Tips on Insurance and Fee Petitions Presented by All Panelists.
On June 10, 2014, Rossdale CLE—a Florida based CLE provider—hosted an attorney’s fees seminar with Susan White of Los Angeles’ Manatt, co-contributor Mike of Santa Ana’s AlvaradoSmith, and Charles M. “Charlie” Wilson III of Dallas’ Goranson Bain. They each provided a 30 minute discussion relating to tips on successfully presenting and opposing fee applications, with Ms. White’s discussion centering on insureds dealing with insurers having obligations to pay/defend. Here is a summary of what each had to say:
Susan White – Insurance.
1. Who pays the bills: depends on the type of policy. General liability (“duty to defend”) policy is where insurer hires counsel to defend. Defense costs policy (such as D&O) is where insurer pays or reimburses the defense costs, often using recommended panel counsel.
2. Duty to defend policies: usually insurer will defend with or without reservations. Insureds must watch for conflict in retention of an attorney who might skew the defense in favor of insurer as far as coverage; in California, this entitles appointment of independent Cumis counsel (which is different than insurer panel counsel).
3. What rates do insurers pay independent counsel? In California, they are the rates actually paid by insurer to counsel retained in ordinary course in similar cases. Questions arise as to what this means; burden is on the insurer in California and issue can be arbitrated.
4. TIPS FOR INSUREDS: communicate with insurer frequently and often; meet with independent counsel and communicate back with input to insurer on regular intervals; try to settle any disputes.
5. When must the insurer pay: generally, when the defense costs are incurred under duty to defend policy; insurers are known to delay, so monitor often.
6. Allocation issues: this involves covered versus uncovered claims. Usually, the general rule is that the insurer under duty to defends policies must pay the entire time to defend except for “with reservation caveats” and insurance policy provisions allowing recapture of fees on claims ultimately found not be covered. However, defense counsel should break out and describe claims being worked on with specificity in billings.
7. There is a reasonableness presumption about fees if insureds pay the bills: the presumption is against the insurer. This means preparing proper time sheets with detail which are promptly forwarded to insurer for reimbursement. TIPS ON BILLING: Do not block bill (insureds do not like); do .1 rather than .25 time increments; avoid duplication and vague entries; apportion time between contract policy issues and tort claims; avoid too much inter-conferencing; insurers usually will not reimburse for first class travel; review, follow, or reasonably protest insurer billing guidelines.
Mike Hensley—Proving Reasonableness and Rates of Fees/Costs.
1. In prosecuting or opposing fee applications, provide the judge a roadmap (because most fee proceedings are “costs” issues heard by the judge). Attorney credibility in the prosecution or opposition to fee petitions is critical.
2. As a claimant, make sure you have a fee entitlement basis. Most jurisdictions follow the American Rule—party pays for own fees and costs unless contract or statute says otherwise.
3. Look for conflict of law issues which may affect recovery. Example: McKesson Corp. v. Islamic Republic of Iran, No. 01-7041 (D.C. Cir. June 3, 2014) – Iran applied to fee entitlement, resulting in appellate reversal of $13.4 million fee award down to Iran official tariff capped amount of $29,516.
4. Look for instances of judicial or pleading estoppel. Opponent to fee application pled or asked for fees also; in California, still have to have a fee entitlement basis but other jurisdictions accept an estoppel theory.
5. Think about requesting discovery of the opponent’s hourly rates and what they spent on the case. Most federal courts find this probative evidence for a fee claimant; state courts are more split on the issue.
6. Make sure you follow the time deadlines for bringing fees and costs requests.
Also, if you do not like a fee ruling, most fee awards are separately appealable and must be separately appealed.
7. Utilize lodestar/multiplier analysis in most jurisdictions. However, know your
particular venue – example: in class actions, most federal courts used percentage of recovery as primary test (usually 25% of a fund or estimated recovery) cross-checked by lodestar method; in California, lodestar is the primary check cross-checked by percentage of recovery in class actions.
8. As a claimant, provide a detailed declaration by the lead or supervising
attorney, which indicates experience of all attorneys/assistants working on the case, describes the litigation in detail; attach contemporaneous, detailed billings (trying to avoid reconstructed time, or explaining why it is reliable); avoid block billing (in California, reductions of 10-30% are routine and sometimes more); apportion out time on unsuccessful claims; give voluntarily reasonable reductions for duplication/inefficiency (in Ninth Circuit, any haircut by district judge over 10% has to be specifically explained – see Moreno v. City of Sacramento, 534 F.3d 1106, 1112 (9th Cir. 2008); explain any higher hourly rates for a venue (such as no qualified venue-based counsel having expertise in the particular case, especially a factor in more rural or smaller counties); show prior hourly rate awards to the attorneys on the case; for a large matter, consider using a fee expert who is knowledgeable of various studies on hourly rates and has experience in auditing bills; get declarations from credible attorneys in the venue confirming the reasonableness of hourly rates being requested.
9. Provide lower court with a detailed proposed order, statement of decision, or findings of facts/conclusions of law, a roadmap for the appellate court.
10. Avoid misrepresenting the complexity or risks of the case.
11. Attempt to introduce any pre-petition efforts to settle the fee dispute.
12. Introduce evidence about the financial situation of the client where it is relevant (such as in civil rights cases or where financial situation is a factor in the fee analysis).
13. Describe the retention agreement with the client, sensitive to local state rules about retainer agreement confidentiality.
14. Detail equitable factors supporting or militating against a fee award – such as scorched earth tactics of the defense or “over litigation” by the fee claimant.
15. When opposing a fee declaration on unreasonableness of work or fees, make the objections specific.
Charlie Wilson – Fee Claimant “Do’s” and “Don’ts”.
1. Attorneys generally spend very little time to recoup fees; a mistake, given the amounts generally at stake – often, much higher than the award or verdict to the client.
2. Know your forum. Some fees are damages and have to be presented before the jury. The median U.S. family income is $50,000 per year, so they will scoff at large fee requests unless a clear explanation of why such requests are justified. In Texas, judges have more discretion in a fee request matter.
3. Retainer agreements: make the retainer agreement specific on fee recovery and make sure modifications are in line with local ethical rules and that you, the attorney, are fair in any modification negotiations.
4. Fees are usually costs presented to the judge; however, they can be damages which require presentation of proof before juries, such as common fund and “tort of another” circumstances. [CROSS OVER ISSUE WITH MS. WHITE: in California, in Brandt situation, fees are damages; unless a stipulation to present before judge is agreed to, fees are determined by the jury.]
5. In Texas, there are fee limitations on noncash benefit recoveries in class actions, with attorneys getting lower fees for these types of benefits.
6. Recommendation to engage an outside fee expert in large fee recovery cases because the expert will review the matter with a clean slate and can give an independent view of the fee request.
7. For claimants, make sure all attorneys show their experience in years as well as substantive areas.
8. Use annual state bar surveys on hourly rates, where available.
9. Segregation of fees: billing should exclude noncompensable time or break this time out; in Texas and many federal courts, the burden of segregation is on the fee claimant and the “intertwined” theory will not blunt the need for apportionment.
10. Show any “no charges” on the billings; judges and juries like this.
11. Show billing judgment – this indicates that you are “self monitoring” attorney billing – avoid billing 8.0 hours 13 days in a row, this is a red flag which tells the judge or jury that there is no monitoring of the attorney so billing.
12. In federal courts, district judges do look at prior fee awards in similar cases.
13. Fee claimants get mileage by making voluntary reductions in the fee request, especially reductions suggested by the fee claimant’s expert.
14. “Don’ts” to avoid in attorney billing practices: (a) excessiveness—turning a single plaintiff case into a class action as far as time billed; (b) failure to segregate distinct claims—in Texas, this failure to do so means fees will be unrecoverable in most cases; (c) vague entries—federal judges will discount and avoid submitting redacted billings (no reason to put privileged matters in entries in the first place); (d) block billings—courts do not like, because it is a sign of camouflaging work; (e) do not persistently bill for long days, unless on an intensive, rush project, trial, or you are multi-tasking on a couple of intense projects; (f) avoid overstaffing; and (g) avoid excessive inter-conferencing with other attorneys or assistants.
15. Billing rates usually depend on the complexity of the case. A good starting point is local bankruptcy court procedures on both rates and manner of billing time.
Comments