Texas Appellate Court Rescues Vigilante from $300,000 in Attorneys’ Fees

Posted on December 4th, 2018 by Legal Fee Advisors

By Zachary Kalmbach.

A Texas appellate court was troubled by a trial court’s grossly inadequate consideration of a large fee award, and remanded the case for reconsideration. James McGibney, who is a founder and operator of a number of “vigilante justice” websites, sued Neal Rauhauser alleging a number of defamation torts. The trial court dismissed the claims, and, without conducting a hearing, awarded Rauhauser $300,383.84 in attorneys’ fees (the full amount requested). Appellant appealed, challenging the reasonableness of the award. The appellate court (the “Court”) determined that the trial court failed to properly analyze the reasonableness of the fee request, and remanded the case for reconsideration.

The Court began its review by declaring, “a trial judge is obliged to do more than simply act as a rubber-stamp, accepting carte blanch the amount appearing on the bill.” The Court went on to forecast its decision, stating, “[i]n reaching our conclusion that there was insufficient evidence to support the trial court’s award of the entire amount sought by [Rauhauser], we need only to look at a handful of the charges that appear on his billing statement.” Accordingly, the Court proceeded to scrutinize Rauhauser’s billing records.

First, the Court found that “[s]ome entries were so heavily redacted that the trial court could not possibly have had sufficient evidence to determine that the entire amount requested was not excessive or extreme.” The Court listed a number of examples of entries that were “so heavily redacted as to be meaningless.” For example, some entries were completely redacted, and many others contained descriptions such as “Review [Redacted]” and “Review and respond [Redacted].” Other, “less brutally” redacted entries provided some information, “but still stopped short of providing any meaningful evidence of the tasks performed.” The Court concluded that, while some redacted matters may have involved communications between attorney and client, “a trial court is not at liberty to blindly assume that fees for every communication between counsel and client should, in fairness, be awarded.”

Moreover, the Court found that other entries had “dubious relevance” to the lawsuit. For example, Rauhauser’s attorney billed 4.9 hours for researching the criminal history of opposing counsel, which the Court determined was wholly unrelated to this suit. Other billed services “went well beyond the depth or research and preparation ordinarily expended in the early stages of any lawsuit.” The Court emphasized its concern with the fact that Rauhauser’s attorneys amassed nearly $67,000 in fees before the motion to dismiss was even heard. Moreover, the Court was troubled by the fact that two attorneys billed $13,585 to travel to Fort Worth to attend a hearing on the motion.

Other areas of legal work that appeared on the record gave the Court further pause. For example, numerous hours were devoted to reviewing not only the rulings or holdings of particular cases, but the entire record of those cases. The Court found “particularly troublesome” the practice of reviewing the entire files of cases outside the jurisdiction. The Court emphasized that such research would have no authoritative, or even persuasive, authority to guide the trial court in this case.

In conclusion, the Court found that the trial court failed to consider and weigh the evidence of attorneys’ fees in a sufficiently thorough manner. Accordingly, the Court remanded the fee issue for reconsideration. This case demonstrates the importance that courts’ place on the determination of fee awards, which should motivate attorneys to scrutinize their billing practices and records before submitting them to a court. Moreover, the case illustrates a number of issues that may compel a court to reduce a fee award. Such issues include redacted entries that fail to provide meaningful evidence of the work performed, work that is not relevant to the case, and excessive and unnecessary research.

McGibney v. Rauhauser, 549 S.W.3d 816 (Tex. App. 2018), review denied (Sept. 28, 2018)

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