Unreasonable Attorney Fees: Queens County Supreme Court Reduces Attorney Fee Request by 45% for Excessiveness, Bill Padding, and Inefficiency

By   /   April 15, 2013 

 

Unreasonable Attorney Fees: Queens County Supreme Court Reduces Attorney Fee Request by 45% for Excessiveness, Bill Padding, and Inefficiency

Supreme Court, Queens County

Francis v. Atlantic Infiniti, Ltd.1

Lisa Belrose

In Francis v. Atlantic Infiniti, Ltd.,2 plaintiff’s attorneys made a motion for reimbursement of reasonable attorney’s fees and costs in the sum of $102,560.60, pursuant to New York’s Lemon Law.3  The underlying action involved the purchase of a used Infiniti QX4 car with major mechanical problems that were not timely remedied by the defendant.4  Plaintiff counsel was successful in recovering the value of the purchase price of the car in the amount of $20,949, without significant discovery, and won a summary judgment motion disposition in plaintiff’s favor.5  However, despite success, the court held that the fees charged were not reasonable because of the excessive time involved, bill padding, and inefficiency of counsel.6  This case implicates several important issues in legal fee bills, most importantly that attorney’s fees must be reasonable.

In determining a reasonable attorney fee, courts use the lodestar method, the Johnson twelve factor method, or a combination thereof.7  The New York Courts use the lodestar method as an objective method to determine the reasonableness of attorney’s fees, while the Johnson method is used as a subjective test for a court, in its discretion, to increase or decrease a request for attorney fees.8  This article will explore each method in more detail, focusing on the lodestar and the many sub-issues that are implicated in legal billing, illuminating that ethical and reasonable billing practices decrease the likelihood of fee disputes and/or reduction in attorney fee requests by adjudicating courts.

The lodestar method was first enunciated by the Third Circuit in Lindy Bros. Builders, Inc. v. Am. Radiator & Standard Sanitary Corp.9  The lodestar method is calculated by multiplying the reasonable expenditure of hours by a reasonable hourly rate.10  The reasonable expenditure of hours is evaluated by looking to the nature and extent of the work an attorney performs, and whether an attorney has exercised billing judgment, avoided duplicative services, inefficiency, or bill padding.11  Billing judgment is a lawyer’s ethical duty to remove fee requests for hours expended that are “excessive, redundant, or otherwise unnecessary.”12  A court must also be able to evaluate the hours expended, which means that attorneys must avoid vague billing entries and block billing for work that is performed.13  A vague billing entry lacks sufficient detail to enable a court to determine what work was actually performed and the time it takes to perform such work.14  Block billing on the other hand, is billing “such that multiple tasks are aggregated into one billing entry thereby ‘imped[ing] the court’s efforts to evaluate the reasonableness of any of the listed activities.’ ”15

The second part of the lodestar computation is that a reasonable hourly rate must be established for the lawyer seeking an application for his or her fees.16  A reasonable hourly rate depends on the market in which the lawyer provides his or her services.17  The attorney requesting the fee carries the burden to prove the rate is reasonable, and, should the attorney fail to meet his or her burden, a court will turn to rates customarily charged in the market.18  Also, in determining a reasonable hourly rate, an attorney must distinguish between legal and non-legal work (i.e., clerical, secretarial, or other work than can be performed by non-attorneys).19  New York courts have stated that “ ‘[i]t is appropriate to distinguish between legal work, in the strict sense, and investigation, clerical work, compilation of facts and statistics and other work which can often be accomplished by non-lawyers but which a lawyer may do because he has no other help available. Such non-legal work may command a lesser rate. Its dollar value is not enhanced just because a lawyer does it.’ “20

The second method used in determining a reasonable attorney fee is the Johnson method which evaluates:

(1) the novelty and difficulty of the questions presented; (2) the skill requisite to perform the legal services properly; (3) the preclusion of other employment by the attorney due to acceptance of the case;(4) whether the fee is fixed or contingent; (5) time limitations imposed by the client or the circumstances; (6) the nature and length of the professional relationship with the client; (7) the amount involved and the results obtained; (8) the undesirability of the case; and (9) awards in similar cases.21

 

A court may focus on any number of these factors to increase or decrease the fee request, in a court’s discretion, based upon the facts of the case.22

The court in Francis used the lodestar as an objective inquiry into plaintiff’s attorneys’ request for attorney’s fees and the Johnson factors as a subjective inquiry into the same.23  In calculating the lodestar, the court reduced the fee award for three instances of unproductive, duplicative, and non-legal work performed from the hours expended on the case.24  The first instance was based upon unproductive work that was billed in the sum of $2,510 for a motion to compel that was never filed with the court.25  The supervising attorney’s hours were also reduced from nineteen to ten hours based upon duplication of work, because he did not draft legal documents or appear in court.26  The court also reduced the paralegal billable hours from sixty to thirty hours for secretarial tasks such as “copying, collating, typing, etc.”27

Next, the court calculated a reasonable hourly rate based upon the facts of the case.28  Because the plaintiff’s attorney failed to prove that their fees were reasonable, the court used case law from the Second Circuit to guide its inquiry.29  The court found that 25 years experience garnered an hourly wage of $350-$400 per hour, $325 was the prevailing rate for partners, associates’ range was from $100 to $250 per hour, and $100 per hour for paralegals.30  Applying the customary rates for the locality, the court reduced the fees charged by the lead attorney from $410 per hour to $225 per hour, the supervising attorneys rates were reduced to $250 per hour from $330 per hour, and the paralegal charges were reduced from $130 to $85 per hour.31  This was based upon the experience of the attorneys which did not justify the charges with only three years experience for the lead attorney on the case, not to mention that the lead attorney, with no previous Lemon Law experience, charged a higher hourly rate than the more experienced supervising attorney.32

Last, the court in Francis applied five of the factors from Johnson and held that the reduction based on the objective factors was appropriate and there was no need to adjust the fee award any further.33  In fact, the court found good reason, based on past precedent, to reduce the law firm’s rates in this case based on the objective factors.34  For example, in past cases the same law firm requested $88,557 in legal fees and was awarded $26,000, another request was for $33,639 and was reduced to $22,900, and another requested for $50,861.89 was reduced to $7,500 in fees.35  The court also found that the reduction in fees was appropriate because the law firm should have been more efficient considering that they had significant experience in Lemon Law litigation, which meant that the firm recycled papers, arguments, and motions from previous litigation.36  Next, the court found that the amount involved did not justify the expense because “a full refund of the purchase price for a value of $20,949.00, no one can credibly argue that a reasonable, paying client would be willing to pay $102,560.60. . . .”37  Lastly, the court looked at the attorney’s experience and skill, which was limited by the lead attorney on the case (with no previous Lemon Law experience); however, the court found it unreasonable to charge 204.6 hours for services because the action was relatively limited in that it did not require “any extensive discovery, depositions, expert witnesses or motion practice other than plaintiff’s motion for summary judgment and no trial.”38  The overall result based upon the above analysis and deductions was that the plaintiff’s fee request was reduced by $22,765.50 (45% ).39

The ruling in Francis reinforces the legal principle that attorney’s fees and billing practices must be reasonable, fair, and ethical.  It is not as simple as knowing or being able to cite the lodestar40 or Johnson41 tests for reasonableness.  There are many more sub-issues and concerns that go along with a reasonable attorney fee.  These include, but are not limited to, a reasonable expenditure of hours based upon the facts of the case, a reasonable hourly rate, exercising billing judgment, and avoiding duplicative services, bill padding and charging for non-legal work at legal work rates.42  In order to avoid billing disputes and/or a reduction in fees requested, legal professionals should keep contemporaneous time records that document the work that was performed with sufficient detail in order to allow a client and a court to evaluate the services that were performed to ensure transparency and accuracy in billing records.  A court will not always detail, like they did in Francis, exactly why, or dissect the bills so thoroughly.  As a matter of fact, many courts will reduce the fee requested by a percentage rate, depending on how questionable it finds the billing entries.  These legal concepts are clearly here to stay, and a law firm, such as the one in this case, should have been better aware of what a reasonable attorney fee entailed, and avoided such a reduction by a court.

 

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Footnotes:

  1. 34 Misc. 3d 1221(A) (Sup. Ct. Queens County 2012).
  2. Id.
  3. n.y. gen. bus. law § 198-b (Consol. 2012).
  4. Francis, 34 Misc. 3d at 1221(A).
  5. Id.
  6. Id.
  7. Arbor Hill Concerned Citizens Neighborhood Ass’n v. Cnty. of Albany, 522 F.3d 182, 186-89 (2d Cir. 2007) (citations omitted).
  8. Francis, 34 Misc. 3d at 1221(A).
  9. 487 F.2d 161 (3d Cir. 1973).
  10. Francis, 34 Misc. 3d at 1221(A).
  11. Id. (citations omitted).
  12. Hensley v. Eckerhart, 461 U.S. 424, 434 (1983).  See also Shim v. Millennium Grp., 2010 WL 2772493, at *4 (E.D.N.Y. 2010) (citation omitted) (holding “courts ‘should exclude excessive, redundant or otherwise unnecessary hours’ ”); Automobile Club of N.Y. v. Dykstra, 2010 WL 3529235 at *3 (S.D.N.Y. 2010) (citations omitted) (finding a case should be litigated effectively, and if not, a court may reduce a fee award for “excessive, wasteful, or redundant” work).
  13. Tatum v. City of N.Y., 2010 WL 334975 at *7 (S.D.N.Y. 2010).
  14. Grievson v. Rochester Psychiatric Ctr., 746 F. Supp. 2d 454, 466 (W.D.N.Y. 2010).  See also Tatum v. City of N.Y., 2010 WL 334975 at *7 (S.D.N.Y. 2010) (quoting Kirsch v. Fleet St., Ltd., 148 F.3d 149, 172 (2d. Cir. 1998)) (holding “Courts may deny compensation where the billing information submitted is ‘too vague to sufficiently document the hours claimed’ ”).
  15. Green v. City of N.Y., 2009 WL 3088419 at *6 (E.D.N.Y. 2009) (quoting Soler v. G. & U. Inc., 801 F. Supp. 1056, 1061 (S.D.N.Y. 1992)).  See also Handschu v. Special Svcs. Div., 727 F. Supp. 2d 239, 249 (S.D.N.Y. 2010) (quoting Williams v. N.Y. City Housing Auth., 975 F. Supp. 317, 327 (S.D.N.Y. 1997) (stating “ ‘Fee applicants should not ‘lump’ several services or tasks into one time sheet entry because it is then difficult if not impossible for a court to determine the reasonableness of the time spent on each of the individual services or tasks provided . . . .’ ”).
  16. Francis, 34 Misc. 3d at 1221(A).
  17. Id.
  18. Id.  See also Tatum, 2010 WL 334975 at *4 (citation omitted) (finding that hourly rates of “$650 and $625 are unreasonable in light of the rates Plaintiff’s attorneys actually charge their paying clients and the rates ‘prevailing in the community for similar services by lawyers of reasonably comparable skill, experience and reputation.’ ”).
  19. Francis, 34 Misc. 3d at 1221(A).
  20. Rahmey v. Blum, 466 N.Y.S.2d 350, 357 (N.Y. App. Div. 2d Dep’t 1983) (quoting Johnson v. Ga. Highway Express, Inc., 488 F.2d 714, 717 (5th Cir. 1974).
  21. Francis, 34 Misc. 3d at 1221(A) (citing Johnson, 488 F.2d at 717-19).
  22. Rahmey, 466 N.Y.S.2d at 358.
  23. Francis, 34 Misc. 3d at 1221(A).
  24. Id.
  25. Id.
  26. Id.
  27. Id.
  28. Francis, 34 Misc. 3d at 1221(A).
  29. Id.
  30. Id. (citations omitted).
  31. Id.
  32. Id.
  33. Francis, 34 Misc. 3d at 1221(A).
  34. Id.
  35. Id.
  36. Id.
  37. Id.
  38. Francis, 34 Misc. 3d at 1221(A).  The court also noted that the time spent may have been avoided had the lead attorney been provided support, guidance, and supervision of the firm that would represent the firm’s extensive experience.  Id.
  39. Id.
  40. Lindy Bros. Builders, Inc., 487 F.2d at 168.
  41. Johnson, 488 F.2d at 717-19.
  42. Francis, 34 Misc. 3d at 1221(A).