Judge: Watch for ‘red flags’ in fee requests

If you’ve ever thought submitting an application for attorneys’ fee is a tedious and time-consuming job, think of the judge on the receiving end of your request.

“We want to be lawyers, not accountants,” said Judge Nanette K. Laughrey.

Laughrey, a senior U.S. district judge for the Western District of Missouri, gave her candid thoughts on awarding attorneys’ fees in federal litigation during a May 30 CLE program organized by the National Association of Legal Fee Analysis. Joined by James G. Carr, a senior judge for the Northern District of Ohio, Laughrey stressed the importance of crafting a solid and reasonable fee request.

“It’s worth your time and doing a good job in front of the district court if you want to be successful on your fee application or you want to defeat a fee application,” she said.

By that, Laughrey didn’t necessarily mean that it should be as detailed as possible, nor that it should shoot for the moon in an attempt to get the biggest award possible. As a long-sitting judge in Missouri who often has watched the case unfold from the time it was filed, Laughrey said she typically makes a “gut call” as to whether the fee request makes sense.

“Once there’s a red flag, there’s much more scrutiny,” she said. “For the most part, I look at the fees, I have a gut reaction to them, I compare them to other fees I’ve awarded in similar kinds of cases, and it’s not a complicated process. But when it is a complicated process, it’s much more time-consuming.”

Carr agreed, saying attorneys should avoid putting the judge in the position of acting like a cost-conscious client demanding to know what every charge was for.

“I’ll be quite blunt: It’s the one part of my job I don’t look forward to a whole lot,” Carr said.

Both judges said they dislike challenging lawyers on their fee applications, which can feel like a challenge to the lawyers’ integrity and skillfulness. Both also said they prefer to reduce either the hourly rate or the number of hours awarded rather than deny an award outright.

Still, there are some red flags they watch for. Laughrey said she sometimes will see applications in which a lawyer has claimed more than 24 hours of time in a single day. That seemingly impossible outcome can be a product of the lawyers’ minimum increment of time — the task took only a minute, but the lawyer tracks his or her time in 10ths of an hour.

“If the judge sees that you’re working more than 24 hours in a day, there’s something there going on that doesn’t make sense,” she said.

Laughrey said she requires fee applications to be submitted in searchable form so her staff can convert the contents to a spreadsheet for easy analysis.

In November 2018, Laughrey presided over a particularly testy fee fight in a Missouri case that went to the U.S. Supreme Court. Trinity Lutheran Church prevailed in a religious-discrimination suit after the state of Missouri refused to let the church’s daycare participate in a program to use recycled tire scraps to resurface its playground.

After prevailing in the high court, the attorneys for the church asked for more than $890,000 in fees. Laughrey approved less half of that, with a final award of about $434,000.

The church primarily was represented by Alliance Defending Freedom, a Christian organization that handles religious-freedom cases. Laughrey said the attorneys had excessive hours for basic research and case preparation, and that some lawyers asked for fees that were out of line for what was ultimately a Missouri case.

“There’s a real relationship between the hourly rate and what’s an excessive fee or excessive billing,” she said. “If you’re getting $500 an hour, and you’re doing very, very basic research in an area you should know about, that’s probably excessive, given that rate.”

In contrast, Laughrey pointed to a groundbreaking class-action lawsuit involving recordkeeping fees charged to a 401(k) plan. The case, which has gone on for more than 12 years, reached a $55 million preliminary settlement earlier this year.

Although the fee applications hadn’t been submitted at the time Laughrey spoke, she said she would likely consider such factors as the complexity and longevity of the case, as well as the fact that it was the first case to go to a trial using what was then a little-used provision of the Employee Retirement Income Security Act.

Laughrey noted that, while there are good First Amendment lawyers across the country, the St. Louis law firm of Schlichter Bogard & Denton became national experts in ERISA litigation.

“They certainly seem to have earned their money,” she said.

The law firm subsequently has submitted a request for $18.3 million in fees, constituting a third of the settlement fund. Laughrey is scheduled to consider the application at the settlement’s final hearing on Aug. 13.