CALIFORNIA ATTORNEY'S FEES

For Our Venerable Readers

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Happy New Year 2010 from Mike and Marc

A Happy, Healthy and Prosperous New Year to All Our Readers . . .

 

Mike, Marc, and Irving Wish Our Readers Happy Holidays

 

 

 

Three-Fer From Recent California And ABA Monthly Magazines/Papers

 

No. 1: Ellen Peck Reviews “Fees, Fee Agreements & Arbitrations” in December 2009 Edition of CALIFORNIA BAR JOURNAL.

     Ellen R. Peck, an Escondido sole practitioner and former State Bar Court judge, made these points in her recent California Bar Journal article:

• Except in limited circumstances, most private attorneys have to notify clients they do not carry legal malpractice insurance or that it has lapsed/been terminated (Cal.Rule Prof. Conduct 3-410);
• Incentive awards to class action representatives are discretionary and should not be a bargain point in a fee or retainer agreement (Rodriguez v. West Publishing Corp., 563 F.3d 948, 958-959 (9^th Cir. 2009));
• Interest calculations for collecting attorneys must be based on a 365 or 366 day year, not a 360 year, under penalty of being a False Advertising Act violation (Karton v. Dougherty, 171 Cal.App.4^th 133, 138 n.1 (2009));
• A retainer agreement’s predispute agreement for binding fees/costs arbitration is enforcement after Mandatory Fee Arbitration Act requirements are exhausted, with the State Bar website having a good sample form for such an arbitration clause (Schatz v. Allen Matkins Leck Gamble & Mallory LLP, 45 Cal.4^th 557, 574-575 (2009));
• A lawyer must consider withdrawing from representation or making disclosures to clients if he/she contemplates including a Civil Code section 1542 waiver in a settlement agreement with a client over a fee dispute, based on the legal malpractice waiver repercussions flowing from the release (State Bar Standing Comm. on Prof. Responsibility & Conduct Formal Opinion No. 2009-178)); and
• Lawyers are generally prohibited from charging, collecting, or receiving any advance fees or other compensation in connection with loan modification legal services (Bus. & Prof. Code, sec. 6106.3(a); Civ. Code, sec. 2944.6).

No. 2: Hon. Edward G. Weil Indicates Prior Settlement Communications In Fee Disputes May Be Admissible in His Article, “Are Settlement Talks Confidential?”, Published in the December 2009 Edition of CALIFORNIA LAWYER.

     Hon. Edward G. Weil, a Contra Costa County Superior Court Judge and former California deputy attorney general, cautions that prior settlement communications may be admissible in fee dispute litigation, especially private attorney general fee hearings, fee “catalyst” cases, and ambiguous settlement agreement disputes. He also has a nice compendium about the confidentiality and admissibility of settlement discussions in other contexts.

No. 3: Four Substantive Legal Practice Areas Dominate Malpractice Claims Since 1985, Reports James Podgers in “Practice Pitfalls,” Found In the December 2009 Edition of the ABA JOURNAL.

     The ABA Journal article confirms that, between 1985 and 2007 (based on information published in the ABA Standing Committee on Lawyers’ Professional Liability’s annual Profile of Legal Malpractice Claims), four practice field areas have been and still are at the top of the list: plaintiffs personal injury; real estate; family law; and estate, trust and probate. The percentage of all claims reported in the ABA study for 2007 in these top four practice fields break down this way:

• Plaintiffs personal injury – 21.56% (pretty steady, with 21.65% in 1995);
• Real estate – 20.05% (up the most in the top 4, with 14.35% in 1995);
• Family law—10.33% (up slightly, with 9.13% in 1995); and
• Estate, trust and probate – 9.68% (up some, with 7.59% in 1995).

Off Topic: Co-Contributor Marc’s Chicks … They May Now Be “Pullets.”

     Because co-contributor Mike does not want to quit the blog over Marc’s new pets (two chicks), he thought it better to give you an update instead.

     The chicks may now be at a more advanced stage such that they are more accurately characterized as “pullets.” Anyone other than farmers know what this means?

     A pullet is a young, domestic hen, usually under one year of age. The word comes from the old French word “poulet” or the Latin word “pullus,” meaning a young bird. This should be contrasted with a “biddy” or “hen,” which means an adult female chicken.

     However, there is a more sinister secondary definition that we hope does not apply. Some sources classify pullet as the “flesh of a medium-sized young chicken suitable for frying.”

     In any event, Marc will either be having great omelets or a nice chicken dinner.

                         I wonder what chicken tastes like?

Update to Contributors Page

Full Disclosure Compels Inclusion of Additional Pets.

     Co-contributor Mike pointed out that our contributors page failed to disclose the recent addition of some pets to Marc's household, and precipitously threatened to end his participation in this blawg unless the disclosures were updated for the benefit of our audience.  Therefore, the contributors page has been updated, and our readers can now see photos of Ampersand (&), Arroba (@), and two chicks (Mole and Kung Pao). 

California Appellate Courts: A New Survey Suggests Reversals Are “On The Rise” In Intermediate Courts of Appeal

Professor Uelmen’s Latest Survey Shows A Rise in Reversals.

     In the September 2009 issue of the California Lawyer, Professor Gerald F. Uelmen talks about the recent trends in California Supreme Court decision making, doing so in an article wickedly entitled “Too Much Togetherness?” Beyond this main topic, Professor Uelmen also has an interesting survey for the 2004-2009 period concerning affirmance rates for both the California Supreme Court and the various California Courts of Appeal. We thought we would share some of the findings with you. However, he basically concludes that there is a significant variance in affirmance rates among the various intermediate courts, while the overall affirmance rate by the Supreme Court has held somewhat steady.

     The overall affirmance rate for all cases during 2004-2009 for the California Supreme Court was 41.5%, a slight decline from the 45.9% rate for the earlier 1996-2004 survey period. (Professor Uelman observed that there was little difference between the affirmance rates for civil and criminal cases.)

     However, the real variance occurred among the District Courts of Appeal (in appellate parlance, the DCAs). We will keep to an examination of affirmance rates in civil cases.

• The Second District, Division 1 had the lowest overall affirmance rate, clocking in at 17% for 2004-2009 (compared to a 40% rate for 1996-2004).
• The honor for highest affirmance rate in the Second District went to Division 8, which had a 71% rate for 2004-2009 (which had no prior comparison rate because it was created in 2000).
• Overall, however, the winner of the highest affirmance rate went to our local Fourth District, Division 3 Court of Appeal, which had a 73% rate during 2004-2009 (as compared to a 22% rate in 1996-2004). Professor Uelman attributed this to significant turnover in the Santa Ana court between the two periods, positing that the new lineup has a closer affinity with the “Ron George” Supreme Court.

     Also, the Sixth District had the next lowest affirmance rate of 18% for 2004-2009 (as compared to a 38% rate for 1996-2004). After the Fourth District, Division 3 and the Second District, Division 8, the third highest affirmance rate went to the First District, Division 5, which had a 64% affirmance rate during 2004-2009 (up from a 42% rate during 1996-2004).

We Wish our Readers a Happy and Safe 4th of July

"Boo To Billable Hours" Available On-Line

 

From Innovation to Albatross.

     Our readers will know from our posts (January 7, 2009, February 1, 2009) that the concept of the billable hour is under attack by some lawyers and clients.  Fellow blawger, attorney John Derrick, has written an interesting book entitled "Boo to Billable Hours."   He has traced the history of the billable hour from the early 20th century, when it was initiated by the legal reformer Reginald Heber Smith, to its presented contested status.  Along the way, John Derrick asks what is wrong with the billable hour, why there is so much inertia to change, and whether there are better alternatives -- and he has constructive suggestions.  The book can be purchased from Amazon, or viewed on-line for free.  Check it out.

California Attorney's Fees Welcomes Appellate Lawyer John Derrick's Monthly Musings to the Blogosphere

Appeals Lawyer Blog Now Includes Monthly Musings Feature

     Certified Appellate Specialist John Derrick has added a "Monthly Musings" feature to his blog.  His first monthly musing is entitled, "Why do lawyers use 'Esquire?'".  Our article for California Litigation, "When the American Rule Doesn't Apply:  Attorney's Fees as Damages in California Litigation", was edited by John, who serves on the Editorial Board of the publication.  Mike and Marc look forward to reading John's elegant musings every month.

Arbitration Fee Award: Plaintiff Winning $4.1 Billion “Prove-Up” Arbitration Award Obtains $633,450 In Attorney’s Fees

Arbitrator Enhances Plaintiff’s Lodestar by 3.0 Multiplier.

     We give thanks to Cal Biz Lit, who in his June 16, 2009 post described a “prove-up” arbitration award of $4.1 billion stemming from a very unusual lost commission dispute. He notes that the award was confirmed as a judgment by the Los Angeles County Superior Court on May 28, 2009. See Chester v. iFreedom Communications Incorporated, et al., LASC Case No. BC353567 (with a copy of the judgment and arbitration award available from the Cal Biz Lit post).

     So, what attorney’s fees were awarded in this eye-popping award? Retired Orange County Superior Court Judge William F. McDonald, who is affiliated with JAMS, awarded lodestar amounts of $178,750 to one attorney and $32,400 to another attorney under various Labor Code fee-shifting provisions. Arbitrator McDonald then enhanced the lodestars by a 3.0 multiplier, which took the total fee award to $633,450.

     Interestingly enough, guess what the daily post-judgment interest is on the total judgment? Believe it or not, $1,125,159.97 per day!

     Although we co-contributors usually do not comment on the merits, it does appear that the fee award was well within the realm of reasonableness.

     BLOG UNDERVIEW—Although common lore among attorneys has it that arbitrators seldom award punitive damages, that folk wisdom did not hold up in this case. Arbitrator McDonald awarded $2,926,276,674.27 in punitive damages to plaintiff.

Plaintiffs’ Class Action Attorneys Seek $23.5 Million In Fees and Costs In Orange County Register Carrier Settlement

Register Claims Plaintiffs’ Attorneys Are Seeking About $10 Million More Than They Agreed to Claim.

     In our December 1, 2008 post, we summarized a settlement reached between a plaintiff class and The Orange County Register in an Orange County Superior Court complex case pending before Superior Court Judge David C. Velasquez. The case primarily involved newspaper carrier claims that they were effectively employees who had not been granted paid certain wages and other benefits owed to them. In the settlement as reported by the press, the plaintiff class agreed that the Register would pay carriers up to $22 million and their attorneys up to $14 million (inclusive of $2 million in costs).

     Now, an imbroglio is brewing over the plaintiffs’ fee request, scheduled for hearing on June 25, 2009 before Judge Velasquez.

     Plaintiffs’ lead counsel Daniel Callahan has upped the fee/costs request to $23.5 million, which is 160% of the monetary settlement to the carriers. The Register was not amused, opposing the fee request as “an unabashed embrace of avarice” and a renege on the prior fee cap deal forged in the settlement. Register’s lead attorney Thomas Nolan also stated that plaintiffs’ counsel “shamelessly asks this court to sanction an award that is $7 million more than the [plaintiffs] will receive and $10 million more than plaintiffs’ counsel had assured [the paper] that they would request.”

     Mr. Callahan defended his increased fee request on numerous grounds: the lawsuit protected the public from orders by the Register that carriers drive on the wrong side of the road; he won working condition improvements for current carriers; and his firm waged an “underdog” fight against a defendant that he characterized as a consummate “obdurate defendant” that “stonewalled the plaintiffs at every turn.”

     Mr. Nolan argued that $3.7 million would be a reasonable fee, and that plaintiffs’ fees should be reduced to deter lawyers from making future unreasonable demands.

     For more details on this brouhaha, see John Gittelsohn’s article “Attorney seeks $23.5 million for waging suit against the Register,” which was printed in the June 15, 2009 edition of The Orange County Register (and also available for reading at its website).

Attorney’s Fees In the News …. Al Franken Is A Little Richer From Award in U.S. Senate Race Lawsuit

Minnesota Intermediate Appellate Court Orders $95,000 Paid to Well Known Saturday Night Live Cameo Performer.

     Al Franken, a well-known guest performer on Saturday Night Live, ran for a U.S. Senate post against Norm Coleman. A Minnesota appellate court found that Mr. Franken had received 312 more votes than Mr. Coleman in last November’s election, a determination being appealed to the Minnesota Supreme Court.

     Recently, the Minnesota court ordered Mr. Coleman to pay Al $95,000 in fees (out of his original $160,000 request) related to Coleman’s lawsuit over the still-unresolved Senate race. Coleman had asked the three-judge panel to delay a decision on the cost reimbursement until the Minnesota Supreme Court finishes its review, a request that apparently was nixed.

      Because we are scrupulously non-partisan, we quote news correspondent Emily Litella:  "Never mind." 

     For more on this story, see Elizabeth Stawicki’s June 10, 2009 story available for reading at minnesota.publicradio.org.

Attorney’s Fee Awards And Fee Requests In The News … Redwood City Gets Tagged, E*TRADE Financial Will Seek Large Fees, and Bluetooth Class Action Plaintiffs’ Lawyers Seeks Fees Drawing Numerous Objections

Redwood City Assessed About $260,000 Under Private Attorney General Statute.

     Redwood City lost a CEQA challenge by local attorney Joe Carcione (son of Joe Carcione, the Green Grocer) who sued arguing that the EIR

was inadequate for the “Downtown Precise Plan,” a plan with a vision for up to 2,500 new high-rise housing units in a pedestrian-friendly shopping district of the City. Specifically, San Mateo County Superior Court Judge Marie Weiner ruled that (1) the EIR failed to have a “shadow study,” i.e. examining whether allowing buildings up to 12 stories high could cause shadowing on shorter downtown buildings (including Mr. Carcione’s law offices); and (2) the City inadequately studied how historic buildings in downtown Redwood City might be impacted by a development swell.

     Mr. Carcione apparently moved for attorney’s fees under California’s private attorney general statute, Code of Civil Procedure section 1021.5, asking for reimbursement of his full $350,000 in legal fees. On May 28, 2009, Judge Weiner awarded Mr. Carcione $260,000 in fees, apportioning out the fees for the “shadow study” issue (because his law offices had a personal stake in the issue) and awarding full fees for the historic resources issue (because he had no personal stake in defending this issue).

     Redwood City had paid an outside attorney about $107,000 over three years to defend it in the Carcione suit. It has been projected that redoing the plans for the project with the help of outside consultants may cost roughly $250,000. Adding all these expenses (plus the fees award to Mr. Carcione), the Downtown Precise Plan will cost more than $600,000 just for litigation-oriented fees and redo costs.

     For more information on this situation, see Shaun Bishop’s story, “Redwood City’s tab for defending flawed downtown plan grows,” which was posted on June 4, 2009 at the San Jose Mercury News website.

             Library of Congress photograph.  The Courthouse, Redwood City.

E*TRADE Financial Will Seek Large Fees After Winning Over $18 Million In Contractual Breach/Interest Damages.

     Following a three-week bench trial before United States District Judge Robert Sweet of the Southern District of New York federal court, E*TRADE Financial Corporation was awarded over $18 million in contractual breach damages and prejudgment interest in a four-year lawsuit against Deutsche Bank AG.

     Importantly, the district judge ordered Deutsche Bank to pay E*TRADE attorney’s fees in an amount to be determined in a postjudgment proceeding.

     We will keep you apprised on the fee proceeding in this case—although it is likely to be large.

Bluetooth Headset Proposed Class Action Settlement Draws Lots Of Objections When Class Attorneys Seek Over $800,000 Even Though Class Members (Other than Representatives) Receive No Payout.

     In In re Bluetooth Headset Products Liability Litigation, Case No. 2:07-ML-01822-DSF-E (C.D. Cal., assigned to U.S. District Judge Dale S. Fischer), seven law firms represented plaintiffs in a putative class action over economic losses purportedly caused by inadequate warnings of the need for volume control in Bluetooth headsets.

     The law firms, on behalf of the class, seek to obtain final approval to a proposed, pre-certification settlement in which nothing will be paid to the absent class members, $800,000 will be paid to the class attorneys, $100,000 paid to charities that are neither class members nor have suffered any injuries, and $12,000 will be paid to the representative plaintiffs. Also, class members retain the right to pursue claims for physical injury and the right to seek future injunctive relief, with defendants apparently making their use warnings more definite in nature.

     This proposed settlement has drawn a firestorm of protests from many, many objectors. Based on several cases from different federal appellate courts, objectors have argued that the proposed settlement is essentially “self dealing”—either a “sellout” of the attorneys’ and class representatives’ fiduciary duties to the class or a mertiless lawsuit brought to only obtain leverage for the representatives’ benefit. See, e.g., Murray v. GMAC, 434 F.3d 948, 952 (7^th Cir. 2006); Mirfasihi v. Fleet Mortgage Corp., 356 F.3d 781, 785 (7^th Cir. 2004); Crawford v. Equifax Payment Services, Inc., 201 F.3d 877 (7^th Cir. 2000); Molski v. Gleich, 318 F.3d 937, 953 (9^th Cir. 2003).

     The fairness hearing on the proposed settlement and objections is slated for July 6, 2009.

     If you would like to see a representative objection, see Ted Frank’s objection referenced in a post of his at overlawyered.com.  Mr. Frank is a resident fellow at the American Enterprise Institute and a frequent contributor to overlawyered.com.

 

Fees In The News …. Alhambra Police Officers Association Seeks Fee Award Of $40,000 For Successful Restraining Order

Fee Hearing Is Set for June 26, 2009.

     In October 2008, the Alhambra Police Officers Association brought suit to obtain a temporary restraining order to prevent officers from having to attend an October 18 “block party” for Councilman Gary Yamauchi (who was re-elected a month later in November). The Association did obtain a restraining order and then dropped the lawsuit given that the officers apparently opposed Mr. Yamauchi’s candidacy.

     Now, at a hearing set for June 26, 2009, the Association is asking the court to order the City of Alhambra to pay $40,000 in attorney’s fees that the Association spent on the lawsuit.

     Earlier in 2009, the City settled with 40-50 police union members, agreeing to pay them wages for “donning and doffing” (the time spent on for putting on police equipment before coming to work) and about $2,500 each in back pay.

     For more details on the Association-Yamauchi re-election events, see Alfred Lee’s story, “Alhambra police union seeks attorneys fees from lawsuit,” which was posted on May 31, 2009 and available for reading at pasadenastarnews.com.

Some Historical Trivia . . . In Pro Per Protections Go Back To English Statutes Enacted During Reigns of Henry VII And Henry VIII

Indigency Protections Go Way Back.

     Yesterday, we did a post on Garcia v. Santana, an interesting Second District decision that held that financial condition was a factor to consider when awarding fees under Civil Code section 1354(c), a fee-shifting statute under the Davis-Stirling Act.

     Here is some trivia for you history buffs out there.

     Indigents’ rights of access to the courts go back to English days. Specifically, a statute passed under the reign of King Henry VII in 1495 provided for waiver of pretrial fees and costs with respect to indigents. Later, under the reign of Henry VIII, another statute was enacted that provided relief from automatic payment of costs of the opponent should the indigent litigant lose. The 1495 statute is even quoted in full in Justice Johnson’s concurrence in Baltayan v. Getemyan, 90 Cal.App.4^th 1427, 1437-1438 (2001).

     Interestingly enough, Justice Johnson in Baltayan concluded that “access trumps comfort,” meaning that the scales of justice had to tip in favor of indigent access to the courts. In Garcia, Acting Presiding Justice Woods penned his own concurrence expressing discomfort with the breadth of this conclusion by Justice Johnson. Justice Woods cited vexatious litigant countervailing protections as a basis for his discomfort with the breadth of the bright line rule endorsed by Justice Johnson in Baltayan.

 

                          Henry VII (left, attributed to Michael Sittow).  Henry VIII (right).

                          (Wikipedia).

Diocese Fee Battle Ends . . . Fees Denied Because SLAPP Motion Was Not Frivolous

 

Orange County Superior Court Judge Colaw So Rules.

     In our May 4, 2009 post, we discussed a fee battle brewing in Orange County Superior Court after St. James Church’s SLAPP motion eventually lost in a case against the Episcopal Diocese of Los Angeles. That battle has now taken place so that we can report the result.

     Code of Civil Procedure section 425.16(a)(3) provides that the court must award reasonable attorney’s fees and costs to a plaintiff beating a SLAPP motion but only if the motion to strike was frivolous or solely intended to cause unnecessary delay. Diocese sought fees from St. James and certain volunteer directors under this provision.

     Diocese did not prevail. On May 15, 2009, Orange County Superior Court Judge Thierry P. Colaw denied the Diocese’s fee motion. Although the SLAPP procedure had never before been used in a church property dispute, Judge Colaw ruled that the motion was not frivolous, and had been brought in good faith by experienced and well-qualified defense counsel. In his tentative, Judge Colaw rhetorically asked whether the case could be considered to be frivolous when the underlying motion was granted, given that the Court of Appeal issued a 70-page opinion explaining its holding and the California Supreme Court granted review (which only happens to resolve unsettled issues of law) and explained its ruling in a lengthy opinion after consideration of numerous amici briefs for both sides.

     For more details on this proceeding, see “Superior Court Denies Episcopal Diocese’s Motion For Attorneys’ Fees,” posted May 15, 2009 by Karen Bro on the St. James Anglican Church website.

        Jerusalem.   The Anglican Church.  Library of Congress.

Attorney’s Fees In the News …. Newport Beach Police Sgt. Neil Harvey’s Hearing For Payment Of $2.14 Million In Requested Fees Will Occur in June 2009

His Attorneys Are Seeking a $1 Million Lodestar Plus a Multiplier.

     According to a May 14, 2009 article by Joseph Serna in the Daily Pilot, civil attorneys representing Newport Beach police Sgt. Neil Harvey, who obtained a favorable civil rights award of $1.2 million from a jury earlier this year, will be moving for $2.14 million in fees from the City of Newport Beach, CA sometime in June 2009. The fees totaled more than $1 million, but they are seeking twice that based on a multiplier request.

     So, stay tuned in June 2009, when we report back on how he did on the motion.

May 2009 Issue of The American Lawyer Has Two Articles of Interest

Rules of the Road For Creating Alternative Fee Arrangements Versus Pure Hourly Rates.

     Peter D. Zeughauser (formerly with The Irvine Company) is now a consultant who frequently writes about client-attorney fee arrangements. In his article “Alternative Reality” (pp. 75-76), he offers these “rules of the road” for creating an intelligent alternative fee structure:

• Understand each other’s position;
• Follow the money (flat rates work best for “cost pool” cases and contingency fees work well for “results pool” cases);
• Avoid windfalls;
• Share the risk—and the rewards (hybrid fee arrangements often do this);
• Avoid capped fees; and
• Always have a reopener.

2008 Shows Attorneys Are Also Impacted by the Economy.

     In a special report entitled “The Party’s Over” (pp. 105-186), The American Lawyer reported that 2008 was one of the worst years for the top 100 American law firms surveyed in the report. Average revenue per partner decreased 1%, while average head count rose 4.5% (which outpaced average gross revenue growth of 4.1%). Average 2008 compensation for all partners in the top 100 slipped 4.2% (however, don’t feel too sorry, because that amounted to $960,976). The biggest slips hit well-known New York firms (with 7 out of the 10 biggest decliners being venued there), with Washington, D.C. having 5 out of the top 10 revenue-per-lawyer gainers for 2008.

     BLOG BONUS COVERAGE—Jill Redhage, Daily Journal Staff Writer, has written an article in the May 13, 2009 Los Angeles Daily Journal—“Legal Work Drops Sharply in L.A., Not S.F.—in which she confirmed the downturn in most California legal markets. Based on the Hildebrandt Peer Monitor Economic Index released May 10, 2009, demand for legal services in San Francisco in the first quarter 2009 only dipped 1.2% from the same time frame in 2008, while demand dropped 8.2% from the prior 2008 first quarter in 33 legal markets worldwide. How did other well-known U.S. or English cities do? They all dipped on the demand side in first quarter 2009 versus first quarter 2008 as follows: New York—9.5% decrease; Washington, D.C. and London—12% decrease; Chicago and Los Angeles—8% decrease. The main bright spot was bankruptcy work, which was up 13.2% first quarter 2009 as compared to the first quarter 2008.

M & M Are Quoted in May 11, 2009 Daily Journal Article Concerning Attorney's Fees

Article by Daily Journal Staff Writer Dhyana Levey is Entitled "Students May Have to Pay Attorney Fees After Losing ADA Lawsuit".

     Calattorneysfees co-contributors Mike Hensley and Marc Alexander are quoted in today's Daily Journal regarding attorney's fees issues in a lawsuit brought by students with learning disabilities against the Association of Medical Colleges to get extra time to take the MCAT.    The students, who were awarded more than $2 million in attorney's fees in the trial court, have been dealt a reversal of fortune, and now face potential exposure to attorney's fees. 

     As we celebrate the first year anniversary of our blog, we note that we are being contacted with increasing frequency by the press to comment on attorney's fees issues.

Happy First Birthday ….. To Us!

     Believe it or not, we have been doing this blog for one year now, beginning with our inaugural post on May 11, 2008.

     We would like to thank our readers and fellow bloggers, many of whom were nice enough to offer tips, provide us leads on cases or topics to discuss, or “hat tip” us on cross-over issues. Hope we have been of some use to all of you in the blogosphere!

 

Attorney’s Fees In the News … Guardian Battle For Octuplets And Weiss-Trutanich L.A. City Attorney Campaign Battle

Nonprofit Group Files Suit For Guardian Appointment Over Suleman Octuplets.

     The Suleman octuplets have gotten a lot of press. Well, recently, a nonprofit group (A Minor Consideration) has filed suit requesting appointment of a guardian to steward the money generated by the octuplet twins borne to Octomom Nadya Suleman.

                     Dionne quintuplets ca. 1934.  Wikipedia.

     The nonprofit group—formed by Paul Petersen, a former child actor on “The Donna Reed Show” (a group advocating for children in the entertainment business)—tapped attorney Gloria Allred to file the Orange County Superior Court action. The primary basis for the suit is the fear that the money generated from revenue-generating publicity actions would not be used for the benefit of the octuplets. It is an unusual action, because most guardianship proceedings are brought by parties with closer ties to the children.

     Any attorney’s fees from the suit would be paid from the children’s estate if the court determines that a benefit was conferred from the guardianship.

     For more details on this action, see Bethania Palma Markus’ May 4, 2009 article “Gloria Allred files suit on octuplets’ behalf”. (Also, it is a little unclear from the article whether Mr. Petersen or his nonprofit group is suing, so we apologize if we got it wrong!)

     BLOG TRIVIA—Who did Mr. Petersen play on “The Donna Reed Show”? Answer: Jeff Stone, the youngest son of the Stone family. By the way, the show ran for eight seasons between 1958-1966. (For some of us, brings back memories, doesn’t it?)  Click here to hear Paul Petersen sing, "My Dad."

L.A. City Attorney Battle Spotlights Possible Hiring of Outside Counsel From Candidates’ Affiliations With Prior Firms or Clients.

     Westside councilman Jack Weiss and defense lawyer Carmen Trutanich are campaigning for the Los Angeles city attorney position. Both sides have raised conflicts of interest which they assert may cause the city attorney’s office to hire expensive outside counsel to avoid conflicts arising from each campaign’s affiliation with prior law firms or clients.

     Mr. Weiss claims that the city attorney might have to hire costly outside counsel, if Mr. Trutanich was elected, based on Trutanich’s representation of private defense clients that would be adverse to the city in the future. Preposterous, says Mr. Trutanich, and you may have the same egg on your face—after all, Mr. Weiss, you worked for Century City-based Irell & Manella and represented two billboard companies that may well be adverse to the city at some stage given the litigiousness of many of those businesses.

     The conflict issue surfaced based on a 2006 California Supreme Court ruling involving Cobra Solutions that resulted in disqualification of the San Francisco city attorney’s office because the city attorney had gained confidential information from a defendant sued by the city for a kickback scheme. Both sides said the supreme court decision is “very fact-specific” and deny it will have much impact. I guess we will have to see who wins and what the future holds before seeing which side had the better “crystal ball” on this issue.

Diocese Fee Battle . . . . Brewing In Our Backyard!

Diocese Seeking Fees From Breakaway Faction in Orange County Superior Court.

     Here is one brewing in the backyards of where the contributors to this blog base their practices.

     The Episcopal Diocese of Los Angeles is seeking to recover its attorney’s fees and court costs from the church and certain members who voted to break away from the Episcopal Church in 2004, which led to a bitter legal battle over St. James’ Via Lido campus. Eventually, the dispute went all the way to the California Supreme Court, which ruled in the diocese’s favor in January 2009.

     The fees/costs motion is slated to be heard on May 15, 2009 in Orange County Superior Court. The diocese has not disclosed how much it will seek, which has led St. James’ attorney Daniel Lula to guess it will be an “obscene amount.”

     More information on this fee battle can be found in Brianna Bailey’s article, “Diocese seeks legal fees,” which was posted on May 2, 2009 at the Daily Pilot website.

 

But cf.:  Eskimo Methodist Episcopal Church. Library of Congress Prints and Photographs

Attorney’s Fees In the News … Citizens Reap Public Interest Award, While Homeowner May Have To Pay FEHA Department Fees

Citizens Group Awarded Over $175,000 in Fees For Successful Attack of Santa Barbara Proposed Housing Project.

     Citizens Planning Association (CPA) were awarded over $175,000 in attorney’s fees ($117,228 lodestar, based on four attorneys charging $350 an hour, plus a $60,000 multiplier add-on) for successfully attacking the City of Santa Barbara’s environmental analysis of the proposed Veronica Meadows housing development. We assume the award was based on Code of Civil Procedure section 1021.5, California’s private attorney general statute. Judge Thomas Anderle awarded the multiplier because “[t]he fee award must be large enough to entice competent counsel to undertake difficult public-interest cases.”

     However, in an interesting twist, the project’s developer agreed to assume the risks of all legal costs. Developer opposed the award on the grounds that the case was not that legally complicated and that no multiplier was justified under the circumstances. CPA’s attorneys spent nearly 1,000 hours prosecuting the cases, with no potential for recovery if they were unsuccessful. So far, the attorneys have not received a penny in fees, although co-contributors Marc and Mike would predict that there will be an appeal of the fees award by the developer.

     For more detail on this award, see Nick Welsh’s article “CPA Lawyers Net Cash Award” in the April 16, 2009 edition of the Santa Barbara Independent and CPA attorney Marc Chytilo’s comments “That Was No Bonus” in the April 30, 2009 edition of the same paper (both available for viewing at independent.com).

Homeowner Prospective Landlord Will Have to Pay Fees to Discrimination Department Even Though Bulk of Case Dismissed.

     Dan Bader, owner of a Newport Beach, CA house, advertised a room for rent on Craigslist. As an afterthought, he wrote that the rental unit was “well suited for professional adults” and “perfect for 1 or 2 professionals.” That set off a firestorm with the Fair Housing Council of Orange County, which thought those few words implied discrimination against people with children. The council filed a complaint with the Department of Fair Employment and Housing, which in turn summoned Mr. Bader to a hearing in downtown Los Angeles.

     Mr. Bader was told the complaint would be dropped if he paid the Orange County council $4,000 and agreed to five years of classes at $250 a class, after indicating that he did not discriminate but that the ads were a problem. Mr. Bader balked, with the state suing him for discrimination. He countersued the Fair Employment and Housing Department, the Orange County council, and council’s CEO D. Elizabeth Pierson. Last year, Orange County Superior Court Judge Andrew Banks dismissed Bader’s countersuit and indicated he would have to pay each of his opponents’ reasonable legal fees. (We assume the opponents won an anti-SLAPP motion.) To add insult to injury, the state dropped its lawsuit against Mr. Bader on the eve of trial. Mr. Bader moved to have the department and council pay his attorney’s fees in defense, but Judge Banks denied that request earlier last month.

     Mr. Bader’s fee exposure comes to over $51,000—he had already paid Ms. Pierson $7,500 in fees; he may owe $7,000 each to the department and council; and he owes about $30,000 for his own defense. In retrospect, Mr. Bader says he would have paid the $4,000—even if it was “blackmail.” Council’s marketing director has been reported as saying the council dropped its suit because Mr. Bader already has to pay the council’s attorney’s fees. She also indicated that Mr. Bader had opportunities to mediate and resolve the matter, but declined.

     For more on this one, see Brian Joseph’s OC Watchdog article “Bureau’s power scares homeowner,” published in the May 1, 2009 Local section of The Orange County Register.

To Seal or Not To Seal …. That Is the Question!

Sharon Stone Inadvertently Got Her Wish In Fee Dispute Lawsuit With Former Attorney.

     In case you do not know it, sealing court records is not the norm and takes an exceptional showing for most civil cases. The standards are stringent and set forth in California Rules of Court, rules 2.550, 2.551, and 8.160. However, the next news item shows that entertainers frequently lobby for sealing of records, sometimes inadvertently getting their requests granted through mere processing errors.

     Sharon Stone, the well-known actress gaining lasting fame from “Basic Instinct,” and two film companies were sued by attorney William Jacobson in Los Angeles County Superior Court. Mr. Jacobson sought to recover $107,000 in unpaid legal services, plus interest. The superior court judge expressed doubt that the case records should be sealed when the defense brought a request to do so. After all, court records are not sealed just because the parties want to keep the dispute private in nature. However, the court records inadvertently were sealed, but recently were released after the matter had settled earlier this year.

     In an April 25, 2009 article, “Secret Sharon Stone Lawsuit Was Routine Fees Matter,” written by Anthony McCartney (and available for viewing on Starplus Entertainment News Blog), a free press advocate is quoted as saying there was little or no justification for the sealing in such a run-of-the-mill civil lawsuit.

     BLOG OBSERVATION—Ms. Stone apparently nixed using a private judge to adjudicate the matter. We would think that contractual arbitration would have had a better shot at keeping matters private, because many providers (such as JAMS) have confidentiality rules and stringent destruction of documents policies. See, e.g., JAMS Comprehensive Arbitration Rule 26.

Attorney’s Fees In the News – And Legal Fees Just Keep Dominating Several News Stories!

Montrose Chemical Defense: Is An Associate Worth $450 An Hour?

     Latham & Watkins, a high-powered, national law firm based out of Los Angeles, has been defending Montrose Chemical Corp. in a toxic tort case, with Montrose being insured by Century Indemnity Co. L&W and the insurer have apparently been locked in a nasty battle about reasonableness of fees. Accordingly to an April 22, 2009 article by Debra Cassens Weiss, “Is Associate Worth $450 Hourly? Fee Cited in Latham Dispute” (available for reading at the ABA Journal website), L&W billed about $21.8 million in a four-year period ending 2006 in defending Montrose, and Century Indemnity paid about $5.8 million of the tab. They are still jousting on what is reasonable, with various claims being exchanged back and forth. (The insurer seems to be particularly mad about the fact L&W billed more than $330,000 for internal communications and memoranda between attorneys on the case.) L&W billed fees ranging from $380-$450 per hour for lawyers, while the insurer said reasonable hourly rates would range from $140-$180 an hour.

     One of the most interesting aspects of the controversy is the insurer’s challenge to the $450 hourly rate for an “unlicensed” L&W associate—a charge denied by L&W (which says the associate, a former judicial clerk, was licensed at the time). Co-contributors Marc and Mike have no real comment, except to note that Mike just now bills out at $450 an hour after being licensed for almost 30 years.

Jurupa School District Member Hit with Anti-SLAPP Fees and Appeals.

     Jurupa Unified School District board member Michael Rodriguez sued the District and two individuals (a superintendent and a former board member) for due process, civil and equal protection violations arising out of his January 2007 censure by board members. Mr. Rodriguez apparently lost an anti-SLAPP motion brought by the defendants, being assessed with an adverse award of attorney’s fees amounting to around $47,970. Mr. Rodriguez has appealed to the Fourth District, Division 2 Court of Appeal, so we are sure to report on the result in an upcoming post. For more information on the case, see Sandra Stokley’s story, “Jurupa schools lawsuit heading to Court of Appeal and beyond,” in the April 22, 2009 Press Enterprise (pe.com).

Davis Attorney Ordered to Pay $65,000 in Fees to Chico Newspaper.

     Fees awarded to prevailing defendants in anti-SLAPP motions are becoming more and more common, especially when the defendant is a newspaper with more stringent protections from libel claims. Paul Boylan, a Davis, CA attorney, knows about this all too well.

     Mr. Boylan apparently represented a Willows newspaper and was awarded $100,000 in attorney’s fees in a lawsuit against the Sacramento Valley Mirror. His fee award did not last that long as far as savoring the fruits of his victory.

     In November 2008, Mr. Boylan filed a lawsuit in Butte County Superior Court claiming defamation and negligence against the Enterprise-Record, Chico’s local newspaper based on comments posted on a message board for ChicoER.com readers hosted by Topix.net. Newspaper filed a SLAPP motion, Mr. Boylan dismissed his action, and Judge Barbara Roberts awarded the paper a little over $65,000 in fees and costs (based on decisions that indicate a dismissal of a complaint before a SLAPP motion is heard does not divest the trial court of jurisdiction to decide the motion and award fees to the prevailing party). So, in the end, Mr. Boylan had to give back a fair amount of what he had earned from the earlier lawsuit.

     For more on this one, see “Lawyer ordered to pay Enterprise-Record legal fees,” posted April 24, 2009 at the ChicoER.com website.

Mobile Park Owner Awarded Millions in Fees After Homeowners Lose Rent Control Lawsuit.

     San Rafael residents in the rent-controlled mobile home park known as Contempo Marin lost a protracted lawsuit by park owner Equity LifeStyle Properties, Inc. in United States District Court for the Northern District of California. Based on a recent U.S. Supreme Court decision, Equity won a constitutional challenge to the rent-control ordinance, such that rents will go up after a stay of 10 years in enforcement of the favorable judgment. Also, District Judge Vaughn Walker ordered that San Rafael pay $1.8 million in fees to Equity.

     More details on this case can be found in Jennifer Upshaw’s article “San Rafael, homeowners lose Contempo Marin rent-control lawsuit,” posted April 21, 2009 on marinij.com.

Billionaire Allen Stanford Wants Release of $10 Million to Pay Legal Fees to Fight Ponzi Scheme Charges.

     Billionaire Allen Stanford, two aides and three of his companies are accused by the Securities and Exchange Commission of involvement in a Ponzi scheme for high-yield certificates of deposit issued by Stanford International Bank in Antigua. His assets were frozen on February 17, 2009 by a court-appointed attorney in the case, effectively stymieing his efforts to pay his team of defense attorneys. Mr. Stanford has moved to have District Judge David Godbey release the funds, beyond his efforts of obtaining an advance of defense costs from certain insurance policies (likely D&O). Mr. Stanford has argued in court papers that the SEC has no proof of a Ponzi scheme, with the collapse of his financial network resulting from governmental seizure of the firm.

     Richard Scrushy, founder of HealthSouth Corp., was successful in obtaining a lift of frozen assets so that he could pay defense costs. This was an important win, because he was eventually acquitted in 2005 in a criminal accounting case.

     For more detail on this item, see Anna Driver’s story “Allen Stanford seen in hard fight for legal fees,” posted April 23, 2009 at uk.reuters.com. (BLOG OBSERVATION—Co-contributors Marc and Mike successfully opposed a preliminary injunction sought in a civil federal securities case that sought to try up a defendant’s access to company funds for his defense, even though the management agreement allowed defendant to use these funds for defending against the securities lawsuit. This win made it possible for defendant to continue his defense and paved the way for a settlement that was favorable in nature.)

Off Topic: Falling D&O Coverage Raises Fears of More Difficult Settlements of Plaintiff Securities Class Actions/Derivative Suits

Settlements May Depend More on Personal Contributions from Sued Officers and Directors, Reports Recent Article from The National Law Journal.

     According to Amanda Bronstad’s April 17, 2009 article, “As D&O Coverage Falls, Plaintiffs Lawyers Fees at Risk,” published in The National Law Journal and available for reading at LAW.COM, plaintiff shareholder actions—mainly securities class action or derivative suits—may get harder to settle with the shrinking nature of D&O insurance available for purchase or use.

Off Topics: Here Is A Three-Fer—Bankruptcy Work Booming, Rehab Investment Companies Get Substantial Fee Arbitration Award, And Mepco Obtains Fee Award Against Saddleback Valley Unified School District

Bankruptcy Fees Are Awhirl In Lehman Brothers Bankruptcy.

     The bankruptcy of Lehman Brothers Holdings Inc. has certainly been a financial boon for many involved law and investment banking firms.

     Christopher Scinta and Linda Sandler, in their April 13, 2009 article “Lehman Brothers Law Firm Weil Gotschal Seeks $55 Million in Fees” (available for viewing at Bloomberg.com), report that Weil Gotshal & Manges LLP, led by partner Harvey Miller, is seeking approval of $55 million in fees from the bankruptcy court in the Lehman Brothers bankruptcy case, which covers debtor bankruptcy work for the period September 15, 2008-January 31, 2009. Partners and “of counsel” attorneys charged an average of about $824 per hour, according to the fee bankruptcy filings.

     Others must be equally delighted by the bankruptcy. Lazard Freres & Co., Lehman’s investment banker which helped sell various Lehman assets for about $1.54 billion, is seeking $6.6 million in compensation for the same period of time. Milbank Tweed Hadley & McCloy LLP, representing Lehman’s unsecured creditors’ committee, is seeking $12.1 million in fees, while Houlihan Lokey Howard & Zukin Capital Inc., the committee’s investment banker, has asked for $2.2 million for work performed during the same rough time frame.

     A hearing on these requests has been set before the bankruptcy court for May 13, 2009. (Both the U.S. Trustee’s Office and bankruptcy court have quite a lot of control over fee approval, with the former being able to object to requests (with its objections given substantial weight in many instances) and the latter being the ultimate arbiter of what fees get paid and when.)

     Lynn LoPucki, a UCLA law professor and frequent critic of the bankruptcy process, has estimated that Weil could see as much as $209 million in fees from this case and that, overall, bankers, accountants and lawyers might obtain judge-approved charges of $906 million.

 

   UCLA School of Law

 

Oxford Street Properties and Affiliates Awarded $1 Million in Attorney’s Fees in Los Angeles Rehabilitation Project Arbitration.

     JAMS arbitrator Richard Chernick recently ordered Rehabilitation Associates and Fedora Investment Corp., represented by Hollywood sole practitioner Lance J. Robbins, to pay $20 million to Oxford Street Properties and certain affiliates relating to fraud and economic duress claims arising from the attempted rehabilitation of the disused 102-year-old Main Mercantile Building in downtown Los Angeles into loft-style apartments. Mr. Chernick also awarded the prevailing parties $10 million in punitive damages and $1 million in attorney’s fees.

     Mr. Robbins is apparently a landlord himself who has gained some press attention in the past based on citations for violating city building codes, as reported by Mindy Farabee in her April 17, 2009 article, “Property Firm Is Awarded $30 Million in Loft Debacle,” appearing in the Los Angeles Daily Journal.

General Contractor Mepco Wins About $765,000 in Fees From Saddleback Valley Unified School District in San Diego Litigation.

     Mepco Services, a Downey-based general contractor hired to renovate Esperanza Special Education School in Mission Viejo, recently won a San Diego County Superior Court action against the Saddleback Valley Unified School District.

     Specifically, the school district was ordered to pay about $1.4 million to Mepco for a troubled renovation at the Mission Viejo special-education school. Also, Mepco was awarded about $765,000 in legal fees on April 16, 2009 by San Diego County Superior Court Judge Frederic Link—even after some photocopying charges were ordered stricken from the fee/cost requests.

     For more details on this case, see Scott Martindale’s April 16, 2009 article published in The Orange County Register’s Local section.

Off Topic: Top List Of Law Firms Laying Off Nonpartner Attorneys

April 2009 Issue of The American Lawyer Provides Top Ten List.

     Who says lawyers are recession proof? Not at all, according to a top ten list of large law firms that have laid off nonpartner attorneys in recent times, as surveyed in an article printed in the April 2009 issue of The American Lawyer.

     Here is the top ten plus honorable mention list according to the April 2009 article, specifying number of nonpartner attorneys cut and percentage cut from nonpartner population:

• Orrick (CA headquartered) -- 140 cut; 19.86%;
• White & Case (N.Y. hdqtr) -- 270 cut; 15.43%;
• Pillsbury (CA hdqtr) -- 55 cut; 14.29%;
• Cooley (CA hdqtr) -- 52 cut; 12.97%;
• Bryan Cave (Midwest hdqtr) -- 58 cut; 11.22%;
• Latham (CA hdqtr) -- 190 cut; 10.84%;
• McDermott (Midwest hdqtr) -- 60 cut; 10.64%;
• Faegre & Benson (Fla hdqtr) -- 29 cut; 10.62%;
• Proskauer (N.Y. hdqtr) -- 58 cut; 10.58%; and
• Wilson Sonsini (CA hdqtr) -- 45 cut; 10.09%.

     Honorable mention went to Holland & Knight (Fla. headquartered), which cut 70 lawyers—a high score, but with the cuts also inclusive of partner layoffs.

     Interestingly enough, the top ten layoffs were dominated by California- and Midwest-headquartered firms. The only explanation coming from the article was that New York firms have a different culture and management style, with layoffs “not in their DNA.” At least two large New York firms—Weil, Gotshal and Sullivan & Cromwell—dodged layoffs because of their involvement in restructuring work.

     For more information, see Vivia Chen’s article, “And The Winner Is …” in the April 2009 The American Lawyer at page 24.

Off Topic: Stevens’ Criminal Case Gets Dismissed And Phil Spector Incurs Large Legal Bills In Defending Criminal Charges From The Clarkson Shooting

CelebriTrials Linked by Large Legal Fees

Stevens Case Is Dismissed.

     Over the weekend, in our April 5, 2009 post, we discussed the criminal trial of former Senator Ted Stevens—which likely cost him at least $2 million in legal fees to defend.

     Earlier this week, U.S. District Judge Emmet Sullivan dismissed the case at the Attorney General’s request, but appointed an outside lawyer to investigate the conduct of six members of the prosecution team about allegedly not providing exculpatory evidence to the Stevens’ defense team. The investigation could lead to reprimands, disbarment, and even criminal charges as against the attorneys subject to investigation.

     A good editorial on the whole story—“Not-so-even on Stevens”—can be found in the April 9, 2009 Opinion section of The Orange County Register.

Phil Spector Spends Plenty of Legal Fees In The Clarkson Criminal Case.

     Phil Spector is no neophyte to the music world or to using attorneys in lawsuits over royalties. It has been reported that he spent up to $5.7 million in legal bills over a 20-year period in litigation over certain music royalty rights. That legal spending has spilled over and escalated in the criminal trial over the Clarkson shooting.

     Mr. Spector has had no less than 11 criminal defense attorneys representing him during the course of the case, supplemented by 4 investigators, 5 paralegals, a jury consultant, numerous expert witnesses, and a slew of consultants never called as trial witnesses. The final tally is not known, but one criminal defense attorney charged $1 million for one year of representation and the expert witnesses charged over $500,000. The public record also shows that he has in the past couple of years borrowed $2.1 million from certain of his assets.

     To show you how expensive (not to mention emotionally draining) trials can be, Mr. Spector and the Westin Bonaventure Hotel recently wrangled over a $105,000 bill for stays during his first trial (which resulted in a mistrial). Although the matter was settled, it does illustrate the magnitude of costs of a lengthy trial—even though the expense only related to staying near the criminal court venue for the trial.

     For more details on the expenses relating to the Clarkson criminal trial, see Harriet Ryan’s article “Spector’s long legal battles may be sapping his fortune,” which was reported in the April 8, 2009 issue of The Los Angeles Times.

Off Topic: Former Senator Ted Stevens Spends At Least $2 Million On His Criminal Defense Of Public Corruption Charges

DOJ Moves to Dismiss Case After Government Had Problems Turning Over Exculpatory Evidence.

     Defending criminal cases can be an expensive proposition. Just ask former Alaska Senator Ted Stevens.

     He was convicted on public corruption charges by a jury. However, his case was fraught with problems. Department of Justice’s (DOJ’s) Public Integrity Section had its own integrity problems during the case as far as failing to timely turn over potential exculpatory evidence to the Mr. Stevens’ defense team. (This has resulted in contempt charges being filed against three DOJ attorneys involved in the prosecution side of the case.) District Judge Emmet Sullivan asked the DOJ unit how he was to find that it had integrity given some of the events occurring in the case.

     Finally, on April 1, 2009, U.S. Attorney General Eric H. Holder, Jr. moved to dismiss the case with prejudice, 5 months after Mr. Stevens was convicted on public corruption charges. The motion to dismiss will be heard on April 7, 2009.

     It has been reported that Mr. Stevens spent at least $2 million in attorney’s fees in defense of the federal criminal charges. I guess we will all have to wait to see if he attempts to recover fees against the Government, although he will have to prove that the prosecution was frivolous in nature.

     This case does illustrate the expense incurred in defending against high-profile criminal cases. In some future posts, we will discuss the interplay between criminal defense retainers and third party efforts to attack them as shielding illicit moneys.

     For more information on the history of the Stevens case, see Mike Scarcella and Joe Palazzolo’s April 6, 2009 article “Series of Errors Doomed Stevens Prosecution” in the Legal Times, available for reading on Law.com.

Attorney’s Fee Awards In the News—One Entertainment Case Whooper and Two Smaller Ones

Attorney’s Fee Awards In the News—One Entertainment Case Whooper and Two Smaller Ones

$14 Million Fee Award – Entertainment Dispute.

     Los Angeles County Superior Court produced one of the largest fee awards we know of (with a recent article on the award suggesting it is the biggest ever)--$14 million.

     Well-known author Clive Cussler became entangled in a dispute with what is now known as Bristol Bay Productions, a company to which he had sold the rights to two books, including his novel Sahara. However, before the first movie based on Sahara was filmed, Mr. Cussler decided he did not like the adaptation and demanded that he be made screenwriter on the film. Producers refused, Cussler sued based on breach of contract, and producers countersued claiming he had breached the good faith and fair dealing covenant stemming from the contract. The movie did not fare well, with Jessica Winters of the Village Voice calling it “the skull-splitting cacophony of 21 producers and four screenwriters . . . standing in the same room, shouting into their cell phones.”

     The matter proceeded to trial, with each side represented by entertainment lawyer heavyweights: Mr. Cussler had retained Bertram Fields (who had never lost a trial) and the producers had Marvin Putnam of O’Melveny & Myers in their corner.

     After a 15-week trial (yes, you heard right), Cussler lost on all counts (Mr. Fields’ first career defeat at trial, apparently), and producers won $5 million on one of their counterclaims.

     You know what comes next. Producers moved for an award of attorney’s fees as the prevailing party based on an indemnity clause in the contract with Mr. Cussler. (Mr. Fields had billed Cussler $8.5 million on the case, but producers’ attorneys sought $14 million in fees.)

     Late in the week of March 9, 2009, Los Angeles County Superior Court Judge John Shook did award producers, as prevailing parties, the $14 million fee based on the contractual fees clause. Ms. Cussler is appealing, and we are certainly going to report on the results at some point in the future.

     For more information on this one, see Ben Hallman’s March 17, 2009 article “O’Melveny Wins $14 Million Legal Fees Ruling from Thriller Author Clive Cussler,” found at americanlawyer.com.

     BLOG OBSERVATION—For those of you wanting to see law on the interplay between fee recovery and contractual indemnity clauses, see our category “Indemnity” at the left hand side of our home page.

$42,340 Total Fees Assessed Against Development Critics of Irvine Project.

     Two individual critics of a Irvine Business Complex project were ordered to pay $20,713 to the City of Irvine and $21,635 to Maguire Properties, the developer of the project engaged in a long-time battle over what fees the developer needed to pay to fully build its Park Place project near Main and Jamboree. After the City and Maguire crafted a settlement plan under closed door sessions, two individuals critical of the “backroom deal” sued to force a public review of the plan. The suit was thrown out in November 2008, with an Orange County judge ruling that the City acted properly in approving the settlement agreement.

     More recently, the judge ordered the two individuals to pay attorney’s fees as described above. Although the bases for the fee award were not cited in the article we used to summarize what occurred, we would guess that they were awarded under the Public Records Act or Code of Civil Procedure section 128.7.

     For more on the facts of this particular award, see Sean Emery’s April 1, 2009 article “Council critics owe Irvine, developer $40,000 after failed suit" in the The Orange County Register.

$12,900 in Fees Awarded to “Sugar’ Mosley for Winning anti-SLAPP Motion.

     A former conditioning coach of “Sugar” Shane Mosley (Mosley is the World Boxing Association welterweight super champion) sued him for defamation in Los Angeles County Superior Court. Mr. Mosley apparently told reporters in 2007 that he believed certain substances he took were vitamins that his conditioning coach “pressured” him to take during training for a 2003 fight against Oscar De La Hoya. The conditioning coach claimed that the remarks were defamatory, misrepresenting him as a professional and making it look like he committed a crime. Mr. Mosley was not tickled with this claim, and moved to strike it under the anti-SLAPP statute (which makes a fee award mandatory for a prevailing defendant). Mr. Mosley won his anti-SLAPP motion on the defamation claim.

     Then, Mr. Mosley—who won the anti-SLAPP round (sorry for the pun)—moved to recoup nearly $78,000 in attorney’s fees. (Although others worked on the successful dismissal motion, Mosley’s lead attorney stated in his fee request that he personally spent at least 13 hours on the motion, charging his client “a discounted hourly rate of $900 per hour”—a $50 per hour haircut from his usual hourly charge.) In opposition, the conditioning coach’s lawyers argued that the claim for over $70,000 in fees for work on one motion was “exotic and exorbitant” in nature.

     Recently, Los Angeles County Superior Court Judge Alan J. Rosenfeld awarded Mr. Mosley $12,900 in fees for work on the successful anti-SLAPP motion. Although not a “knockout,” Mr. Mosley did recover some of the fees spent in “knocking out” the defamation claim, one that usually comes loaded with punitive damage allegations. (Again, forgive the puns, everyone—could not resist!)

     For more details on this award, see article “Lawyers for boxer score $12,900 decision,” posted April 1, 2009 (from Daily News Wire Services).

Off Topic: Meltdown Business Is Not Creating Boom For Lawyer, A December 2008 Article Opines

 

Co-contributor Mike Hensley Is Quoted.

     In “Slim Pickings: Meltdown business should be booming for lawyers. But it’s not,” an article posted on December 17, 2008 at thebigmoney.com, writer Chris Thompson posits that the corporate failure in America should be a big boom time for American lawyers. However, he does not believe that to be the case. “Once-lucrative legal areas like structured finance, meanwhile, have died overnight. It seems lawyers will suffer like the rest of us.”

     Mr. Thompson also observes that year-end 2008 bonuses were nonexistent or cut in half by many large law firms. Beyond that, many big firms have folded or have had to lay off up to 20% of their talent.

     Real estate law, he states, has taken the biggest hit—“firms that specialized in real estate have watched their business tank.”

     Co-contributor Mike Hensley was quoted in Mr. Thompson’s article. After he noted that fees at top firms handling high profile bankruptcy and securities-fraud defense matters can range from $450 to $1,000 an hour, Mike was quoted as saying “I’ll tell ya, lawyers are going to be the ones who, case by case, bail this country out.”

Off Topic: Criminal Justice Act Attorneys Get Needed Pay Raise

Congress Raises Rates $10 Per Hour After 2005 Survey Shows Menial Net Compensation to CJA Attorneys.

     After March 11, 2009, attorneys accepting assignments under the federal Criminal Justice Act (CJA) get a $10 per hour pay raise for representing defendants financially unable to retain counsel in federal criminal proceedings. The rates have been raised from $100 to $110 per hour (although rates went up to $175 per hour for capital cases). However, case maximum fee caps also apply depending on the type of criminal case involved.

     Nationwide, CJA appointments go 58% to federal defenders and 42% to private attorneys on the CJA panel.

     The rate hike was likely inspired by a 2005 survey showing CJA attorneys incurred $64 per hour overhead on these cases, meaning they netted just $36 per hour before taxes.

     For more information on the pay hike, see Marcia Coyle’s article, “Congress Raises Fee For Federal Court-Assigned Counsel,” in the March 27, 2009 edition of the New York Law Journal.

Britney Spears Conservatorship: $2.7 Million Paid To Lawyers During The First 11 Months

Entertainment Conservatorships Do Not Come Cheap.

     Since a conservatorship was put in place for 27-year-old singer Britney Spears, the attorney’s fees have really soared. No less than 17 lawyers and firms have had a hand in Ms. Spears’ business and personal affairs since then, according to a March 24, 2009 Los Angeles Time article, “Lawyers surround Britney Spears,” authored by Harriet Ryan.

     The price tag? Answer: At least 2.7 million paid in lawyers’ fees and costs during the first 11 months of the court-appointed conservatorship.

     Even for a singer, this takes your breath away!

Link to Britney Spear's Womanizer Video on Youtube

 

CLE Fee Dispute Program in SF This Week

 “Attorney Fee Disputes In a Volatile and Uncertain Economy”

    This CLE program on attorneys’ fees is being held this week in San Francisco.

    March 19, 2009

    Golden Gate Law School

    San Francisco, CA

    Noon-5pm (with lunch buffet)

Off Topic: Los Angeles County’s Probation Billing Creates Uproar

County Spent Over $13,000 on Outside Counsel to Collect on $1,004 Detention Debt Owed by Grandmother.

     California state law apparently allows a parent or guardian of minors to be charged for their criminal detention through county probation departments, although state law also prohibits billing the indigent. These laws have created quite an uproar when applied to one retired grandmother with a very limited income.

Off Topic: Tobacco II Oral Arguments Well Synopsized By The UCL Practitioner

 

Kimberly Kralowec Provides Details on the March 3, 2009 Arguments.

     Co-contributor Mike Hensley and his colleague Robert J. Stein III attended yesterday's California Supreme Court’s arguments in San Francisco in Tobacco II, a case that will likely decide the impact of certain post-Proposition 64 amendments to California’s Unfair Competition Law.

     Kimberly A. Kralowec, the mastermind behind the excellent “The UCL Practitioner” website, has done a comprehensive, even-handed summary of the March 3, 2009 arguments advanced before the California Supreme Court in Tobacco II. See her March 4, 2009 post for details.

City Of Anaheim/Angels Litigation: City Spends $4 Million For Trial And $150,000 On Appeal

 

Angels Spend $7.5 Million On Litigation, Failing to Win Fees Under Indemnity Clause.

     Given that spring training is not far away for baseball fans, we have a postscript from our December 20, 2008 post discussing the Fourth District, Division 3’s decision in City of Anaheim v. Angels Baseball, L.P. In that case, the appellate panel—in a 2-1 decision—affirmed the jury’s verdict in favor of the Angels and also determined that an indemnity clause did not allow the Angels to recoup substantial fees from the City of Anaheim.

     Now, we can report to you about the amount of fees spent by each side.

  Library of Congress

Potpourri: FEHA Fee Award Against Costco And Recent Article Confirms Steep Decrease in Jury Trial At Both State and Federal Levels

Costco Hit With FEHA Fee Award of $471,240 Plus Costs.

     In our category “Civil Rights,” you will find cases discussing California’s Fair Employment and Housing Act (FEHA), a statutory scheme that has a mandatory fee-shifting provision in favor of winning plaintiffs. The next fee award demonstrates that, depending on the ultimate outcome, fee awards can be substantial in difficult cases vindicating civil rights.

     Juan Valera sued Costco under FEHA for hostile work environment and sexual orientation discrimination. Although rejecting the sexual orientation discrimination claim, a Los Angeles jury did award him $420,000 for enduring a hostile work environment.

    Mr. Valera also moved for attorney’s fees under FEHA. Los Angeles County Superior Court Judge Maureen Duffy-Lewis ordered Costco to pay his lawyer Leo J. Terrell $471,240 in fees, plus routine costs of $39,540.

     This result demonstrates that FEHA fees can sometimes outstrip a nice recovery where an attorney efficiently litigates a matter to a positive conclusion. On the opposite end, FEHA awards can be quite diminished where the outcome was not as positive, there were inefficiencies by the litigating attorneys, or where the matter was not that difficult to resolve.

     For more details on this case, see the Daily Breeze Blog of February 11, 2009. 

L.A. Daily Journal Article Highlights Slump in Jury Trials.

     In our past posts of December 19, 2008 and October 30-31, 2008, we respectively summarized state and federal reports showing that jury trials were on the decline. A recent article by Dhyana Levey, “For the Vanishing Civil Trial, Report Shows Another Down Year,” in The Los Angeles Daily Journal (Feb. 13, 2009 edition) gives added confirmation to the existence of this decline.

     In California, the number of jury trials dropped 28% in fiscal year 2006-07 as compared with the previous year. Dating back to the 2002-03 fiscal year, there was a 37% decreased in jury civil trials during the five-year period.

     Nationwide, the percentage of state civil cases that went to a jury trial dropped from 1.8% in 1976 to .6% in 2002. (From our previous post, California clocked in at 1.7% for civil unlimited jury trials during the 2006-07 fiscal year.)

     At the nationwide federal level, jury trials fell from 5.5% in 1962 to 1.2% in 2002, even though case filings increased fivefold during the same interval.

     The Daily Journal article quotes one San Francisco defense attorney as indicating that expense is the driving force behind this phenomenon, with clients not wanting to go to trial if the expenses exceed a settlement and with discovery being the major culprit behind escalating litigation costs (especially given the expense of electronic discovery). Based on the expense of litigation, at least one other attorney opined that this pushes matters into mediation “to get the spending stopped.”