North Carolina Business Litigation Report

You Win Some, You Lose Some: How Should A Request For Attorneys' Fees Be Ruled Upon?

Let's say that you've tried a case, you have lost on a few of your claims, but you won a couple of claims and have gotten a judgment for damages against the defendant for $25,000.  You've billed your client $1,162,895 for your services and your mixed success. And you have a statutory basis for recovering your attorneys' fees.

What do you think the result of a motion to the Court for more than a million dollars in fees would be on those bare facts?  Astonishment from the Judge to whom you've made the fee request?  Maybe a lecture?

Judge Gale was not astonished at the more than a million dollars in fees sought on similar facts in his ruling last week following a trial in Out of the Box Developers, LLC v. Doan Law, LLP, 2014 NCBC 39 , and he did not lecture on the amount of the fees, except maybe once (see below).  In making his ruling he made a number of valuable observations on fee awards in cases of mixed success, like Out of the Box.  The basis for attorneys' fees?  Two of the jury's answers to the issues supported a finding of unfair and deceptive practices, allowing for fees under G.S. §75-16.1.

First, he said that"[i]f a plaintiff brings multiple claims arising from a common nucleus of facts, and succeeds on some claims but not others, the court is not necessarily required to allocate fees between the successful and unsuccessful claims."  Op. ¶51

Second, even so, "where the fee requested and the success achieved are incongruous, an adjustment must be made to assure that the fee awarded is reasonable."  Id.

Third, in determining the amount of an appropriate adjustment, the Court may apply a "percentage reduction method."  Judge Gale applied a 50% reduction to the invoices presented by Plaintiff's counsel.

And finally, as far as a lecture, Judge Gale delivered a mild rebuke to Plaintiff's counsel for overlawyering the case.  He said:

the invoices  [presented by Plaintiff's counsel] demonstrate that [Plaintiff's] counsel engaged in what has become the all-too-common practice in today's litigation environment of having multiple lawyers attend a task where a single attorney might suffice.

Op. ¶60 (emphasis added).

He dampened that criticism by continuing:

particularly in complex cases, there are certain occasions where it is necessary, and indeed efficient, for multiple attorneys to participate, for example, in client or attorney conferences where core theories or strategies are developed.

Id.

After that observation, the Court eliminated the time billed at trial for a third attorney, ruling that the two more senior attorneys (a partner and an associate) could have handled the trial on their own.  He took pains to note that his elimination of that attorney's fees was "no reflection on the quality of her participation, as she contributed well."  Id.

Judge Gale also eliminated a fair amount of associate time from the fee request due to changes in the associates working on the case, which he attributed to the long duration of the case (it ran for four years).  In some instances, he reduced the associate time by 75%.

For those who are looking for a barometer of the reasonableness of their hourly rates, Judge Gale found the partner's rate of $495 an hour to be "reasonable and appropriate," as he did for the lead associate's hourly rate of $260 an hour.  Other associate rates of $180 to $250 per hour were found similarly reasonable.  So were legal assistant rates of $130 an hour.

All that discussion and the accompanying reductions led to an award of $467,827.63 against a fee request of $1,162,895, after Judge Gale parsed through more than 40 monthly invoices, invoice by invoice.  That award bears interest at the legal rate until it is paid.  Order ¶70 (4).

Will the Defendant pay it?  I doubt it, based on the facts their own counsel moved to withdraw before trial because his bills had not been paid and he did not expect them to be paid going forward (see Order ¶19), and because the Defendant's pretrial settlement offers were negligible and they did not include an offer to pay the sanctions of approximately $35,000 which had been previously ordered against it for discovery non-compliance.  Plus, who has half a million dollars sitting around to pay the opposing party's attorneys' fees?

You might be wondering about the daily interest on that fee award.  My calculation is $102.54 per day at an 8% interest rate (the rate allowed by G.S. §24-1).

If you remember the name Out of the Box, that's probably because I have written about decisions in the case several times: about sanctions for violations of a Protective Order; the Business Court's dismissal of an appeal of those sanctions; sanctions for violation of a discovery order; and the proper way top serve a non-party with a subpoena.

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Mack Sperling
Brooks Pierce, LLP
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230 North Elm Street
Greensboro, NC 27401
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