Good billing practices can go to waste if the rates charged are too high

Posted on August 4th, 2016 by Legal Fee Advisors

By Emily Wilson

A New York court has reduced an award of fees by approximately 50% in a commercial tenancy dispute case, Thor 725 8th Avenue summary judgment against the Goonetillekes for $2million after the couple had breached several terms of a contractual guaranty. The Court then reduced Thors’ fee motion of $309,212 for reasons including, inter alia, the firms’ use of high hourly rates, fees on top of fees and small amounts of block billing. The reduction LLC v. Goonetilleke. Thor obtained could have been greater had the Court taken issue with fees for research and excessive staffing.

Firstly, the upward deviation in rates charged by the 10 attorneys staffed on the case were found to be too high for such “a garden-variety breach-of-contract case” and were revised down to rates comparable with market rates for similar cases. To demonstrate, the $695 rate charged by a partner with 26 years of litigation experience was reduced to a rate of $450. Further, the fact the firm had charged, and Thor paid for, these rates did not in itself justify the award of them, given that the question of commercial reasonableness is an objective one.

The reasonableness of the 707.3 hours billed by counsel was also examined, with the Court applying a broad reduction of 10% to reflect some erroneous time keeping methods. Most notable, the fees incurred in preparing for the fee motion were disallowed. Further, though block-billing is generally disfavored by the courts, some of the disputed block-billed entries were often for less than four hours and included specific allotment of time to instill in the Court enough confidence regarding such charges. The Court, however, still found some basis for a “slight reduction” of 10% due to “mild instances of improper block and duplicative billing”. The Goonetillekes then erroneously suggested the partner heading Thor’s case expended too much time on it. The Court, however, highlighted that the partner had delegated much of the work to associates (approximately 55%) and had himself only billed 19% of the total fees and, as a result, no reduction was made. On a question of costs, the Court was disinclined to reduce Thor’s request for $11,341. Thor was able to demonstrate investigation services were necessary and the $5,078 in Westlaw research was regularly billed separately as it is not included in attorney rates.

Despite the firm employing many reasonable billing methods that were accepted by the courts, the largest dispute (and ultimate reduction) arose out of the rates charged by the firm. In light of this, it is important for firms to remember the context of the case in which they are charging their client – does it involve complex and contentious doctrines of law or are the issues ones that are easily handled by more junior staff? Identifying the complexity of each case will ensure the courts look more favorably on future motions for awards of fees and costs.

It should be noted that at time of distribution an appeal has been filed and the views expressed by the court may be overturned.

Thor 725 8th Ave. LLC v. Goonetilleke, No. 14 CIV. 4968 (PAE), 2015 WL 8784211 (S.D.N.Y. Dec. 15, 2015)

Legal Fee Advisors provides confidential, practical consultation to companies and individuals, solving their legal fee issues with respect and fairness.

Comments are closed.