Texas Court finds Blatant Block Billing and Exaggeration of Billable Hours

Posted on February 27th, 2018 by Legal Fee Advisors

By Zachary Kalmbach.

A Texas court recently cut a fee award by 35%, in large part because a firm demonstrated poor billing judgment by block billing and overstating the number of hours expended on the case. In Kiewit Offshore Services v. Dresser-Rand Global Services, Plaintiff, Kiewit, filed a breach of contract suit against Dresser-Rand. The Court granted separate summary judgment motions for each party, resulting in a $9,572,271.90 judgment against defendant. Plaintiff subsequently sought $2,239,321.75 in attorneys’ fees and $183,975.90 in expenses. In reducing the requested fees and expenses, the Court segregated successful from unsuccessful claims and found that plaintiff’s attorney had exercised improper billing judgment. This resulted in a 35% overall reduction to attorneys’ fees, for a total award of $1,424,309.13 in fees and $183,975.90 in expenses. Segregating fees, which is a common practice, yielded a 15% reduction, and improper billing judgement made up the other 20% of the overall reduction.

The Court first deducted $144,749.50 in paralegal fees. Under Texas law, courts are to consider a four-step test to assess whether paralegal fees are recoverable. Under the test, a paralegal may recover attorneys’ fees for a paralegal’s work if the paralegal performs work traditionally done by an attorney. Evidence must establish: 1) the qualifications of the paralegal to perform substantive legal work; 2) that the paralegal performed substantive legal work under the direction and supervision of an attorney; 3) the nature of the legal work performed; 4) the paralegal’s hourly rate; and 5) the number of hours expended by the paralegal. The Court found that plaintiff did not establish two necessary elements of the test: plaintiff neither demonstrated the qualifications of the paralegals nor described the substantive legal work paralegals performed under the direction of attorneys. Thus, the Court concluded that plaintiff could not recover for paralegal time.

After excluding paralegal fees, the Court applied a 15% reduction to segregate fees incurred on plaintiff’s unsuccessful claims. The Court reasoned, “‘Intertwined facts do not make tort [attorney’s] fees recoverable; it is only when discrete legal services advance both a recoverable and unrecoverable claim that they are so intertwined that they need not be segregated.’”

Finally, the Court next applied a 20% deduction for block billing, overstated time charges, attorneys performing non-legal work, and non-working travel time.

As to block billing, the Court found that most of plaintiff’s billing entries failed to specify the amount of time spent on discrete tasks. For example, a partner billed nine hours for traveling to Boston, preparing for and attending a deposition, attending attorney conferences, and preparing correspondence. The Court found that plaintiff failed to identify how many hours were “‘were written off as unproductive, excessive, or redundant’” as required to establish good billing judgment, which “weigh[ed] in favor of a reduction.”

The Court also found that plaintiff overstated time charges. For example, the Court identified specific instances where plaintiff’s attorneys billed more hours than defendant’s attorneys for the same task. This included a conference call where plaintiff’s attorneys each billed 1.5 and 0.9 hours while defendant’s attorneys billed only 0.3 hours. Moreover, on several occasions, plaintiff’s attorneys billed more hours on a deposition than the time it took to conduct the deposition. Overstatements such as these contributed to the 20% billing judgment reduction.

The Court applied further reductions because plaintiff’s attorneys billed for clerical work and non-working travel time. For example, attorneys billed for conferring with colleagues about file organization, uploading files, and conferring with a vendor on a quote. Plaintiff’s attorneys also billed for travel time without indicating how much of the time was devoted to travel as opposed to other tasks. These improper billing entries contributed to the 20% billing judgment reduction.

Deductions for segregation and improper billing practices resulted in a 35% overall fee reduction and a total fee award of $1,424,309.13. Defendant did not challenge, and the Court did not address, the requested expenses of $183,975.90. This case is a classic instance of a court segregating unsuccessful claims. Moreover, the court laid out a comprehensive test for whether paralegal work may be billed, and described a plethora of billing practices that will not be tolerated, such as block billing, overstated time charges, attorneys performing non-legal work, and billing for non-working travel time.

Kiewit Offshore Servs. Ltd. v. Dresser-Rand Glob. Servs., Inc., No. CV H-15-1299, 2017 WL 2599325 (S.D. Tex. June 15, 2017)

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