Inefficient and Excessive Billing Results in Attorney Fee Reduction of 70 Percent

Posted on October 1st, 2014 by Legal Fee Advisors

A U.S. District Court Judge slashed the requested attorney fees for a recent $32 million class action settlement by over $5 million.[1] The law firms were requesting fees of $8 million, but Judge Edward Davila of the Northern District of California found only $2.4 million in fees to be justified, resulting in a reduction of 70 percent.[2]

The litigation involved a class action suit about violations of the Telephone Consumer Protection Act provisions that prohibit automated calls to consumers without consent.  The Judge devoted about half of his 22 page order, however, on the issue of legal fees. [3]  Judge Davila’s criticisms of the requested fees were numerous, ranging from the number of hours billed, to the duplicative time spent on the case by the ten law firms, 18 attorneys, and eight paralegals.[4]

The judge criticized the firms for the distribution of hours worked, noting that of the 2,560.7 hours billed, over 65 percent of the time was billed by attorneys with rates of $500 per hour or more, while the minority of hours were billed by attorneys with lower rates.  Judge Davila particularly noted that “few clients would stand for such an inefficient allocation of time.” [5] This kind of criticism by a court is not uncommon–it has become a routine practice for many law firms to overstaff cases with senior partners who end up doing work capable of being handled by lower level partners or senior associates.  However, more and more courts are recognizing this as an issue to remedy.

Further, the court reduced the 800 hours spent in settlement negotiations and mediation to only 400 hours, finding that the time billed was particularly excessive, and noting that “there is little reason why so many attorneys would need to be present.”[6]  In fact, the billing guidelines of many companies now include restrictions on the number of attorneys that can bill for attendance at a hearing or mediation, and attorneys should be well aware of this.

This case demonstrates that courts are willing to significantly reduce attorney fees when there is a prevalence of duplicative work and excessive hours billed for by attorneys. Law firms should know that staffing a case with multiple attorneys with high billing rates does nothing more than inflate the costs billed to clients, particularly when junior staff with lower billing rates and a fewer number of attorneys would be adequate. Inefficient billing practices such as this leads to inflated fees that the courts are willing to find unreasonable.

J. Clark

Legal Fee Advisors © 2014

[1] Lisa Hoffman, Plaintiffs Attorney Fees Slashed in BofA Case, Law.com, (Sept. 8, 2014), http://www.law.com/sites/articles/2014/09/08/plaintiffs-attorney-fees-slashed-in-bofa-case/?slreturn=20140812111145.

[2] Rose v. Bank of Am. Corp., No. 5:11-CV-02390-EJD, 2014 WL 4273358 (N.D. Cal. Aug. 29, 2014), reconsideration denied, No. 5:11-CV-02390-EJD, 2015 WL 1969094 (N.D. Cal. May 1, 2015)
[3] Id.

[4] Rose v. Bank Of Am. Corp., No. 5:11-CV-02390-EJD, 2014 WL 4273358 (N.D. Cal. Aug. 29, 2014).

[5] Id. at 10.

[6] Id. at 8.