Attorneys Fees Applications
By Gerald G. Knapton
A demand to or from opposing counsel to pay legal fees will usually be made under: (1) a contract provision authorizing the award of fees, (2) a state or federal statute authorizing fee awards in the specific action, (3) an equitable theory such as the substantial benefit theory or common fund theory, or (4) a statute or court rule that awards fees as sanctions for improper conduct in litigation.
Regardless of the theory, the request must be analyzed in two phases. First, is the party entitled to the award? Second, what is the reasonable "lodestar" amount of fees? Calculation of this lodestar amount is a fundamental requirement, and a court's refusal to do this is a reversible error. Press v Lucky Stores, Inc. (1983) 34 C3d 311, 322. Third, what enhancement is appropriate? This article is concerned with the second and, to a limited extent, the third phases: determining the lodestar amount on a motion for reasonable fees and costs.
Focus on Hours, Rates, and Results
Case law lists many factors that should be considered in evaluating fees. California Rules of Professional Conduct 4-200 is often cited, and a lot of ink is used, in a boilerplate recitation to show compliance with each of the factors. In practice, however, the courts look at three things: hours, rates, and results. Generally, fees must be set based on objective factors such as a reasonable hourly rate and the amount of time that is reasonable for the work performed. Salton Bay Marina, Inc. v Imperial Irrigation Dist. (1985) 172 CA3d 914, 957-958; Glendora Community Redevelopment Agency v Demeter (1984) 155 CA3d 465, 474.
Burden of Proof
The burden of proof is always on the party seeking an award of attorneys fees and costs to submit evidence that clearly supports the claim, including accurate and coherent time records and invoices. Hensley v Eckerhart (1983) 461 US 424, 437. Items on a verified cost bill that appear proper are prima facie evidence that the costs, expenses, and services were necessarily incurred. Melnyk v Robledo (1976) 64 CA3d 618, 623. Once parties properly object to a verified memorandum of costs, the burden shifts back to the claimant to prove that the costs were reasonable and necessary. Jones v Dumrichof (1998) 63 CA4th 1258, 1265; Ladas v California State Auto. Ass'n (1993) 19 CA4th 761. But conclusory and unsubstantiated objections may not rebut the presumption that fees were reasonably and necessarily incurred. Hadley v Krepel (1985) 167 CA3d 677, 682.
Specificity Is Required in Billing
It is particularly important to include very detailed time descriptions in a "fee-shifting" case since the usual check and balance of a review of a bill by an actual fee-paying client is often not present. When the documentation of hours is inadequate, the trial court may reduce the hours accordingly. Hensley, 461 US at 433; see also Leroy v Houston (5th Cir 1987) 831 F2d 576, 585 (appellate court reduced award based on deficient time records); Cziraki v. Thunder Cats Inc. (2003) 111 CA4 552 (remand with instructions to conclusively demonstrate charges on only successful claim).
It is sometimes possible to get an award of fees without submitting the customary detailed legal bills, but this is not the norm, and it is very risky to try this approach if more than $25,000 is being requested. See Weber v Langholtz (1995) 39 CA4th 1578 (detailed declaration of what was done was submitted in place of time records and billing statements; request of $18,000 awarded); Melnyk, 64 CA 3d 618 (court allowed fees of $25,000, which was a 65 percent reduction of request). If substantial sums are requested, you should not ignore the requirement to document what was done in the best and most complete manner possible. Even handwritten records can make very impressive exhibits.
Amount of Hours
Fees for excessive, redundant, or otherwise unnecessary hours should be excluded from a fee request. Gates v Deukmejian (9th Cir 1993) 987 F2d 1392, 1397. Before you file your papers, ask the other side how many hours they billed in the case. Don't be too concerned with their hourly rates if their firm is bigger or smaller than your firm. But if you are opposing their request of 1,000 hours and your own firm billed 1,000 hours, then you may want to explain why your hours are acceptable and theirs are not. The statement outlining the hours of work in this matter should be used to summarize the work that was done, with particular effort to be fair and reasonable in the characterization of time, particularly of time that was expended in the courtroom before the very judge who will now be ruling on the fee request. If the matter was tried to the court and required, for example, 15 days of trial time, and, furthermore, if the material was well presented by counsel, then it is probably not a good idea to attempt to minimize the hours involved for preparation and presentation of a matter.
Sometimes counsel will vastly understate or overstate the hours required to do a particular kind of work. If irregularities can be documented and shown to the court, it is generally enough to raise the court's ire. See Levy v Toyota Motor Sales USA Inc. (1992) 4 CA4th 807 (reducing fees).
Apportionment and Non-fee Claims
It is often necessary to separate work on claims that are successful, and hence compensable, from work on unsuccessful claims that are not compensable. "[T]he fee applicant ... should maintain billing time records in a manner that will enable a reviewing court to identify distinct claims." Hensley, 461 US at 437.
If there are multiple parties to a matter and many separate theories, and plaintiffs prevail against only one defendant or on only one of several theories, then the trial court has discretion to reduce the fee to reflect a lack of success against particular parties. County of San Louis Obispo v The Abalone Alliance (1986) 178 CA3d 848, 869-70; Corder v Gates (9th Cir 1991) 947 F2d 374, 378-81; Cabrales v County of Los Angeles (9th Cir 1988) 864 F2d 1454, 1464-66; Sokolow v. County of San Mateo (1989) 213 CA3 231, 249-50.
On the other hand, the plaintiff may get full fees even if he or she wins only on one theory but achieves the maximum relief possible under all theories. The test for relatedness of claims is not precise; the court may consider the circumstance of the injury and whether there is a common core of facts or related legal theories. Schwartz v Secretary of Health and Human Services (9th Cir 1995) 73 F3d 895, 903. Failure to recover all damages sought does not mandate a reduction in the award, but the court must determine whether the relief obtained justifies the expenditure of attorney time. Bruno v Western Electric (D Colo 1985) 618 F Supp 398; Gates, 987 F2d at 1404 n13. Also see Feminist Women’s Health Center v. Blythe (1995) 32 CA4 1641, 1674 (no reduction required if time on failure to prevail aspect was insignificant).
Sometimes an applicant will request fees for entirely unrelated work. The general rule is that compensation may not be awarded for work on the "non-fee" claims. Bell v. Vista Unified School District (2000) 82 CA4 672, 686-687 (“When a cause of action for which attorney fees are provided by statute is joined with other causes of action for which attorney fees are not permitted, the prevailing party may recover [fees] only on the statutory causes of action.”). See also, Californians for Responsible Toxics Mgt. v. Kizer (1989) 211 CA3 961, 973-75; Boquilon v. Beckwith (1996) 49 CA4 1697, 1722-23; San Diego Police Officers Association v. San Diego Police Department (1999) 76 CA4 19, 24 and California Attorney Fee Awards §12.17 (2d ed Cal CEB 1994).
Duplication of Effort
Fees for duplicative services are not recoverable. See Gates, 987 F2d at 1397; Daggett v Kimmelman (3d Cir 1987) 811 F2d 793; Bruno, 618 F Supp 398; Thayer v. Wells Fargo Bank (2001) 92 CA4 819. If you are opposing a request, try to isolate and quantify any overlapping work. If you are making a request, add up -- and write off -- the duplicative time billed by junior attorneys who are present at meetings or hearings when their presence really seems to be training time.
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. A rate determined in this way is normally deemed to be reasonable and is referred to for convenience as the prevailing market rate. Blum v Stenson (1984) 465 US 886, 895 n11.
The general rule for prevailing market rates is that rates of attorneys practicing in the forum district are used. Barjon v Dalton (9th Cir 1997) 132 F3d 496; Davis v Mason (9th Cir 1991) 927 F2d 1473, 1488. How much compensation is reasonable also depends on the nature and value of the services. For example, an experienced attorney doing clerk's work should be paid clerk's wages, absent justifying circumstances. In re Busy Beavers Building Centers, Inc. (3d Cir 1994) 19 F3d 833, 855.
Asking for too high or too low an hourly rate is the single biggest issue in many fee applications. When the fee applicant is a sole practitioner or small firm, it is not appropriate to compare its hourly rates to those of large firms since they have very different costs that drive their rates. One should look to similar-size firms and their rates for similar cases. A run-of-the-mill case does not warrant "the lofty fees of nationally renowned firms." 19 F3d at 856 n35. See also, Finkelstein v. Bergna (1992) 804 F.Supp. 1235, 1237-38 (also suggest using aggregate or “blended” rate); Braco v. MCI Worldcom Communications, Inc. (2001) 138 F.Supp.2d 1260, 1272 (rate reduced because applicant is a solo practitioner).
Don't shoot yourself in the foot by using a rate that can't be substantiated. If you are unsure about the range of rates, it might be useful to provide declarations from experts or well-known local firms of a similar size to your own that state their hourly rates for similar cases. Resist the temptation to use too high or too low an hourly rate; this will undermine your credibility with the court on other issues as well.
Are You Proud of the Effort and the Results?
What if the damage award is quite small relative to the fee request? The court will consider the amount of money won in the trial court when it awards attorneys fees. "Lawyers might reasonably spend $148,000 of time to win $234,000. But no reasonable person would pay lawyers $148,000 to win $34,000." McGinnis v Kentucky Fried Chicken (9th Cir 1995) 51 F3d 805, 810. If you billed many hours in a case where very little money seemed to be at stake, it needs to be explained very thoroughly, with as much candor as possible. See Engel v Worthington (1997) 60 CA4th 628, 635 (appellate court sympathetic to plaintiff who recovered $250 damages but sought $80,000 for 10 years' work to enforce statutory right).
Ask for a Fair Amount
Before making a request for fees, it is probably best to consider the overall equities of the demand and perhaps even to ask a colleague for an opinion about the amount that seems fair under the circumstances. How much would you feel comfortable asking a client to pay for what was done? If the request goes too far and is clearly inflated, the trial or appellate court may deem either the hours or the rate excessive and may find special circumstances for reducing the award or denying one altogether. Serrano v Unruh (1982) 32 C3d 621, 639 n28.
Limitations and Reduction
A lodestar amount may be adjusted up or down on the basis of a number of factors, including the novelty and difficulty of the issues involved and the time and labor required. See Kerr v Screen Extras Guild, Inc. (9th Cir 1975) 526 F2d 67, 69-70; Gates, 987 F2d at 1402. The existence of a contingent fee contract is either irrelevant or only one factor to be considered in determining reasonable attorneys fees. State v Yuki (1995) 31 CA4th 1754, 1769; PLCM Group, Inc. v. Drexler (2000) 22 C4th 1084, 1096; Larry Hayward v. Ventura Volvo (2003) 108CA4 509, 513. See also Blanchard v Bergeron (1989) 489 US 87, 94.
Some courts approach the issue as one involving a reduction of claimed hours to determine a reasonable hour component and others address the issue as a reduction of the lodestar figure itself to adjust for lack of success, but it is said to be mathematically inconsequential which is chosen for the adjustment, Cabrales v. County of Los Angeles (9th cir. 1988) 864 F2d 1454, 1465). See also Ketchum v. Moses (2001) 24 C4th 1122, 1134; Weeks v.Baker & McKenzie (1998) 63 CA4 1128, 1175-76; Flannery v. California Highway Patrol (1998) 61 CA4 629, 647; San Diego Police Officers Association 76 CA4 24 (2/10s multiplier upheld).
Sometimes the application for fees is so clearly overreaching that it is perceived as an affront to the court's knowledge and experience. "The person seeking [the] award is not necessarily entitled to compensation for the value of attorney services according to his own notion or to the full extent claimed by him .... [The applicant has] the burden of showing that the fees incurred were allowable, were reasonably necessary to the conduct of the litigation and were reasonable in amount." Levy, 4 CA4th at 814-815 (affirming a 78 percent reduction of requested fees).
Sometimes litigation is kept going when it seems that no tangible benefit is being produced for either party. The Sixth District Court of Appeal recently decided that all of the fees incurred after the plaintiff rejected a reasonable but informal oral settlement proposal (not a formal Code of Civil Procedure section 998 offer) were not "reasonably spent" on the litigation and were not compensable by the losing party. The client had paid more than $450,000 of the billed attorneys fees; $520,587 was requested, but only $75,000 was awarded. Meister v Regents of Univ. of Cal. (1998) 67 CA4th 437, 444 n5. This may be a wake-up call for all of us. Be prepared to justify or oppose fee requests by this standard.
What Needs to Be Highlighted?
Keep in mind that you will not be writing on an entirely clean slate since it is common to present the fee argument before the trial judge who presided over the case, and he or she will probably have a good idea of the amount of work done and the skill of counsel. Because most courts do not want to see a major litigation effort over the amount of fees, it is best to present summaries and charts explaining the request, backed by fully detailed legal bills.
Don't forget to prepare as if the judge has either forgotten the details of the case or confused it with another matter. You must explain what the case was about, what kinds of procedural events happened, and why you staffed the case the way you did. If you are opposing the request, it is usually useful to scrutinize the staffing shown by the application or the bills. The application should include a declaration from the firm's senior lawyer explaining what went on in the handling of this case. Any special factors not apparent from the face of the bills such as staffing, write-downs, or write-offs should be included.
Your opposition must be tailored to the situation. Generally, it is best to confine the opposition to arguments in five discrete areas: (1) non-fee claims, (2) apportionment, (3) hourly rates, (4) amount of hours, and (5) duplication of efforts or wastage.
Use a Chart
Summarize your request or objections in a one-page summary or chart. An opposition should show the effect of adjustments to hourly rates, in eight categories of objections (administrative work, clerical work, duplicative work, motion fees, deposition summaries, trial preparation, high daily hours, and vague descriptions), and for work on an unrelated matter. The chart should apportion the amount of fees under both claimed and adjusted hourly rates. This enables the court to easily translate the billing deficiencies into dollar adjustments to the amount of fees awarded. Because the court might or might not adjust the hourly rate, it is best to show any adjustments using both the actual rates claimed by the firm and the proposed, adjusted rates.
Gerald G. Knapton is a partner at the Los Angeles office of Ropers, Majeski, Kohn & Bentley. He has testified as an expert witness both for and against requests for fees.
Article updated: January 2004