Californian fee award slashed by $1million for unreasonable, vague and contentious time entries

Posted on June 10th, 2016 by Legal Fee Advisors

By Emily Wilson.
In a case regarding a breach of merger, Banas v Volcano Corporation, Volcano Corporation was successful in obtaining summary judgment against Banas and other shareholders party to the failed merger. Volcano sought attorney fees and costs in excess of $4 million for the work of their attorneys. The fee motion was met with strong opposition by Banas for a number of reasons including; block-billing, use of overqualified staff, vague, unnecessary or excessive time entries. With the Court agreeing with many of Banas’ objections, the fee award was reduced by approximately $1 million.
One of the Court’s greatest criticisms of the firm’s fees was their use of block-billed time entries. In one example, a partner had block billed 6.1 hours for various tasks. The firm’s contention that block-billing was “standard practice” within the district was met with harsh disapproval by the Court, stating it “flies in the face of repeated criticism by courts throughout the country.” As a result, the Court was unable to discern the reasonableness of each separate task and reduced the entire award by 20%.
Following the Court’s criticism of block-billing, the Court took issue with the firm’s use of vague descriptions, as they made it “difficult to determine what the timekeeper was actually doing.” While Banas contended that over $200,000 should be excluded entirely for vagueness, the Court thought it more appropriate to include this objection within a broad 5% reduction for a range of deficiencies.
Included in this 5% reduction was the firm’s inefficient use of attorneys. Banas argued that the hourly rates charged by the firm, ranging from $355 to $1,095 per hour, were greater than the prevailing market rates for similar cases in the Northern District. Volcano, however, provided evidence to the contrary. Judge Orrick, using his own knowledge, held though the hourly rates were at the higher end, that they were reasonable. Where Volcano was held deficient was the completion of work by appropriate attorneys – 2.2 hours for a senior associate to prepare binders was found “not a reasonable use of a senior associate’s time, particularly not at $645 an hour”. Further, though Banas did not object to the use of contracted attorneys for the review of documents, they took exception to reviews conducted by some of the firm’s more senior attorneys (with the Court’s agreement). The Court also held that, while the firm was successful in resolving the matter in their client’s favor, an excessive amount of time was used to achieve this outcome and over $100,000 was deducted as a result.
Other arguments put forward by Banas, such as discrepant time entries between staff, overstaffing at depositions and mediations, and excessive travel were held unpersuasive by the Court and no reductions made.
This case highlights the need for attorneys to pay special attention to the work they are undertaking – to be specific in detailing the work completed and consider whether it is an efficient use of time and money. Many of the criticisms espoused in this case could have been avoided by adopting better billing practices, particularly by eliminating the use of block-billing and providing clearer descriptions for work completed. By keeping such reasonable description rules in mind, the successful party may well have had greater success in its fee application.

Banas v. Volcano Corp., 47 F. Supp. 3d 957, 971 (N.D. Cal. 2014)

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