Arizona Court Cuts Fees by 55% for Improper Allocation of Work and Excessive Billing
Posted on January 4th, 2018 by Legal Fee Advisors
By Zachary Kalmbach.
A fee award in a 2017 District of Arizona case, Maricopa County v. Office Depot, Inc., highlights the importance of properly allocating work between experienced attorneys and associates and provides several examples of excessive billing. The case involved plaintiff Maricopa County’s purchase of office supplies from defendant Office Depot, with the Plaintiff alleging breach of contract and fraud. Defendant filed a motion to dismiss the complaint, which the Court granted in part. Later, the Court granted Defendant’s summary judgment motion. Defendant subsequently moved for an award of $1,076,678 in attorneys’ fees and $68,277.29 in expenses. Plaintiff challenged $1,035,307.35 in fees for work performed by an out-of-town firm. The firm billed 1,906.0 hours, the bulk of which was billed by a partner with 21 years of experience and an attorney with 18 years of experience. The Court reduced the fees sought by the firm by 55% because of problems in the way the firm allocated work and excessive hours on several activities.
Firstly, the Court reduced the number of hours billed for work on Defendant’s motion to dismiss. The Court found that “devoting almost 174 hours on a motion to dismiss five claims was excessive” and that “[i]n general, the time [the firm’s] lawyers expended on tasks was excessive.” However, the main problem with the hours billed on the motion was with how the firm allocated the work. Although, in the Court’s view, much of the research and drafting could have been done by associates, the lead attorneys did most of the work. The Court addressed this problem when considering the lodestar factors.
The Court also found problems with how the firm allocated work on cross-motions for summary judgment. While the hours spent on the cross-motions “[struck] the court as excessive, . . . the primary problem with the cross-motions [was] that the majority of the work was done by [a lead attorney]” rather than an associate. As with the motion to dismiss, the Court addressed this problem when considering a reduction to the lodestar.
The Court applied several other reductions to the lodestar because of excessive billing. For example, fees associated with Defendant’s public records request were excessive because “[i]t should not have taken [59.4 hours] for defendant to send plaintiff a public records request and then draft a four-page complaint regarding plaintiff’s failure to respond promptly.” The Court also found that the firm improperly billed for travel-only time. Moreover, 200 hours billed by the lead attorneys for simply reviewing documents and 533 hours billed for 24 depositions were deemed excessive, in large part because many of the hours were duplicative, as both lead attorneys attended most depositions. Finally, “[a]s with most of the [firm’s] billing,” hours billed for “general litigation tasks”, such as “drafting the answer, expert reports, and settlement discussions,” were held to be excessive by the Court and taken into consideration when reducing the lodestar.
In total, the Court concluded that the number of hours the firm reasonably expended on the case was 1,334.2 and that the total lodestar amount was $687,510.10. The Court, however, found that the lodestar factors suggested a further reduction would be appropriate for the firm’s failure to properly allocate the work, as most of the work on the motions to dismiss and the cross-motions was performed by lead attorneys rather than associates, the Court applied a further 20% reduction, decreasing the lodestar amount to $569,031.56. The Court found that Defendant’s non-taxable expenses of $68,277.29 were reasonable. As a result, the Court awarded a total of $678,679.85 in attorneys’ fees and expenses.
This case demonstrates the importance of properly allocating work between experienced attorneys and associates. The Court did not hesitate to apply significant reductions where it found that lead attorneys billed for work that could have been performed by associates. The case also highlights several examples of excessive billing, such as travel time, document review, and duplicative hours.
Note: At the time of publication an appeal had been filed on June 15, 2017. We will keep you updated on any updates to this case!
Maricopa Cty. v. Office Depot, Inc., No. 2:14-CV-1372-HRH, 2017 WL 1957882 (D. Ariz. May 11, 2017)
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