In Massive Fee Clash, Billing Blunders Cost Attorneys $1.8 Million in Fee Reductions

Posted on September 11th, 2018 by Legal Fee Advisors

By Zachary Kalmbach.

A federal court in Nebraska made substantial reductions to a fee request to account for a plethora of billing errors. Defendants, Werner Enterprises and Drivers Management, operated a student driver program for new truck drivers. Plaintiffs filed a class action seeking compensation for unpaid wages allegedly earned during off-duty time spent on short rest breaks and in their trucks’ sleeper berths. Plaintiffs prevailed on the short rest break claim, but not on the sleeper berth claim. Plaintiffs requested $2,192,500 in attorneys’ fees and $201,465.75 in costs. To account for numerous billing improprieties such as vague records and billing for excessive, duplicative, and unnecessary work, the Court reduced fees by 85% and costs by 34%.

Plaintiffs requested hourly rates ranging from $375 for the least experienced associates to $525 for the most experienced partners, which were consistent with market rates in Philadelphia. Plaintiff asserted that Philadelphia rates should apply because local counsel lacked the expertise to handle the case. Scant evidence, however, was put forward to address whether local firms were even consulted. Finding that plaintiffs failed to demonstrate that Philadelphia rates should apply, the Court ruled that rates should be adjusted to the Omaha market.  This resulted in rates ranging from $200 for the least experienced associates to $325 per hour for the most experienced partners.

As to the reasonableness of the requested hours, the Court first found that several erroneous time entries must be excluded. For example, the fee petition included a time entry indicating that a single attorney worked 45 hours in one day, for which the attorney billed $22,500. There were several similar entries that the Court excluded. Moreover, plaintiffs’ expert had to be deposed twice as his first deposition contained errors and miscalculations of damages. Counsel billed 337.8 for work related to the second deposition, all of which were excluded by the Court.

The Court further reduced the number of hours because many of the time entries were vague and reflected excessive, inefficient, and duplicative work. As to vagueness, the Court found that entries such as “prep for trial” and “continue working” failed to provide sufficient detail, with several entries containing no details at all. Moreover, the Court excluded 200 hours for time spent on work that was only necessary due to missed deadlines or plaintiffs’ counsel’s litigation errors. Further, the Court identified over 800 other hours of work that was “excessive, duplicative or unnecessary.” The Court observed that this total represented more than 25% of the total hours claimed, and thus reduced the total number of hours by 25%. After applying the above reductions, the Court found that the remaining hours should be reduced by half because the fee petition failed to distinguish between work on successful and unsuccessful claims.

The Court also excluded 456.9 hours spent by paralegals scanning consent forms and adding the forms to a database. The Court reasoned that plaintiffs were not entitled to compensation for such time because the tasks were clerical in nature and did not require paralegal training. Moreover, the Court reduced the requested costs by $68,189.12 for a number of reasons. For example, plaintiffs failed to file a timely bill of costs and requested reimbursement for the unnecessary cost of staying in Omaha to appear for the verdict, even though the judge had previously said that the parties need not be present.

In sum, the Court awarded $337,293.69 in fees and $133,276.63 in costs. These totals reflected an 85% fee reduction and 34% costs reduction. This case provides a plethora of examples of improper billing practices. For example, the Court excluded numerous hours for vague billing entries and billing for excessive, inefficient, duplicative, and unnecessary work. Moreover, the Court rejected the request for out-of-town rates that failed to provide a sufficient evidentiary basis for the rates. Finally, the Court excluded hundreds of paralegal hours for scanning and adding documents to a database. Attorneys should look to this case when searching for guiding principles for billing practices such as setting hourly rates, staffing cases and keeping detailed time entries.

Petrone v. Werner Enterprises, Inc., No. 8:11CV401, 2018 WL 816250 (D. Neb. Feb. 9, 2018), order clarified, No. 8:11CV401, 2018 WL 2049838 (D. Neb. Apr. 25, 2018)

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