A federal appeals court has upheld a federal judge’s decision to deny as “grossly excessive” a request for more than $900,000 in attorney fees based on a $100,000 punitive award.
When a request under a fee-shifting statute is “outrageously excessive,” a judge may deny the award altogether if the statute gives the judge discretion in awarding fees, the Philadelphia-based 3rd U.S. Circuit Court of Appeals said.
Judge Joseph Greenaway Jr. wrote the opinion for the 3rd Circuit.
Lawyers seeking the fees had admittedly tasked one lawyer with recreating time records that included vague descriptions and excessive hours, the appeals court said. Sixty-four hours were billed for “transcripts/clips” and 562 hours were billed to prepare for a week-long trial. There were only five witnesses for both sides.
The appeals court ruled in the case of Bernie and Nicole Clemens, who had sued New York Central Mutual Fire Insurance Co. in Pennsylvania state court for bad faith handling of an uninsured motorist claim. The case was removed to federal court, where the uninsured motorist claim was settled for $25,000.
After trial on the bad faith claim, jurors awarded $100,000 in punitive damages. The plaintiffs’ lawyers at the Pisanchyn Law Firm in Scranton, Pennsylvania, sought more than $900,000 in attorney fees under a fee-shifting statute.
U.S. District Judge Malachy Mannion of Scranton denied the request in August 2017, calling it “astounding” and “exorbitant.” Mannion had examined the fee request, reduced it by 87 percent, then awarded no fee because it was excessive.
Bernie Clemens appealed.
The 3rd Circuit said Mannion’s decision “was entirely appropriate under the circumstances of this case.”
The 3rd Circuit said lawyers for Clemens didn’t maintain contemporaneous time records for most of the litigation, instead recreating the records for the fee petition.” Even worse,” Greenaway wrote, “the responsibility of reconstructing the time records was left to a single attorney, who retrospectively estimated not only the length of time she herself had spent on each individual task, but also the amount of time others had spent on particular tasks, including colleagues who could not be consulted because they had left the firm by the time the fee petition was filed.”
“Astonishingly,” the appeals court said in a footnote, “counsel then attempted to recover attorney’s fees in the amount of $27,090 for the 64.5 hours it supposedly took to reconstruct the time records.”
The appeals court said reconstructed time records don’t necessarily justify complete disallowance of a fee award, but require more exacting scrutiny. Exacting scrutiny isn’t even required, however, to uncover further problems with the fee record, the court said.
“Even worse, the responsibility of reconstructing the time records was left to a single attorney, who retrospectively estimated not only the length of time she herself had spent on each individual task, but also the amount of time others had spent on particular tasks, including colleagues who could not be consulted because they had left the firm by the time the fee petition was filed.”
Judge Joseph Greenaway Jr.,
3rd U.S. Circuit Court of Appeals
Time entries with descriptions such as “other” and “communicate” were vague, and descriptions such as “attorney review” didn’t indicate the nature of the subject being reviewed, Greenaway said. Other entries were “unnecessary and excessive.”
Greenaway described as “staggering” the hundreds of hours billed for trial preparation, which would have meant counsel prepared for trial for about 70 days. “Counsel certainly have an obligation to be prepared,” the court said, “but we simply cannot fathom how they could have reasonably spent such an astronomical amount of time preparing for trial in this case.”
Lawyer Mike Pisanchyn told the Legal Intelligencer that the fee request was not excessive and his clients “are extremely happy with the representation.” He said his firm had litigated the case for eight to nine years, and the firm had obtained “a $100,000 award on a zero written offer.”
Lesson Learned: Always keep time records at the time the work is being done, using some version of a time keeping software. Every person or time keeper working on the case must keep time records. Don’t guess and reconstruct after the fact.