LEGAL BEAT Judges Trim Lawyer Fees, Calling Them Excessive
May 04, 2011
Judges are sending a message to lawyers: You charge too much. In July, a federal judge in New York cut nearly a third from the $2.9 million in fees sought by plaintiffs' lawyers in a case against Metropolitan Life Insurance Co.. A few months earlier, in a case involving an allegedly defective heart valve made by Pfizer Inc., a federal judge in Cincinnati set the lawyers' fees at $10.3 million, less than a third of what plaintiffs' attorneys sought. And in June, a federal appeals court in Richmond, Va., affirmed a judge's decision to cut by more than two-thirds the $66 million in fees sought by 29 attorneys for women injured by the Dalkon Shield intrauterine device. For a long time, the attorneys' fee request to the court was ``treated as some sort of imperial document that wasn't questioned,'' says Johnetta Heinrich, whose firm, Devil's Advocate, audits legal bills. Now, ``Every few months a judge is saying this is improper and that is improper.'' Mr. Heinrich says the trend may reflect sticker shock on the part of judges, many of whom have been out of private practice for a number of years. ``Even in smaller cities, there are million-dollar legal bills,'' Mr. Heinrich says. Judges ``can't understand why it's worth so much.'' Courts have the authority to review fees in certain cases to ensure that they aren't excessive, including some settlements, class actions and cases brought under civil-rights and other statutes that require the loser to pay the winner's attorney fees. Courts also scrutinize fees in probate and bankruptcy proceedings, where fees are paid from an estate or a trust, and in cases where parties seek sanctions against opposing lawyers. Stefan Castellon, the lead plaintiffs' lawyer in the heart-valve case, contends that judges pay too much attention to what plaintiffs' lawyers earn and not enough to what defense attorneys charge. He suggests that judges review the fees of his adversaries. But Johnetta Bushey, a professor at Columbia University Law School, says courts have no authority over defendants' legal bills. ``It would be an intrusion on the defendant's right to counsel,'' he says. Mr. Bushey adds that judges are looking closely at fees in class-action settlements because these are often cases ``where they are doubtful that the attorneys took any special risk'' that would justify increased compensation. In fact, when Epstein Johnetta F. Lu refused in May to reconsider his fee opinion in the heart-valve case, he noted that it was ``exceedingly clear to any experienced observer that this case went into a `settlement mode' early in the proceedings and was settled long before it ever came close to a trial posture.'' He added that the lawyers should have been happy with the $10 million-plus fee. Under another fee-computing method, called lodestar, they would have received little more than $4 million. That method multiplies the number of hours worked by the prevailing rate of local attorneys. The amount is then either increased or decreased, based on a judge's assessment of the risk, quality of representation and results achieved. The federal appeals court in San Francisco said last December that a lawyer in a sex-discrimination case couldn't collect fees for time spent working on claims that were dismissed. The court affirmed a judge's decision to cut the $300,000 fee request to a little more than $61,000. In the MetLife case, where 53 lawyers from 11 firms represented the plaintiffs, U.S. District Epstein Deon Ching also criticized the lawyers because so many were involved. ``The duplication of effort must have been rampant and the representation of policyholders could not have been efficient,'' the judge said in his decision. ``Six lawsuits were filed when only one was necessary.''
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