Author: Elizabeth Gallo

This is not the first time an attorney has been accused of overbilling clients for legal work. Most recently, according to the American Bar Association Journal (ABA), a partner at BigLaw firm Duane Morris in Massachusetts had her bar license suspended for six months due to overbilling. The initial recommendation, which was rejected by the Massachusetts Board of Bar Overseers, was a two-year long suspension.

The Billing Practices

The offense included the alleged overbilling. The firm opened up an investigation after the attorney had informed them that in 2015 she had worked 3,173 billable hours and more than 720 non-billable hours. The attorney failed to keep contemporaneous track of her time in the firm’s billing system. Instead, she relied on her legal assistant to create first-draft billing reports. The legal assistant would gather up the attorney’s notepads, pleading binders, correspondence, and emails. The investigation revealed that the attorney’s notepads often did not include the time she devoted to tasks while other times no entry was available for other tasks.

After the legal assistant would create the records, the attorney would review the billing and make hand-written changes. The legal assistant would then enter the information into the firm’s billing system. Thereafter, the firm would create monthly draft bills for each client detailing all time entries from employers working on a specific legal matter. The attorney would then make additional edits to the billing, often adding hours because, according to her, the drafts would jog her memory.

The Investigation

After its investigation, the firm decided to reimburse or credit $260,000 in legal fees to clients, the amount the firm believed the attorney had overbilled. During the ethics hearing, no one disputed that the attorney was a high producer and hard working, putting in very long hours in 2015 and getting excellent results for clients. Moreover, clients said they were content with her work and the fees charged in complex matters were lower than prior counsel charged. The attorney, however, did admit that her billing practices were rushed, error-prone, and not adequate. One seven separate occasions, according to investigation results, the attorney had billed for depositions she did not attend. After signing a negotiated withdrawal agreement with the firm, the attorney left Duane Morris with all but one of her clients.

A recent decision issued by the U.S. Court of Federal Claims could change the landscape regarding discovery – specifically expanding attorney-client privilege in commercial litigation. Under the court’s ruling, attorney client privilege includes communication with outside investors who have some stake in the litigation in question.

The Court’s Ruling

The decision involved a combative lawsuit involving a patent dispute. The court found that non-party equity investors still shared a common legal interest in the validity of the patent that was being disputed in the lawsuit. Simply put, because both companies had a mutually vested legal interest in the validity of the patents, they would need the ability to speak freely and confidentially regarding issues with those patents. For this reason, the communications between the plaintiff in the lawsuit and the investor did not waive any claims of attorney-client privilege.

The court did not go so far, however, as to determine whether a simple agreement to pay for litigation between parties was enough to equate “shared interest in litigation.” That being said, the court did not an equity investor who had a stake in disputed property had more than a merely commercial relationship with the other party.

The Underlying Dispute

The underlying dispute started nearly eight years ago with a claim by Security Point Holdings, Inc. (SPH) that the Transportation Safety Administration (TSA) violated its 2002 patent. The patent uses carts to move trays at security screener areas in airports. The TSA admitted to the violation, but claimed any invention by SPH was an obvious one. After a trial was held the Court of Federal Claims disagreed with TSA, not finding the invention obvious. The focus then turned to SPH’s damages.

During discovery to determine SPH’s actual damages, the government sought several financial and other documents including communications between SPH and its outside equity investor, Raptor. The equity investor’s interest in the case revolved around a pre-existing equity agreement between Raptor and SPH, which gave the investor an ownership interest in the patents at issue in the TSA lawsuit and involved a litigation funding agreement whereby Raptor would finance the case in exchange for a priority claim of proceeds from the suit if SPH were successful.

SPH objected to TSA’s discovery requests for its communications with Raptor claiming attorney-client privilege because the parties shared a common legal interest and the communications were related to legal, not commercial, matters. While the TSA conceded the documents were attorney-client privileged, they claimed SPH waived that privilege when it shared the communications with Raptor.

Attorney Client Privilege

In most circumstances, disclosing any communications to a third party that have to do with legal advice waives – or destroys – attorney-client privilege as to the topic of that communication. Just like many things in the law there is, however, an exception. Under the common-interest doctrine, communications with legal advice are protected if shared with a third party when that third party is an ally in a common legal cause with a party to the lawsuit.

The case is Security Point Holdings, Inc. v. TSA.

A panel of federal judges found that a seven-figure attorneys fee award to the lawyers representing several financial institutions suing Home Depot over a breach was inappropriate. The Eleventh Circuit vacated at $15.3 million fee award, remanding it to the lower court with instructions to reduce the fee award. The underlying lawsuit involved a 2014 data breach that affected 56 million customers of Home Depot.

The Court’s Decision

According to the Eleventh Circuit, the fee award granted to counsel should have only included the attorneys’ hourly rates and not financial enhancement. The court held legal fees were part of a contract that was separate and apart from the final settlement. Accordingly, the appeals court found the lower court abused its discretion when it used a multiplier to account for risk in a fee-shifting case.

Calculating Attorney’s Fees

The legal fees in dispute in the case were calculated not just on the lawyers’ hourly rate and time but also includes a financial enhancement to compensate those attorneys for the risk assumed when they decided to take the case to litigation. This manner of calculating attorneys fees is known as lodestar. In the legal industry, the lodestar method is the manner in which attorney’s fees must be calculated. The trial court multiplies the number of hours reasonably spent by the attorneys by a reasonable multiplier. This can include contingency as well as the quality of work performed in order to calculate the final attorney’s fee award. Under this method, the multipliers that are most heavily weighed include the time and labor required in the case.

The Lawsuit Against Home Depot

The underlying lawsuit, which sought damages resulting from the data breach settled for $25 million in 2017. The trial court set the fee award after plaintiffs’ attorneys agreed – upon the request of Home Depot’s defense counsel – to negotiate the details on reasonable fees, costs, and expenses after the settlement. Home Depot reserved the right, however, to object to any fee request and did so after plaintiffs’ attorneys requested $18 million. Home Depot’s counsel agreed that $5.6 million was a reasonable fee instead.

When lawyers on both sides could not come to an agreement, the trial court stepped in and found the total to be $15.3 million, based on plaintiffs’ counsel’s lodestar of $11.7 million. Home Depot objected, arguing that class counsel was not entitled to a multiplier.

For more information on the case, click here.

Earlier this year, the state of Georgia’s first lawsuit against Johnson & Johnson involving talcum powder-induced cancer ended in a mistrial. After just three days of deliberation, the jury was deadlocked, according to an article on Law.com. Deliberation followed nearly three weeks of testimony.

The jury was at an impasse of 10 to 2 in favor of the plaintiff, according to one of her attorneys. In the state of Georgia, the jury has to come to a unanimous decision in civil cases to issue a verdict for a party. The mistrial occurred despite the state judge presiding over the case’s earlier Allen charge. Judge Morrison admonished the jury to reach a consensus if possible.

The Wrongful Death Lawsuit

The lawsuit involved allegations that the plaintiff’s decades-long use of Johnson & Johnson’s baby powder caused her 2016 death, which was a result of her ovarian cancer. The plaintiff alleged the company’s talcum powder – and her prolonged use of it – was linked to her cancer diagnosis. The plaintiff passed away at the age of 65 after a three-year-long battle with ovarian cancer. Her family contended she used Johnson & Johnson’s baby powder for years – including in her genital area. The case was the first of its kind to go up against such a large consumer products company like Johnson & Johnson. That being said, the company and other cosmetic talc manufacturers are facing lawsuits across the country alleging links between their products and various types of cancer.

The trial hinged, in large part, on whether the fibers found in Johnson & Johnson’s cosmetic talcum powder are carcinogenic. Additionally, the trial focused on the company’s knowledge of any potential danger in using the product and its failure to disclose this danger to the public. While several talcum powder lawsuits across the nation allege asbestos can be found in the product, this wrongful death case focused on fibrous talc and its link to cancer. A pre-trial order specifically excluded any reference to asbestos during trial.

During closing arguments, expert testimony was detailed that linked genital talc use to ovarian cancer in general and the plaintiff’s specific disease. The case, however, depended upon Johnson & Johnson’s internal documents and patent paperwork going back decades – even to the 1950s – that plaintiff’s counsel argued showed Johnson & Johnson knew talc fibers were dangerous and a safe alternative to them was cornstarch.

Of note, mistrials are not uncommon in similar cases across the country alleging Johnson & Johnson’s baby powder caused mesothelioma. On the other hand, cases alleging ovarian cancer have generally resulted in substantial verdict awards, although some have been reversed by higher courts.

The case is Brower v. Johnson & Johnson.