Recovering Contract Lawyer Fees

If a contract lawyer drafts a successful discovery motion and fees are awarded, how does the court determine the appropriate fee?  We live in a rapidly changing world where the traditional law firm model may no longer be economically viable for certain practice areas.  Instead a case functions more like a construction project where a general contractor has overall responsibility but relies upon sub-contractors with their own discrete role in the work.  In the legal context, a solo might hire a contract lawyer to handle a discovery motion only.  If that motion prevails and fees are awarded, how are those fees calculated?

Reasonable attorneys’ fees are generally calculated using the traditional lodestar method.[1] This method determines a reasonable fee by multiplying “the number of hours reasonably expended on the litigation” by “a reasonable hourly rate.”[2]  The lodestar figure is presumptively reasonable.[3]  However, a district court “may adjust the lodestar upward or downward using a ‘multiplier’ based on factors not subsumed in the initial calculation.”[4]  There are a variety of relevant factors to consider for an adjustment.[5] 

Determining the hours for which attorneys’ fees should be calculated requires first determining whether the expenditure of time was reasonable.[6]  The court “has a great deal of discretion in determining the reasonableness of the fee and, as a general rule, [an appellate court] will defer to its determination … regarding the reasonableness of the hours claimed by the [movant].”[7]  “In other words, the court has discretion to ‘trim fat’ from, or otherwise reduce, the number of hours claimed to have been spent on the case.”[8]  The reasonableness of the time spent is case specific.[9]  Hours related to overstaffing, duplication, and excessiveness, or that are otherwise unnecessary may be excluded.[10]  “[T]he Court considers factors such as the complexity of the issues raised, the need to review the record and pleadings, and the need to conduct legal research, in addition to the length of the briefing.”[11]

The party requesting attorneys’ fees bears the burden of establishing the reasonableness of the hourly rates requested.[12]  “To inform and assist the court in the exercise of its discretion, the burden is on the fee applicant to produce satisfactory evidence—in addition to the attorney’s own affidavits—that the requested rates are in line with those prevailing in the community for similar services by lawyers of reasonably comparable skill, experience and reputation.”[13]   “Affidavits of the [movant’s] attorney and other attorneys regarding prevailing fees in the community, and rate determinations in other cases, particularly those setting a rate for the [movant’s] attorney, are satisfactory evidence of the prevailing market rate.”[14]  The Court may also rely on its own familiarity with the rates in the community to analyze those sought in the pending case.[15]

But how does that calculation work with contract lawyers?  Should their fees be reimbursed at cost or at a billable rate?  An April 24, 2018 decision highlights the problem.  In re Anthem, Inc. Data Breach Litig. noted 33 lawyers at issue were labeled as contract attorneys and were paid hourly rates “from $25.00 to $65.00, with the clear majority in the $40.00 range.”[16]  However, the firms that hired the contract lawyers “have charged hourly rates for contract attorneys from $185 to $495.”  The average hourly rate came to $359.83.  “It is simply inappropriate for these rates to be charged, especially when there is recent authority for the hourly rates to range for such billers from $25 to $59.”[17]

If courts allow parties to use contract lawyers and recover a billable rate rather than the actual paid rate, discovery motions become potential profit centers.  This in turn creates more motion practice and encourages wars of attrition.  It is not in the interests of the courts or litigants for that to become reality.

[1] See, e.g., Camacho v. Bridgeport Fin’l, Inc., 523 F.3d 973, 978 (9th Cir. 2008).

[2] See Hensley v. Eckerhart, 461 U.S. 424, 433 (1983).

[3] Cunningham v. County of Los Angeles, 879 F.2d 481, 488 (9th Cir. 1988).

[4] Van Gerwen v. Guarantee Mut. Life Co., 214 F.3d 1041, 1045 (9th Cir. 2000).

[5] Kerr v. Screen Extras Guild, Inc., 526 F.2d 67, 69-70 (9th Cir. 1975) (listing factors).

[6] See, e.g., Marrocco v. Hill, 291 F.R.D. 586, 588 (D. Nev. 2013).

[7] Prison Legal News v. Schwarzenegger, 608 F.3d 446, 453 (9th Cir. 2010) (quoting Gates v. Deukmejian, 987 F.2d 1392, 1398 (9th Cir. 1992)).

[8] Edwards v. Nat’l Business Factors, Inc., 897 F. Supp. 458, 460 (D. Nev. 1995).

[9] Camacho, 523 F.3d at 978.

[10] See, e.g., Hensley, 461 U.S. at 433.

[11] Marrocco, 291 F.R.D. at 588.

[12] Camacho, 523 F.3d at 980.

[13] Blum v. Stenson, 465 U.S. 886, 895 n.11 (1984).

[14] United Steelworkers of Am. v. Phelps Dodge Corp., 896 F.2d 403, 407 (9th Cir. 1990).

[15] Ingram v. Oroudjian, 647 F.3d 925, 928 (9th Cir. 2011).

[16] No. 15-MD-02617, 2018 U.S. Dist. LEXIS 69036, 2018 WL 1940418 (N.D. Cal. Apr. 24, 2018).

[17] See, Dial Corp. vs. News Corp., 317 F.R.D. 426, 430, 438 (S.D.N.Y. 2016), Banas v. Volcano Corp., 47 F.Supp.3d 957, 980 (N.D. Cal. 2014).