in federal district court in Washington agreed to a range of legal fees that is well below the norm for class actions in hope of making the deal more palatable to the class, a lead attorney for the plaintiffs said. . . . The Justice Department earlier this month reached a tentative settlement with the plaintiffs in Cobell v. Salazar, a suit that has dragged on for more than 13 years with no end in sight. The more than 300,000 class members are seeking an historical accounting of the government’s handling of billions of dollars in royalties flowing from Indian land. . . . The $1.41 billion settlement, a far cry from the billions the plaintiffs had been seeking, requires authorization from Congress—and, ultimately, approval from the presiding trial judge, James Robertson, in the U.S. District Court for the District of Columbia. Justice attorneys and counsel for the plaintiffs say Robertson was integral in supervising settlement negotiations, which ramped up in July following an appellate court ruling that kicked the case back to the trial court.

NEW YORK  

Challenge to $40 Million Contingency Fee Now in Referee's Hands

Attorney for client's estate argued that three Graubard Miller lawyers were in a 'conspiracy of silence' regarding monetary gifts from the client

Nate Raymond, New York Law Journal

12-17-09 -- The question of whether Graubard Miller deserved a $42 million contingency fee from a settlement it obtained just five months after its client agreed to switch from paying hourly rates is now in the hands of a referee in New York. . . . In closing arguments Wednesday in Manhattan Surrogate's Court, Mark Zauderer, an attorney for the law firm, contended that Graubard Miller deserved the full 40 percent contingency fee on the $104.8 million settlement for Alice Lawrence, the widow of a New York real estate magnate. . . . But Daniel Kornstein, who represents Mrs. Lawrence's estate, insisted Mrs. Lawrence "did not understand the ramifications" of changing her fee arrangement because of medication she was using after knee surgery that made her "spacey" and "dizzy."

Inside Jones Day's 685-Page Lehman Fee Application

Zach Lowe, The American Lawyer

12-16-09 -- On Monday, our colleague Brian Baxter reported that Weil, Gotshal & Manges had soared past the $120 million mark in billings for the Lehman Brothers bankruptcy. . . . The $12.3 million Jones Day has billed from the beginning of the case last September is a pittance in comparison. But the firm's latest fee application, filed Tuesday, goes into a level of detail we've rarely -- if ever -- seen. The document, which covers $9 million in fee and expense requests from June 1 through the end of September, runs a whopping 685 pages and lists every action any Jones Day lawyer (or staffer) took in the case. . . . Every cab ride, every photocopy, every late-night food delivery -- it's all there, and it presents an exhaustive portrait of what it's like to work on a case of this magnitude. 

NEW YORK  

Quinn Emanuel Requests $1 Million for Work on N.Y. Governor's Case

Joel Stashenko, New York Law Journal

12-14-09 -- The legal team from Quinn Emanuel Urquhart Oliver & Hedges that ultimately won recognition of New York Gov. David A. Paterson's authority to appoint Richard Ravitch to fill the lieutenant governor's post has requested $1 million for its work on the case. . . . Paterson's spokesman, Peter Kaufman, said Friday that the request for the $1 million payment by the governor's chief counsel, Peter Kiernan, was filed with the state comptroller's office on behalf of Quinn Emanuel and its attorneys Kathleen M. Sullivan, Faith E. Gay and Robert Juman. In it, Kiernan said that Quinn Emanuel had "unique experience, expertise and capacity" to handle the complex case and the constitutional questions involved in it. The request does not detail the hours worked by individual lawyers or others, but said 23 "professionals" worked "around the clock" between July 7 and Sept. 22 to meet court deadlines and prepare the litigation, Kiernan said.

GENERAL

Lawrence W. Schonbrun:
Class-action lawyers picking their clients’ pockets

Another Voice / Lawsuit reform

By Lawrence W. Schonbrun

12-11-09 -- Plaintiffs’ class-action lawyers, in collaboration with the very defendants they sue on our behalf, have worked out a Dickensian scheme that is keeping millions, tens of millions, or perhaps even hundreds of millions of dollars (it’s hard to know for sure) in class-action settlement recoveries out of the pockets of class members. . . . How do they do this, you might ask? Rather than settling these cases like a typical contingency fee case, these artful dodgers of the legal world are negotiating their fees with the defendants after (or so they claim) and separate from any recovery they negotiate for us class members. In doing so, class-action lawyers are able to enrich themselves at the expense of their clients, while the courts look the other way. . . . Let me explain. Take the case of a typical personal injury accident. Assume you were injured in a car accident and hired a lawyer. The lawyer comes to you one day, gives you a check and tells you that your case has been settled. When you ask about his fee, he tells you not to worry, that you won’t have to pay him anything because he will be paid by the insurance company.

Lawyers in T-Mobile Settlement Can't Press for Higher Fees in State Court

Mary Pat Gallagher, New Jersey Law Journal

12-10-09 -- A federal judge in New Jersey has nixed an attempt by lawyers unhappy with their fees from a $13.5 million class action settlement with T-Mobile to re-litigate the issue in California state court. . . . U.S. District Judge Jose Linares on Tuesday granted T-Mobile's motion to block what it called an attempted "do-over" on the fees that would violate the national settlement, undermine his jurisdiction and waste court resources. . . . The lawyers, who are non-class counsel in a suit over the $200 T-Mobile charges for opting out of a cell phone plan before the end of the contract, wanted about 80 percent of the $4.5 million in fees awarded in the settlement of Milliron v. T-Mobile USA, Inc. , 08-cv-4149, which Linares approved Sept. 10.

FLORIDA  

Ho! Ho! Ho!: Santa Comes Early for Firm With $5 Million Bonus on Fees

By Vanessa Blum | Daily Business Review | New York Lawyer

12-09-09 -- Over opposition from the Securities and Exchange Commission, attorneys have been awarded a $5 million bonus for their work unraveling one of the region’s largest investment frauds. . . . Roberto Martinez, the court-appointed receiver for Fort Lauderdale-based Mutual Benefits, sought additional compensation of $11 million for his law firm Colson Hicks Eidson and primary counsel Kozyak Tropin Throckmorton. The two firms previously received $3.8 million in legal fees over five years. . . . Though short of the receiver’s request, the total fee award of $8.9 million boosts the blended rate for both partners and associates to $450 per hour. . . . In a seven-page order Monday, Chief U.S. District Judge Federico Moreno said the attorneys had been compensated since 2004 at rates far below what was reasonable for their work. He ordered the additional fees be paid from unclaimed investor funds and a corporate operating account.

NEW YORK  

Federal Judge Approves Solo's Manhattan-Level Fees in 'Hotly Contested' Discrimination Suit
Vesselin Mitev, New York Law Journal

12-09-09 -- Manhattan lawyers who represented a Long Island, N.Y., police officer in a "hotly contested" labor discrimination suit should be paid attorney fees consistent with Southern District of New York market rates, a federal judge has ruled. . . . Citing the "considerable experience" of Janice Goodman, a veteran Manhattan solo practitioner, and Gillian Thomas, a former attorney for the women's defense fund Legal Momentum, Eastern District of New York Judge Arthur D. Spatt ordered Suffolk County to pay $207,000 in attorney fees in Germain v. County of Suffolk, 07-cv-2523. . . . Suffolk County had sought to pay a maximum of $150,000 based on its calculation of the customary rate in the Eastern District, which includes the county.

In Rare Move, Debevoise Sues Client Over $6 Million in Unpaid Bills

Nate Raymond, New York Law Journal

12-09-09 -- After years of wrangling over more than $6 million in unpaid legal fees, Debevoise & Plimpton has taken a timber company to court over its refusal to pay the bill. . . . Debevoise sued Candlewood Timber Group LLC last month in Manhattan Supreme Court after its former client did not pay the multimillion-dollar tab arising from litigation in 2006 over rain forest damage in Argentina. . . . Candlewood, in documents filed in an earlier proceeding trying to block the firm's arbitration demand, said Debevoise does not deserve the "exorbitant" $6 million sum, claiming it overstaffed the matter with associates of "no apparent skill" and was replaced by another firm for trial.

TEXAS  

Did lawyer/lobbyists work for justice or financial gain?

Fort Worth Star Telegram Editorial

12-08-09 -- Texas taxpayers didn’t contract to pay lobbyists more than $1 million to get the Tim Cole Act enacted into law. . . . But that will be the practical effect if a wrongly convicted Carrollton man can’t get a contract with a lawyer/lobbyist revoked. . . . Steven Phillips spent 25 years in prison, convicted in Dallas County of a rape he didn’t commit. DNA evidence finally showed that another man was responsible, and Phillips was officially exonerated in 2008. . . . After being convicted, he avoided a life sentence by pleading guilty to other offenses he hadn’t committed. He has court orders exonerating him on those counts, too. . . . Last December, broke and living in Springfield, Mo., Phillips signed a contingency fee contract with a Lubbock law firm that loaned him $3,400. Under the contract, Glasheen, Valles & Dehoyos would "investigate, evaluate and pursue to settlement or judgment all claims for damages" that Phillips might have against the City of Dallas and State of Texas. . . . Lawyer Kevin Glasheen and his firm didn’t pursue legal claims on Phillips’ behalf, Phillips asserts. But they want attorney fees of 25 percent of the money the state owes him as compensation for time wrongly served. . . . In a lawsuit filed in Dallas, Phillips claims the fees are excessive and that they’re for lobbying services he never contracted for. . . . Once court orders showing Phillips wrongly served 25 years and was exonerated on all counts are filed with the comptroller, he would be entitled to a $2 million lump sum plus an $80,000 annuity, potentially $4.1 million.

Cash Still the Best Feedback When Pressing Law Firms for Value, Says GC

Amy Miller, Corporate Counsel

12-4-09 -- Call it a perfect storm for the billable hour. . . . After seeing years of skyrocketing legal fees, the legal marketplace has been hit hard by the faltering economy and shrinking in-house legal budgets, turning both general counsel and outside counsel into advocates for change. . . . And the change many are calling for loudly these days is the death of the billable hour. So it's no surprise that dozens of in-house lawyers and outside counsel gathered at the Harvard Club of New York City Tuesday and Wednesday to talk about the challenges and rewards of alternative billing arrangements.

An Increase in Hourly Rates? Get Ready for a Fight

Zach Lowe, The American Lawyer

12-3-09 -- Last month, Susan Blount, the general counsel of Prudential Financial, sent a letter to the 60 law firms the insurance giant uses regularly. The letter addressed the general economy and the need to cut costs, but one announcement stuck out: Prudential informed the firms that in calendar year 2010, the company expected to pay for legal services at 2008 hourly rates. It wasn't a request as much as a take it or leave it deal, Blount says. . . . "The response," Blount says, "has run the gamut, from acceptance to disgruntled acceptance to firms saying, 'You just don't understand!'" . . . Blount, of course, is not alone in her quest to control legal costs. Law firm and legal department consultants say GCs are looking for at least a freeze on rates in the coming year. Many are asking for cuts to 2009 billing rates of as much as 15 percent, says Ward Bower of Altman Weil. . . . Paul Hurd, general counsel of Daimler Trucks North America, says already instituted a significant rate cut a year ago, when he asked the 75 firms Daimler uses to set 2009 billing rates at about 90 percent of 2008 rates. What does he have in mind for 2010? Hurd says Daimler will ask firms to stick with the current hourly rate. That translates to an hour rate in 2010 that is lower than the firms' 2008 rates.

Survey Shows the Bell Is Tolling for the Billable Hour

Amy Miller, Corporate Counsel

12-1-09 -- Companies are successfully pushing their outside counsel to abandon the billable hour, a new survey indicates. . . . In October, The American Lawyer and the Association of Corporate Counsel jointly surveyed 587 general counsel and chief legal officers, and found that 39 percent paid law firms more money this year under alternative fee arrangements than they did in 2008. Meanwhile, just over half (53 percent) said spending on alternative fee arrangements had stayed the same. Only 8 percent said it had fallen. . . . The results weren't surprising to Susan Hackett, general counsel for the ACC. The increase might have been more substantial, had many cash-strapped general counsel not turned to the quick fix of rate discounts, rather than alternative fee arrangements. But the results nevertheless prove that the legal profession is finally moving away from the billable hour -- for good.

November 2009

NEW JERSEY  

$163K Fee Award to Firm Tossed Out Over Use of Secret 'Master Retainer'

By Mary Pat Gallagher | New Jersey Law Journal | New York Lawyer

11-30-09 -- An appeals court on Tuesday threw out $163,000 awarded to a firm in a suit against former clients, finding it violated ethics rules by not providing a full copy of its retainer agreement until seven months into the representation. . . . The Appellate Division also said the firm, Alpert Butler & Weiss of West Orange, could not recover legal fees as a sanction for frivolous litigation because it handled the matter pro se. . . . The ruling, in Alpert, Goldberg, Butler, Norton & Weiss v. Quinn, A-5503-07, came in a fee action against Michael and Marita Quinn, who hired the firm in January 2006 to replace prior counsel in litigation against Banc of America Leasing & Capital in Cape May County.

Orrick-Levi Strauss Deal Underscores Growth of Alternative Billing

Amanda Royal, The Recorder

11-24-09 -- Karen Johnson-McKewan has been wearing her Levi's a lot lately, and her colleagues at Orrick, Herrington & Sutcliffe don't mind at all. . . . Earlier this year, Johnson-McKewan inked a deal with client Levi Strauss & Co. that is Orrick's broadest alternative fee arrangement ever. . . . Orrick will handle all of Levi Strauss' legal work worldwide in exchange for a fixed yearly fee paid in monthly increments. Levi Strauss will keep only one other firm, Townsend and Townsend and Crew, to continue its brand protection work. Where Orrick doesn't have an office, the law firm itself will retain and pay outside counsel.

AT&T class wins $21.20 in phone line credits; lawyers get $7 million in fees

By Steve Korris, Madison County Record

11-20-09 -- Madison County Circuit Judge Daniel Stack has ordered telephone company AT&T to pay $21,671,857 for mistakes Illinois Bell made eight years ago in distributing $90 million in refunds to business customers. . . . On Nov. 10, Stack placed a price tag on a February order holding AT&T liable for misinterpretation of state law that prescribed the refunds. . . . He ruled that 680,683 business customers deserved refunds but didn't get them. . . . He ordered AT&T to grant class members credits of $21.20 per line. . . . He awarded a third of the judgment, more than $7 million, to class action lawyers Terrence O'Leary of Granite City, Glenn Bradford of Edwardsville, Thomas Londrigan and Timothy Londrigan of Springfield, and Mary Leahy of Springfield.

Ditching the Billable Hour: 'Everyone Wants to Do It'

Amy Miller, Corporate Counsel

11-20-09 -- More companies are paying their outside counsel off the clock, according to the Hildebrandt 2009 Law Department Survey. . . . Just over half of the 231 companies surveyed by the Hildebrandt consulting firm said they either have started or will start negotiating non-hourly billing arrangements with their outside counsel. Just over a quarter said they are considering them. And only 18 percent said they have no plans to abandon the billable hour. . . . The results weren't surprising to Lauren Chung, director of Hildebrandt's law department consulting practice and the survey's editor. "Everyone wants to do it," she says. "But the question is: to what extent? Will they make up 5 percent of legal spending or 100 percent? It will be interesting to see to what extent they will be utilized."

Coudert Estate Pursues Fees Earned From Former Clients

Nate Raymond, New York Law Journal

11-20-09 -- The liquidation plan administrator for the Coudert Brothers estate is claiming that Baker & McKenzie has breached an agreement with the defunct law firm by failing to hand over a portion of a contingency fee earned from work for former Coudert clients. . . . By not handing over the fees, Baker & McKenzie breached an agreement signed with Coudert in 2005 that gave Coudert rights to part of the fee, according to an amended complaint filed last week in bankruptcy court by the administrator. Baker & McKenzie last year resolved a series of cases involving taxes on coal exports for clients brought to the firm by former Coudert attorneys. . . . In a statement this week, Baker & McKenzie said, "We deny any wrongful conduct in this matter, and because it is pending, we will offer no further comment on the matter at this time." . . . The Southern District Bankruptcy Court approved its plan of liquidation in August 2008 in In re Coudert Brothers LLP, 06-12226.

How to Shift Law Firms to a Performance-Based Compensation System

Dan DiPietro, Lisa Keyes, Laura Saklad, The American Lawyer

11-19-09 -- The legal industry loves its traditions, and one of the most entrenched -- embraced by virtually every Am Law 100 firm -- is lockstep associate compensation. But over time, even the best traditions can become anachronisms, and that is the case with lockstep. For several years, the Law Firm Group (LFG) at Citi Private Bank has been urging firms to get rid of lockstep, in which associates receive an automatic annual pay raise, promotion and bonus. In its place, the LFG advocates a performance-based program, in which associates are paid and promoted according to their mastery of skills and competencies, and receive bonuses based on individual and firm performance. . . . Until recently, the LFG's campaign to kill lockstep fell largely on deaf ears. But the recession brought home many of the problems inherent in lockstep. In the last year, several Am Law 100 firms have announced that they have shifted to, or are in the process of shifting to, a performance-based program. An LFG survey in July revealed that almost half of the top 50 firms in The Am Law 100 said they plan to switch to some form of performance-based system.

GENERAL

Must Law Firms Know the Cost of Each Matter They Take On?

Bruce Carton, Law.com Legal Blog Watch

11-17-09 -- There has been plenty of talk over the past year or so about how the billable hour at law firms is under attack, and how changes may be in store. Of course, most of it is just talk so far, and precious little action, as law firms cling to their traditional ways. . . . One firm that claims to have completely done away with the billable hour, however, is the Shepherd Law Group, which states that it hasn't billed or even tracked a single hour since 2006. SLG, an employment law firm, uses an "Up-Front Pricing" model whereby clients know the fee they will pay in advance. On its Web site, SLG explains that if the scope of the agreed upon job changes, it will send the client a change order setting out the new scope and the price for that change. . . . SLG's CEO, Jay Shepherd, writes a blog called The Client Revolution that is heavily focused on the potential death of the billable hour. In an interesting post yesterday, Shepherd wrote that lawyers remain obsessed with how much their services cost, and continue to claim that they cannot move away from the billable hour to offer fixed prices because of their inability to figure out what a particular case or matter costs.

10 Ways Lawyers Rip-Off Clients

Lawrence Delevingne and Gus Lubin, | The Business Insider

11-16-09 -- Like a sick person, a company facing litigation is willing spend big bucks to get out of a trouble. . . . It's entirely justifiable, and lawyers are only too happy to oblige, billing clients for every minute worked, and then some. . . . But is it possible to get sound counsel coming from someone who just pulled 52 all-nighters in a row? How about paying more than $1,000 for an hour of legal advice? And what about being charged for 26 hours in a single day? . . . Like all consultants, some lawyers find questionable ways to squeeze money out of clients. Some are legal, some aren't, but all will make a CFO's blood boil. . . . So review those invoices, make sure you know billing rates, and kindly remind Dewy, Cheatem and How LLP, that summer associates don't need to stay in VIP suites at the Four Seasons.

See The Top Ways Lawyers Overcharge Clients>>>

NEW JERSEY  

Law firm for UMDNJ removed from trial

Ted Sherman, Star-Ledger Staff

11-15-09 -- More than two years ago, Ellen Casey -- a former high-level purchasing official for the state's medical university -- claimed she was fired after raising questions about millions in lucrative contracts that were never publicly bid. . . . But just as her whistleblower case was set to go to trial, the law firm representing the University of Medicine and Dentistry of New Jersey has been removed by a Superior Court judge over allegations of ethical lapses. . . . Judge Claude Coleman in Essex county found that the firm -- McElroy, Deutsch, Mulvaney & Carpenter of Morristown -- had not been honest with the court over its representation of Casey during an earlier investigation of the university. . . . Coleman said the firm "made misrepresentations to this court," and to lawyers for Casey, ordering it to return $324,662 in legal fees in connection with its representation of the university.

CALIFORNIA  

FTC Seeks Contempt Charges Against Lawyer Who Won't Turn Over Fees

Jenna Greene, The National Law Journal

11-11-09 -- The Federal Trade Commission has filed contempt charges against an attorney for refusing to fork over fees he was paid by the operators of an illegal Ponzi scheme. . . . The lawyer, solo practitioner Jeffrey Benice of Costa Mesa, Calif., was ordered in March 2009 to turn over $238,300 to the FTC by a federal judge in Nevada. The court also imposed an $18.9 million judgment on Benice's clients for running a fraudulent "Internet kiosk" business in violation of the FTC Act and the agency's franchising rule. . . . According to the FTC, the defendants -- Charles Castro, Network Services Depot Inc. and others -- paid Benice a $375,000 retainer in January 2005.

WEST VIRGINIA   

Charleston law firm sues former associate for keeping legal fees in SS cases

By Lawrence Smith  -Kanawha Bureau West Virginia Record

11-11-09 -- A Charleston law firm alleges before going solo, one of its former associates failed to remit legal fees belonging to them. . . . Hendrickson and Long PLLC filed suit on Oct. 30 against Benjamin F. White. In its complaint filed in Kanawha Circuit Court, H&L alleges White, 44, before starting his firm, Benjamin F. White, attorney-at-law, PLLC, improperly received legal fees for Social Security claims he litigated on behalf of H&Ls clients. . . . White's law firm is named as a co-defendant in the suit. . . . According to the complaint, White joined H&L on April 28, 2008 as an associate focusing on Social Security law. As an at-will employee, White's compensation package included a base salary, eligibility for H&Ls bonus program, enrollment in its profit-sharing and health care plans and a line of credit. . . . However, fees he earned while representing Social Security claimants "were earned on behalf of H&L and owed to H&L."

GEORGIA  

Legal Fees Paid by Drug Trafficker at Issue in Ga. Money-Laundering Case

Defense motion signals that recent 11th Circuit decision could determine J. Mark Shelnutt's fate in court

R. Robin McDonald, Fulton County Daily Report

11-10-09 -- Jury selection began Monday in the trial of a Columbus, Ga., criminal defense lawyer who faces federal money-laundering charges stemming from legal fees paid to him by his client, a convicted drug trafficker. . . . Armed with a new ruling by the 11th U.S. Circuit Court of Appeals, Columbus attorney J. Mark Shelnutt's defense team has asked the judge presiding over the trial, U.S. District Judge Clay D. Land, to dismiss 30 counts of money laundering and a money-laundering conspiracy count, saying the grand jury that indicted Shelnutt may have been misled about the law.

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October 2009

FLORIDA  

Lawyers' $11 Million Bonus Request Shocks Judge, SEC

By Vanessa Blum | Daily Business Review | New York Lawyer

10-30-09 -- When Chief U.S. District Judge Federico Moreno first read the final fee request for the Mutual Benefits fraud receivership, he thought lawyers were seeking $1.1 million, not $11 million. . . . Then he realized there was no decimal point, the judge recounted Thursday at a hearing in Miami. . . . “I needed a defibrillator,” he joked. “We’re talking about a lot of money.” . . . It is up to Moreno to resolve a simmering dispute over how richly to compensate lawyers for five years of work on one of the largest scams in South Florida history. . . . Roberto Martinez, the court-appointed receiver, is seeking the $11 million bonus to split between his law firm, Colson Hicks Eidson, and primary counsel Kozyak Tropin & Throckmorton. To date, the two Coral Gables firms have jointly collected about $4 million.

GENERAL

Legal Aid Groups Reap Tobacco Settlement Windfall

Petra Pasternak, The Recorder

10-28-09 -- Christmas has come early for California's legal aid organizations. . . . This month, $40 million is going out to more than 100 nonprofits and charities across the state from money left over in a class action settlement with makers of chewing tobacco. . . . The money -- in some cases hundreds of thousands of dollars -- will help local legal groups avoid cutting services and jobs as they struggle through the recession. . . . A check for $800,000 arrived at the San Francisco office of California Rural Legal Assistance about a week ago. Jose Padilla, its executive director, said CRLA was bracing for a shortage of about half a million dollars next year in its $13 million program, thanks to uncertainty about federal and state funding. The cy pres money will save the organization from having to cut pay by 7 percent through furloughs, or laying off six to eight of its 60 lawyers. "This is a godsend," Padilla said.

FEDERAL COURTS

11th Circuit Sides With Defense Attorney Over Legal Fees

John Pacenti, Daily Business Review

10-27-09 -- In a case of first impression, a federal appellate court ruled Monday in the prosecution of prominent Miami attorney Ben Kuehne that criminal defense lawyers can't be charged with taking ill-gotten proceeds from defendants as legal fees. . . . The 11th U.S. Circuit Court of Appeals affirmed a decision by U.S. District Judge Marcia G. Cooke, who dismissed a money-laundering conspiracy count against the attorney for vetting money that went to Miami celebrity attorney Roy Black to defend Colombian drug kingpin Fabio Ochoa. . . . Kuehne, who has represented a number of high-profile clients including Vice President Al Gore in the 2000 presidential recount, was charged along with two Colombians. Prosecutors charged Kuehne knowingly sent drug money through Colombia's black market peso exchange to pay Black and his team.

FLORIDA  

Ludacris Is the Latest Rapper Sued Over Legal Bills

Karen Sloan, The National Law Journal

10-22-09 -- Money is a popular theme in rap music, but some high-profile MCs appear to be tight-fisted when it comes to paying their legal bills: . . . • Tampa-based firm Carlton Fields filed a lawsuit against Ludacris on Oct. 16 seeking to recover $61,860 that it says the rapper owes in fees. . . . • On Oct. 1, Santa Monica entertainment litigation boutique Kinsella Weitzman Iser Kump & Aldisert sued The Game for neglecting to pay more than $34,683 that the rapper allegedly owes for his defense against a gun charge in 2007. . . . • In July, McGuireWoods partner Michael DiMattia asked a federal judge to allow him to withdraw from hip hop mogul Jay-Z's legal team because he hadn't been paid for work in a labor and employment dispute. . . . The lawsuit against Ludacris, whose real name is Christopher Bridges, is in connection with a "garden variety" car accident in 2007 that involved his mother, Roberta Shields, said Carlton Fields partner Walter Bush.

NEW YORK  

Judge Follows 2nd Circuit in Fee Award but Expresses Dissatisfaction With 'Geographic Lodestar' Model

Mark Fass, New York Law Journal

10-22-09 -- A Brooklyn judge has followed a recent appellate precedent requiring him to consider only the average hourly rates in the Eastern District of New York when assessing attorney fees, rather than those of the broader metropolitan area, including Manhattan, where the plaintiffs' firm is located. . . . But in a lengthy footnote, the judge set forth the reasons he believes he should not have had to make that decision. . . . "[T]he border between the Eastern and Southern Districts of New York is uniquely permeable," Judge Brian M. Cogan wrote in Gutman v. Klein, 03 Civ. 1570. "Imposing the Simmons burden on litigants ignores the 'geographic reality and its economic consequences in New York City.'"

Lawyer’s Lament:
Pressure to Review 80 Docs an Hour, for $23 an Hour

By Debra Cassens Weiss, ABA Journal

10-21-09 -- A contract lawyer’s complaint about a directive to review 80 documents an hour is raising questions about whether quantity sacrifices quality. . . . The lawyer, who was being paid about $23 an hour for the document review project, told the blog Temporary Attorney that the directive was in this e-mail: “Please pick up the pace. They are expecting you to do about 80 docs an hour and all of you are less than half that. Changes will be made soon if this does not change asap.”

DISTRICT OF COLUMBIA   

Williams & Connolly Sues Client for $2 Million

Jordan Weissmann, The National Law Journal

10-20-09 -- It's not uncommon these days to see law firms suing former clients over unpaid legal bills (see, for instance, McDermott Will & Emery's recent $606,000 case). Still, this latest bit of legal fee litigation seems remarkable: Williams & Connolly is taking a former client to court over $2 million after the company practically invited the firm to sue. . . . Or so says Williams & Connolly's complaint, filed Friday at the U.S. District Court for the District of Columbia. According to the filing, the firm billed telecommunications company IDT $3 million for representing one of its subsidiaries in a patent case. Afterwards, in September 2008, IDT's CEO allegedly traveled to Washington to meet with Williams & Connolly heavy hitter Brendan Sullivan Jr. in order to work out a payment plan. They agreed to a deal where IDT would pay three installments of $1 million dollars over two years.

CALIFORNIA

Lawyers Vexed by New Law Barring Up-Front Fees for Mortgage Modification Work

Cheryl Miller, The Recorder

10-19-09 -- Backers of a new law that bars mortgage modification services from charging up-front fees (pdf) say the rules will put scam artists out of business. . . . But mortgage lawyers like Paul Molinaro wonder whether the new regulations will really just drive honest attorneys out of the practice. . . . "I think you're going to see a lot of lawyers not doing this anymore," said Molinaro, a founding partner in the Corona, Calif., firm of Fransen & Molinaro. "It's just not worth it." . . . Gov. Arnold Schwarzenegger this month signed Senate Bill 94, a response to complaints from desperate homeowners who have paid thousands of dollars in fees to mortgage modification services, only to learn later that the business did little or nothing to save their homes from foreclosure.

UNITED STATES SUPREME COURT

High Court Justices Doubt Lawyers Should Be
Paid Extra for Winning

Tony Mauro, The National Law Journal

10-15-09 -- The nine justices of the U.S. Supreme Court are all lawyers, but most showed little empathy for their fellow attorneys on Wednesday as they debated whether legal fee awards can be enhanced for superior performance or exceptional results under a federal fee-shifting statute. . . . The justices heard arguments in Perdue v. Kenny A., brought by the state of Georgia to challenge a $4.5 million fee enhancement it was ordered to pay by a district court judge to reward lawyers who succeeded in reforming the state foster care system in a long-running class action. The enhancement would be on top of a $6 million "lodestar" award based on prevailing fees and hours billed. Lawyers for Children's Rights Inc. and a private Atlanta firm worked on the case. . . . Civil rights groups from across the political spectrum are watching the dispute, asserting that the prospect of enhanced fees is necessary to attract quality representation in the lengthy and complex litigation they pursue. But during the hourlong argument, several justices seemed more worried about high legal fees than in encouraging quality lawyers to do public-minded work.

FLORIDA  

Top South Florida Attorneys' Billing Rates Rise in 2009

Vanessa Blum, Daily Business Review

10-14-09 -- Charge for two Miami litigation partners to attend a one-day deposition of celebrity socialite Paris Hilton: $14,000 plus travel. . . . Outside legal fees accrued by government agencies to defend the administration of Florida's Medicaid program for children: up to $94,000 a month. . . . Hourly billing rates for lawyers representing Fontainebleau Las Vegas Holdings in tumultuous federal bankruptcy proceedings: $370 to $700. . . . Those charges -- a glimpse at the current price tag for legal services in South Florida -- were found among more than 150 court filings and legal bills reviewed by the Daily Business Review in its fourth annual survey of lawyer compensation. [See the Daily Business Review's full coverage, Lawyer Compensation (registration required).]

UNITED STATES SUPREME COURT

Conservative, Liberal Groups Unite in Legal Fee Case at High Court

Marcia Coyle, The National Law Journal

10-13-09 -- An attorney fee case -- the first of two important fee challenges to be decided by the Supreme Court this term -- has created an unusual alliance among a host of public interest legal organizations spanning the political spectrum. . . . From the conservative Liberty Legal Institute in Texas to the liberal American Civil Liberties Union, the groups are backing Children's Rights Inc. in New York, in Perdue v. Kenny A., which the justices will hear on Wednesday. . . . The high court case asks whether an attorney fee award under a federal fee-shifting statute can ever be increased above the basic fee calculation because of the attorneys' outstanding performance and the results they obtained.

NEW YORK  

Firm Rebuffed on Bid to Recoup Costs of Failed Medical Malpractice Suit

Says judge in ruling: '[T]he following illustrates why members of the public may hold cynical views of the legal profession'

Noeleen G. Walder, New York Law Journal

10-12-09 -- A Manhattan judge has taken to task some well-known personal injury attorneys for what she called a "nonsensical and frivolous" bid to recoup the costs of an unsuccessful medical malpractice action. . . . "[T]he following illustrates why members of the public may hold cynical views of the legal profession," Supreme Court Justice Emily Jane Goodman began her ruling in Kremen v. Benedict P. Morelli & Associates, 101739/06. . . . Victoria Kremen underwent a double mastectomy after allegedly being misdiagnosed with breast cancer. She accused Morelli Ratner and the now defunct Schapiro & Reich of mishandling the action she brought against her doctors, a suit that was ultimately dismissed because the 2 1/2-year statute of limitations had expired.

GENERAL

$567 Million Fee Award Upheld in Fen-Phen Litigation

Shannon P. Duffy, The Legal Intelligencer

10-9-09 -- A federal appeals court on Thursday rejected challenges to the $567 million attorney fee award in the fen-phen diet-drug litigation, declaring that Chief U.S. District Judge Harvey Bartle III of the Eastern District of Pennsylvania had handled the massive case properly at every step. . . . "The amount of the award, though extraordinarily large, is not excessive in this extraordinary case," 3rd Circuit Judge Kent A. Jordan wrote. . . . Jordan found that Bartle "employed transparent procedures and undertook a thorough and proper analysis -- based on the appropriate information -- in determining the award." . . . The 64-page opinion by Jordan was fully joined by 3rd Circuit Judge Dolores K. Sloviter and partially joined by Judge Thomas L. Ambro. . . . Ambro wrote a partial dissent, saying he believed lawyers whose clients opted out of the settlement may have been treated unfairly in how much they were ordered to contribute to the fees of the class lawyers.

Cadwalader Slashes Billing Rates for Treasury Work

Jenna Greene, The National Law Journal

10-9-09 -- Cadwalader, Wickersham & Taft steeply discounted its billing rates for work on behalf of the Treasury Department related to the Troubled Assets Relief Program. . . . Documents obtained from the Treasury Department under a Freedom of Information Act request show that Cadwalader partners normally charge between $625 to $1,050 per hour. But for 500 hours of work advising the department on "highly complex bankruptcy issues in order to appropriately structure possible Treasury loans or to other investments in multiple large institutions," the price was $525 an hour. . . . Cadwalader associates who typically charge $310 to $575 an hour cost the government $287.50 per hour for 150 hours of work. Special counsel cut their rates to $440, down from $590 to $880 per hour, and performed 275 hours of work. Legal assistants were $125 per hour. The total contract, which was issued on Dec. 15, 2008, was worth $417,562.50. . . . According to the government, Cadwalader "expressly consented" to having its rates revealed. The other firms named in the FOIA request -- Simpson Thacher & Bartlett; Venable; Locke Lord Bissell & Liddell; and (now defunct) Thacher Proffitt & Wood -- claimed the billing rate information was exempt from FOIA because it was confidential commercial or financial information.

NEW JERSEY  

Lawyer Chided for Dragging Out Deal in Blue Cross Suit

Henry Gottlieb, New Jersey Law Journal

10-9-09 -- A federal judge on Wednesday accused a class action lawyer of trying to delay a settlement that helped nearly 600 eating disorder patients so he could pursue a fight with a co-counsel over shares of a $2.45 million fee award. . . . U.S. District Judge Faith Hochberg in Newark, N.J., told David Mazie of Roseland, N.J.'s Mazie Slater Katz & Freeman at a hearing that he put his own interests above "those of people who are dying" when he sought to make the division of fees an issue just before the preliminary settlement in January of a case against Horizon Blue Cross Blue Shield of New Jersey. . . . Then she scolded Mazie for denying the accusation. . . . The exchange took place near the end of an unusual hearing in which Hochberg gave Mazie and opponent Bruce Nagel, of Nagel Rice in Roseland, an opportunity to testify under oath and cross examine each other in the fee dispute that continues months after the underlying case settled. . . . It was like an exasperated parent ordering two children claiming the largest dish of ice cream to duke it out in backyard. In this case, Hochberg jumped into the fray and gave Mazie a few verbal shots to the head before dismissing both lawyers with a warning not to add their time at the hearing to their bills. . . . "Nothing in this discussion gets charged, that's for sure," she declared.

NEW YORK  

BigLaw Firm Sues Manhattan Celebrity
Watering Hole Over Unpaid Bills

By Nate Raymond | New York Law Journal | New York Lawyer

10-9-09 -- Baker & Hostetler has taken the owner of a New York bar frequented by celebrities to court seeking more than $307,000 in unpaid legal bills. The law firm last week sued former client Little Rest Twelve Inc. in Manhattan Supreme Court for failing to pay for work Baker & Hostetler did in the spring to fight off an injunction blocking the use of the name "Buddha Bar" at a restaurant it operates in the Meatpacking District. Little Rest in March fired Baker & Hostetler over its fees, with five partners billing at $475 to $950 an hour. ***** The fee suit is Baker Hostetler LLP v. Little Rest Twelve Inc., 650583/2009. The trademark suit is George V Restauration S.A. v. Little Rest Twelve Inc., 602309/2007. —

NEW YORK  

$586 Million Settlement Approved in IPO Case

Mark Hamblett, New York Law Journal

10-8-09 -- Southern District of New York Judge Shira A. Scheindlin gave her final approval Wednesday to an April settlement concluding eight years of litigation over inflated pricing and undisclosed compensation in initial public offerings during the technology boom. . . . The settlement, which involves a total of $586 million to end 309 coordinated class actions brought against investment banks and the companies they took public, was deemed fair by the judge. She also awarded Stanley Bernstein of Bernstein Liebhard and other plaintiffs lawyers one-third of the $510 million net settlement fund, or $170 million, in fees.

CALIFORNIA  

Court Tosses $400,000 Attorney Fee Award as Arbitrary

By a MetNews Staff Writer

10-7-09 -- The Sixth District Court of Appeal yesterday ordered reconsideration of an attorney fee and cost award representing less than one third of the $1.3 million requested by a San Jose lawyer and his wife in their action against their former general contractor. . . . In a 71-page ruling by Presiding Justice Conrad L. Rushing, the appellate panel said it could not determine that the award by Santa Clara Superior Court Judge William J. Elfving was adequate. While a trial judge does not need to explain his or her decision on a motion for attorney fees and costs, the justice emphasized, the award “must be able to be rationalized to be affirmed on appeal.” . . . As Rushing said he was “unable to surmise any mathematical or logical explanation” for the judge’s award to John Gorman and Jennifer Cheng, the panel reversed. . . . Gorman is the chief executive officer, chief financial officer, president, and secretary of Gorman & Miller PC, a small business law firm with offices in San Jose and Santa Monica. . . . He and his wife contracted with the Tassajara Development Corporation in 1999 to build them a $1.5 million  house in Los Altos Hills. . . . After the couple took occupancy of the home, Gorman and his firm filed suit on behalf of himself and his wife alleging defective construction. . . . Nearly three years later, Gorman and his wife entered into a global settlement with Tassajara and several other defendants. The settlement agreement provided that Gorman and his wife were to be deemed prevailing parties in the action for the purpose of invoking their right to recover attorney fees and costs pursuant to the terms of the construction contract. . . . Gorman ultimately requested attorney fees of $1,350,538.83 and costs in excess of $266,561.96. Over half of the requested attorney fees were billed by Gorman personally. . . . After a contested hearing on their motion, which lasted less than an hour, Elfving issued a 27-word order awarding “reasonable attorneys’ fees of $416,581.37 and reasonable costs of $142,432.46.”

NEW YORK  

Graubard, Lawrence Estate Begin Trial on $42 Million in Legal Fees

Nate Raymond, New York Law Journal

10-7-09 -- The widow of a New York real estate tycoon was "spacey" and "not fully aware" when she agreed to a 40 percent contingency fee with her lawyers at Graubard Miller, an attorney for her estate argued Monday. . . . A lawyer for Graubard countered that Alice Lawrence was in full possession of her faculties and that she had suggested the fee arrangement for the skillful attorneys who represented her. . . . Lawyers for the estate of Lawrence and Graubard Miller made opening arguments during the first day of trial before Howard Levine, the retired New York Court of Appeals judge acting as referee in the dispute in Manhattan Surrogate's Court. Graubard Miller argues Lawrence's estate owes it $42 million for a $104.8 million settlement obtained less than five months after switching from hourly billing to a contingency fee arrangement.

KENTUCKY  

Lawyers billed library $210,000 during spending inquiries

By John Cheves - Kentucky.com 

10-5-09 -- Private lawyers billed the Lexington Public Library about $210,000 this year as it faced scrutiny over its spending from the Lexington Herald-Leader, city auditors and its own board of trustees. . . . The law firm Stites & Harbison charged the library to respond to the newspaper's Open Records Act requests, answer a reporter's questions, review documents taken by city auditors and interview the library's staff about spending, among other tasks, according to billing records. . . .In April, the Herald-Leader detailed more than $134,000 in spending by then-chief executive Kathleen Imhoff on travel, meals, gifts and other items over five years, with little oversight. Most of the library's $15 million annual budget comes from Fayette County property taxes.

NEW JERSEY  

Local Lawyer Wins $100 Million Verdict, But Doesn't Expect to Collect a Cent

By Henry Gottlieb | New Jersey Law Journal | New York Lawyer

10-5-09 -- Cherry Hill, N.J., lawyer Benjamin Folkman won a $100 million personal injury verdict Thursday, but he doesn't expect to collect a penny of it. . . . He convinced an Atlantic County jury to award the sum — plus $250,000 in punitive damages — in a suit against a convict who is serving a life sentence for two murders in January 2001. Brian Wakefield stabbed Richard Hazard to death in Hazard's home in Pleasantville, doused the body with gasoline, beat the family dog and killed Hazard's wife when she came home. His death sentence was commuted in 2007 after the state abolished capital punishment. . . . The Hazards' five children decided to proceed with a liability suit against Wakefield, even though they knew he had no assets.

NEW YORK  

Trial to Begin Over Alleged 'Unconscionable' $42 Million Contingency Fee

Nate Raymond, New York Law Journal

10-5-09 -- A trial over whether Graubard Miller is entitled to a $42 million contingency fee from the estate of the widow of a real estate tycoon is set to begin today in Manhattan. . . . The trial, before Howard Levine, the former New York Court of Appeals judge serving as referee for Acting Manhattan Surrogate Troy Webber, will be the latest phase of a four-year litigation between the firm and its former longtime client, Alice Lawrence. . . . Lawrence refused to pay Graubard attorneys what her estate called an "unconscionable" $42 million after the firm in 2005 won a $104.8 million settlement just four months after agreeing to switch to a contingency fee after two decades of billing hourly rates. . . . Lawrence died in February 2008. Levine last month said in a referee's report that evidence presented by both sides raised material questions as to the value of Graubard's services and whether medical problems suffered by Lawrence interfered with her ability to understand the agreement she was signing. (Read the referee's report (pdf).)

September 2009

GENERAL

Clients Sued by Firms for Fees Retaliate With Malpractice Suits
Jordana Mishory, Daily Business Review

9-30-09 -- Fort Lauderdale, Fla., law firm Rothstein Rosenfeldt Adler says it "dedicated numerous hours in the pursuit" of justice for an education services company in a series of multimillion-dollar lawsuits filed around the country that alleged fraud, racketeering, defamation and legal malpractice. . . . The client was Whitney Information Network, which invested in a Panamanian company that owns and operates a Costa Rican hotel resort. Whitney alleges fellow shareholders, lawyers and contractors worked to wrench away its ownership stake. It filed suits in New York and Florida federal courts and was sued in Maryland. . . . Nearly three years after the litigation started, Whitney and a subsidiary are facing another lawsuit -- over unpaid attorney fees. . . . Rothstein Rosenfeldt Adler asserts the Whitney companies failed to pay legal bills totaling more than $400,000.

TEXAS  

Contingent Fee Spurs Suits by Exonerated Man and His Former Lawyer

Mary Alice Robbins, Texas Lawyer

9-29-09 -- A Dallas County man exonerated in 2008 has sued his former lawyer alleging that the contingent-fee contract under which the lawyer seeks about $1 million of the more than $4 million the state is expected to pay the exoneree is "unconscionable." But the lawyer has fired back, filing a suit of his own. . . . On Sept. 17, exoneree Steven Phillips sued his former attorney Kevin Glasheen and the Lubbock, Texas, firm of Glasheen, Valles, Inderman & DeHoyos in the 95th District Court in Dallas. In his original petition in Phillips v. Glasheen, et al.,Phillips alleges that Glasheen and his firm performed no "meaningful legal services" for Phillips before he terminated them on Sept. 16. [See the petition (pdf).] . . . Randy Turner, Phillips' attorney and a partner in Turner & McKenzie in Hurst, Texas, says he is unaware of any legal services that Glasheen did for Phillips. . . . In his petition, Phillips asks the court to declare Glasheen's fee "unconscionable, and thus unenforceable."

GENERAL

Citigroup GC Has No Sympathy for Law Firms Seeking Premium Fees

By Debra Cassens Weiss, ABA Journal

9-28-09 -- The general counsel for Citigroup says his in-house legal department has been battered by the economic downturn, leaving him with little sympathy for law firm arguments for premium fees. . . . General counsel Michael Helfer, a panelist at an event sponsored by Bisnow, said Citigroup’s in-house legal department has shrunk by about 300 employees over the last few years, many of them felled by layoffs, according to the Washingtonian’s Capital Comment Blog. Compensation for the lawyers who are left has been cut by up to 60 percent. . . . In such an environment, “The amount of sympathy I have for the argument that $1,000 an hour is a reasonable rate ... is nil,” Helfer said, according to the blog account.

American Lawyer Student Edition Preview: Cutting Law School Debt

Posted by Matt Straquadine, The Am Law Daily  

9-28-09 -- The article below appears in the Fall 2009 issue of The American Lawyer Student Edition. The full issue will be available on September 29 at www.americanlawyerse.com. . . . The average law student who graduated from a private university in 2008 borrowed more than $91,500 on the way to earning that degree, according to the nonprofit Equal Justice Works. . . . Combine that with leftover undergraduate debt and the shrinking job market, and you've got a surefire recipe for postgrad financial fright. In a sharp departure from recent history--when students coming out of even mid-tier schools could count on commanding six-figure salaries upon graduating--law school debt is now a heavy burden.

OHIO  

State to slash lawyers' pay from crime-victims fund

Advocates fear difficulty getting legal help in abuse cases

By Holly Zachariah, The Columbus Dispatch

9-28-09 -- Victims' advocates and some attorneys say a reduction in the amount the state reimburses lawyers for work in abuse cases will make it more difficult for victims to get protection orders, especially in rural areas. . . . But Ohio Attorney General Richard Cordray says he had no choice but to rein in reimbursements from the state's rapidly dwindling Crime Victims Compensation Fund. . . . A civil protection order is often the first step in a suspected abuse case. A victim can ask a judge to take such action as removing an abuser from a home or establishing temporary custody. A court appearance almost always is required. . . . Until now, the state reimbursed lawyers at a rate of $150 an hour for court and for travel time for work representing victims in such cases. The state paid $1.32 million to lawyers in 2008, with nearly half of that money going to just five attorneys or law firms. . . . Beginning Oct. 1, that rate will be $60 an hour for court work and $30 an hour for travel, the same as attorneys have always received for helping crime victims fill out compensation claims for missed work, medical bills and other expenses stemming from crimes.

FLORIDA  

Judge issues ruling on legal fees in Venice Sunshine case

By Kim Hackett, Sarasota Herald-Tribune.

9-25-09 -- Ending 16 months of litigation, Circuit Judge Robert Bennett ruled that the city of Venice has to pay open government suit plaintiff Anthony Lorenzo's attorneys $750,000. . . . Bennett did not grant Lorenzo's attorneys a multiplier that could have raised legal fees past $2 million. He also did not grant about $200,000 in attorneys fees for the three months attorney Andrea Mogensen and her legal team prepared to fight about fees, saying there was no precedent. . . . The cost to taxpayers was about ten times more than what the city attorneys argued they should be and three times more than what the case could have settled for last fall. . . . Bennett rebuffed the city's arguments that Lorenzo's attorneys derailed a settlement and "churned" the case to drive up legal costs.

DISTRICT OF COLUMBIA  

D.C. Court of Appeals Details Rules for Escrowing Up-Front Legal Fee

By Martha Neil, ABA Journal

9-24-09 -- In one of the few decisions that addresses the proper handling of legal fees paid up front by the client before they are earned, the District of Columbia Court of Appeals held that they should be escrowed in the attorney's trust account—and explains the rules for doing so. . . . At issue in the attorney discipline case filed against D.C. solo practitioner Robert Mance III was a criminal defense matter he agreed to handle for a flat fee of $15,000, with an upfront payment of $7,500. A three-judge appellate panel held that Mance, who was not immediately able to return the money when the matter concluded before much work was done, should be censured, reports the Blog of Legal Times.

TEXAS  

Exonerated man fights $1 million payout to lawyer

By Mitch Mitchell, Fort Worth Star Telegram

9-23-09 -- A man freed from prison by DNA evidence has asked a judge to stop his former lawyer from taking more than $1 million in fees out of his expected $4 million in state compensation. . . . Lawyers for Steven C. Phillips, 51, filed a petition in state district court in Dallas asking the judge to declare an agreement with his former lawyer "unconscionable and thus unenforceable." . . . That contract with his former lawyer obligated Phillips to give up one-fourth of his award from the state for the 24 years he spent incarcerated for a string of sexual assaults the courts now say he did not commit. . . . "I’ve got kids and grandkids out here," Phillips told the Star-Telegram. "That’s what I’m fighting for now. I’ve seen a lot of unfairness in my life. If now I get a chance to stand up against some of that unfairness, well I’m going to." . . . Phillips’ previous attorney, Kevin Glasheen, said he and his firm worked on behalf of Phillips and nearly a dozen other exonerees to win increased payments from the state in exchange for a cut of the proceeds. He said his firm worked diligently to increase the payments by steering a new bill through the Legislature.