Tag: lodestar

Fired Lawyer Can Recover Pre-Firing Fees Under Quantum Meruit – No Evidentiary Hearing is Required – IL Appeals Court

 

The estate of a young woman killed in a car crash hired an attorney (Lawyer 1) to file a personal injury suit against the drivers involved in the crash. The estate representatives entered into a 1/3 contingent fee arrangement with the attorney who placed an attorney’s lien on any recovery by the estate.

About 2 years later, the estate fired Lawyer 1 and hired Lawyer 2.  Lawyer 2 eventually facilitated a settlement for the estate in the amount of $75,000 and filed a motion to adjudicate the Lawyer 1’s attorney lien.

Lawyer 1 claimed he was entitled to $25,000 – 1/3 of the settlement amount.   After considering his affidavit and time records, but without an evidentiary hearing, the trial court awarded Lawyer 1 a fraction (about $14K less) of what he sought on a quantum meruit basis (number of hours times hourly rate).

On appeal, Lawyer 1 argued the trial court denied him due process by not holding a formal hearing and erred by not awarding him more fees given the settlement’s proximity in time to his firing.

That’s the procedural backdrop to Dukovac v. Brieser Construction, 2015 IL App (3d) 14038-U, a recent unpublished Third District decision that addressed whether a fee petition requires an evidentiary hearing and the governing standards that guide a court’s analysis when assessing fees of discharged counsel.

The Third District upheld the trial court’s fee award and in doing so, relied on some well-settled fee award principles.

In Illinois, a client has the right to fire an attorney at any time. Once that happens, any contingency fee agreement signed by the client and attorney is no longer enforceable.

After he is discharged, an attorney’s recovery is limited to quantum meruit recovery for any services rendered before termination.

In situations where a case settles immediately after a lawyer is discharged, the lawyer can recover the full contract price.

In determining a reasonable fee under quantum meruit principles, the court considers several factors including (i) the time and labor required, (ii) the attorney’s skill and standing, (iii) the nature of the case, (iv) t he novelty and difficulty of the subject matter, (v) the attorney’s degree of responsibility in managing the case, (vi) the usual and customary charge for the type of work in the community where the lawyer practices, and (vii) the benefits flowing to the client.

A trial court adjudicating a lawyer’s lien can use its knowledge acquired in the discharge of its professional duties along with any evidence presented at the lien adjudication hearing.

Here, the appeals court that the trial court properly considered discharged Lawyer 1’s time records and affidavit in making its quantum meruit award. Even though there was no evidentiary hearing, the time sheets and affidavit gave the trial court enough to support its fee award.

Afterwords:

This case provides a good synopsis of the governing rules that apply where an attorney is discharged and the case soon after settles. A trial court has wide discretion in fashioning a fee award and doesn’t have to hold an evidentiary hearing with live witness testimony.

A clear case lesson is that a discharged petitioning attorney should be vigilant in submitting detailed time records so that the court has sufficient evidence to go on in making the fee award.

Court Slashes $25K From $30K Attorneys Fees Request Where Plaintiff Loses Most Claims (ND IL)

timesheet

After winning one out of nine claims, the plaintiff – a recently fired loan officer – sued to recover about $30K in attorneys’ fees under the Illinois Wage Payment and Collection Act (IWPCA) from his former employer. 

Awarding the plaintiff just a fraction (just over $5K) of his claimed fees, the Northern District in Palar v. Blackhawk Bancorporation, 2014 WL 4087436 (N.D.Ill. 2014), provides a gloss on the factors a court considers when assessing attorneys’ fees.  The key principles:

 – the lodestar method (hours worked times the hourly rate) is the proper framework for analyzing fees in a IWPCA claim;

– a court may increase or decrease a lodestar figure to reflect multiple factors including (i) the complexity of the legal issues involved, (ii) the degree of success obtained, (iii) the public interest advanced by the suit);

– the key inquiry is whether the fees are reasonable in relation to the difficulty, stakes and outcome of the case;

– a court shouldn’t eyeball a fee request and chop it down based on arbitrary decisions though: the court must provide a clear, concise explanation for any fee reduction;

– an attorneys’ reasonable hourly rate should reflect the market rate: the rate lawyers of similar ability and experience charge in a given community;

– “market rate” is presumably the attorney’s actual billing rate for comparable work;

– if the attorney has no bills for comparable work to show the court, the attorney may instead (a) submit supporting affidavits from similarly experienced attorneys attesting to the rates they charge clients for similar work, or (b) submit evidence of fee awards the attorney has received in similar cases;

– once the fee-seeking attorney makes this market rate showing, the burden shifts to the opponent to demonstrate why the Court should lower the rate;

(**4-5).

The Court then set down the governing rules that apply when a plaintiff wins some claims and loses others; and how that impacts the fee award calculus:

– a party may not recover fees for hours spent on unsuccessful claims;

– where the successful and unsuccessful claims involve a common core of facts and are based on related legal theories, time spent on losing claims may be compensable: litigants should be penalized for pursuing multiple and alternative avenues of relief;

– when reducing a fee award based on certain unsuccessful claims, the court should identify specific hours to be eliminated;

– attorneys can recover fees incurred in litigating the fee award those fee petition fees must not be disproportionate to the fees spent on litigating the merits;

– the Court should consider whether hours spent on the fee request bear a rational relationship to the hours spent on the merits of the case;

– the Seventh Circuit recognizes 15 minutes per hour ratio of fee hours vs. merits hours as excessive (so 1 hour on fee issue for 4 hours on merits would be disproportionate).

(*5).

With these guideposts in mind,  the Court reduced plaintiff’s claimed fees by deducting (a) fees spent on unsuccessful and unrelated (to the IWPCA count) claims; and (b) fees incurred litigating the fees dispute. 

The combined reductions amounted to almost $25K out of the $30K plaintiff claimed in his fee petition.  The Court held that a $5K fee award on final compensation of about $1,500 was justified given the IWPCA’s mandatory fee provision and stated policy of deterring employers from refusing to pay separated employees’ wages.

Afterwords:

There is no precise formula governing fee awards.   The court will consider the amount claimed versus the fees sought and whether they are congruent with those figures. 

This case also illustrates that a court will look at how many claims the plaintiff won and lost in the same case when fashioning a fee award.

Seventh Circuit Upholds Slashing Of Over $300K In Attorneys’ Fees Based On $2,000 Jury Verdict

scissorsAn easy to parrot, hard to apply attorney fee maxim involves the “prevailing party” standard.  To get attorneys fees awarded under a statutory or contractual fee-shifting provision, you must “prevail” or win the case.  So what happens when your win is a proverbial Pyrrhic one?  That is, you win the lawsuit but get only a fraction of the money you sought? Or, you’re victorious on only one of multiple claims; losing the other claims.  What then?

Montanez v. City of Chicago (http://caselaw.findlaw.com/us-7th-circuit/1670216.html) examines these issues and more in a decision that illustrates the broad discretion a district court has in both fashioning and reducing claimed attorneys fees based on the level of the fee seeker’s litigation success.

The plaintiff filed a civil rights suit against two police officers and a municipality alleging excessive force.  The plaintiff also pled various state law claims.  The state law claims were dismissed as untimely and the plaintiff went to trial on his civil rights (Section 1983) claims.  A jury awarded the plaintiff $2,000 against one of the officers: $1,000 in compensatory damages; $1,000 in punitives.  The jury ruled against the plaintiff on his claims against the other police officer.  The plaintiff sought fees and litigation costs of over $400,000.  The defendants of course argued for a severe fee slashing in light of the paltry jury award.  The District Court (mostly) obliged by lopping off over $300,000 of the plaintiff’s fees and costs.  Plaintiff appealed.

Held: Affirmed

Reasons:

Seven lawyers billed nearly 1100 aggregate hours for the plaintiff in litigating his excessive force claims.  The final tab exceeded over $400,000 in fees and almost $7,000 in costs.  The District Court shortened the fee amount to just over $108,000 and awarded costs of over $3,000.  So the plaintiff still got more than 50 times the jury award.

Affirming the trial court’s fees and costs reduction, the Seventh Circuit noted that in cases “lacking private incentives to limit the scope of litigation” (like fee-shifting Federal suits), a trial judge should exert his authority under Federal Rules 16 and 26 to guard against overlawyering, excessive discovery and wasteful pretrial activities.  The Court then stated the specific attorneys’ fees rules that guide the court’s analysis:

– a prevailing party in a Section 1983 suit can recover “a reasonable attorney’s fee” that is generally computed by the “lodestar” method: number of hours multiplied by hourly rate;

– where the hours a plaintiff spent on successful claims can be segregated from time spent on unsuccessful claims, the time spent on the latter claims can be subtracted from the fee award;

– an attorneys’ reasonable hourly rate is based on the local market rate – the best evidence of which is the rate charged by that attorney for similar work;

– if the court can’t determine a reasonable hourly rate based on the petitioning attorney’s rates, the court looks to the rates charged by similarly experienced attorneys in the community and evidence of rates set for attorneys in similar cases;

– hourly attorney rates are particularly difficult in cases where the attorney typically uses contingent fee agreements;

– conclusory affidavits from other attorneys who opine that another attorney’s rates are reasonable have little probative value;

– the court’s goal in shifting fees (to the losing party) is not “auditing perfection”: instead, it’s to attain “rough justice”;

– in the area of legal research, the trial court has broad discretion in determining what research likely contributed to the successful result at trial and whether certain research was “esoteric”, redundant or had nothing to do with plaintiff’s winning claims;

– the district court can strike vague billing entries and where a fee request dwarfs actual damages won at trial, this raises a “red flag” (as to the validity of the requested fees);

– 28 U.S.C. § 1920 allows a prevailing party to recover “costs” including (i) costs for transcripts necessarily obtained for use in the case; (ii) printing costs and (iii) copying costs for materials necessarily obtained for use in a case.

Montanez, pp. 7-13, 17.

With these guideposts informing its analysis, the Seventh Circuit upheld the District Court’s cuts to the plaintiff’s fees and costs request.  Stating there is no precise mathematical formula for adjusting fee requests, the Court noted that a fee reduction is proper where fees dwarf the trial damage award and the plaintiff achieves “limited success.”

Here, the plaintiff’s success was limited as he won only $2,000 at trial and lost on 4 of his 6 claims.  The Seventh Circuit affirmed the District Court’s 50% cut in the plaintiff’s total lodestar fees based on the comparatively low money judgment amount and on plaintiff losing the majority of his claims.  The other fees and costs reductions approved by the Seventh Circuit included those based on (1) fees generated for witnesses that were never called; (2) for deposition transcripts that were never used, (3) transcription rates that exceeded the allowable amount under Local Rule 54 and (4) legal research into areas that had no bearing on plaintiff’s successful claims.  The Seventh Circuit found these subtractions proper and within the District’s Court’s fee award discretion.

Summary: The case presents a fairly exhaustive summary of a Federal court’s fee award calculus and shows the broad discretion a district court has in lopping off what it views as extraneous fees and costs.  It’s clear that while there is no precise arithmetical rule that governs in all fee cases, a court will look at the claimed fees in relation to the actual money judgment won at trial and will also consider how many claims a litigant won and lost in the same case when determining the fee award.