New Orleans Bar Association

Procrastinators’ Programs

Attorney Fees in Louisiana:

What’s Reasonable?

By

E. Phelps Gay

David B. Belk

Christovich & Kearney, LLP

Pan American Life Center

601 Poydras Street, 11th Floor

New Orleans, LA 70130 December 29, 2017

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ATTORNEY FEES IN LOUISIANA:

WHAT’S REASONABLE?

E. Phelps Gay

David B. Belk

Christovich & Kearney, LLP

New Orleans, Louisiana

I. Overview

The Rules of Professional Conduct require a lawyer’s fees to be

“reasonable,” or at least not “unreasonable.” But how does one determine

whether an attorney’s fees are reasonable or have crossed the line into

“unreasonable” territory? This paper sheds light on this subject.

All lawyers are subject to the Rules of Professional Conduct and at

some point in their careers may find themselves embroiled in disputes with

clients over fees charged and accused of submitting an “unreasonable” bill.

It behooves us to stay abreast of pertinent ethics rules and opinions, and

evolving case law, on this subject.

As a practical matter--and this can save a lot of time, expense, and

heartache--it should be noted that fee disputes between lawyers and clients

can be referred to and resolved by the LSBA Lawyer Fee Dispute Resolution

Program. Capably administered by Practice Management Counsel Shawn L.

Holahan, this is a quick, low-cost, confidential means of resolving fee

disputes. It involves binding arbitration: a short proceeding, usually lasting

one day with one arbitrator, although a panel of three arbitrators may be

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used if the amount in dispute is substantial. The arbitrator’s decision

typically arrives within thirty days of the hearing. Then it is over.

A substantial number of ethical conduct complaints lodged by clients

with the Office of Disciplinary Counsel (ODC) do arise out of

disgruntlement over fees charged. Upon review, the ODC frequently refers

those complaints to the LSBA Lawyer Fee Dispute Resolution Program.

Having served as an arbitrator and having represented Respondents charged

with ethical conduct complaints, I can recommend this program without

hesitation. For more information on the program, see “Public Resources” at

www.lsba.org.1

Falling into a different category are disciplinary complaints where the

lawyer is alleged not to have charged an excessive fee for the work

performed, but to have charged a fee where little or no work was carried out.

In those instances, discipline is often pursued, and it is not infrequently

imposed. See, e.g., In Re Booth, 2008-2353 (La. 3/17/09), 6 So.3d 158.

Although many fee disputes between attorneys and clients are

amicably resolved, lawyers are by no means immune from disciplinary

charges relating to their fees. There is evidence that corporate clients, who

at one time may have simply shaken their heads and resolved to retain

another law firm to handle their work going forward, are less reluctant these

1 Rule 1.5(f)(5) provides that in a fee dispute the lawyer “should suggest a means for

prompt resolution such as mediation or arbitration, including arbitration with the

Louisiana State Bar Association Fee Dispute program.” Moreover, Official Comment #9

to ABA Model Rule 1.5 states that if a procedure has been established for resolution of

fee disputes, even when it is voluntary, “the lawyer should conscientiously consider

submitting to it.”

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days to lodge ethical complaints than they were in an earlier era.2 Factoring

into this shift may be an increased concern that a lawyer-client may have an

ethical obligation to report a violation of Rule 1.5 pursuant to Rule 8.3(a) of

the Rules of Professional Conduct. As a result, defense lawyers should be

mindful of the Rules relating to their fees and expenses. They should be

familiar with case law and ABA Formal Opinions relating to the Rules.

According to one commentator, hourly billing, although not inherently

unfair or unreasonable, has proven to be susceptible of abuse.

Consequently, many high-volume users of legal services, such as insurance

carriers, scrutinize each bill received from law firms. “[A] cottage industry

providing auditing services has sprung up. Moreover, in order to avoid

embarrassment and unseemly haggling over fee reductions, many large law

firms are engaging in pre-audits before sending out their bills.” Hazard,

Hodes & Jarvis, The Law of Lawyering, Third Edition (2010).

For the lawyer accused of overbilling, it should be kept in mind that

your professional liability policy may not provide coverage or defense

against such a charge. This was the holding in Reliance National Insurance

Company v. Sears, Roebuck & Co., Inc., 99-1861 (Mass. App. Ct. 7/30/03),

792 N.E.2d 145, where a professional liability insurer sought a declaratory

judgment regarding its coverage obligations to the insured lawyer. A former

client claimed the lawyer “bilked” the client out of $833,400 in legal fees. In

reaching the conclusion that billing was not a “professional service” covered

by the professional liability policy, the court stated:

2 See, e.g. Richmond, For a Few Dollars More: The Perplexing Problems of Unethical

Billing Practices by Lawyers, 60 So. Car. Law Rev. 63 (Autumn 2008).

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Billing for legal services does not draw on special learning

acquired through rigorous intellectual training. We are not

aware that courses in billing clients appear in law school

curricula. The billing function is largely ministerial. There are

elements of experience and judgment in billing for legal

services, but the same goes for pricing shoes.

Reliance, 792 N.E.2d at 648.

II. Rule 1.5 of the Louisiana Rules of Professional

Conduct

This Rule on fees provides that a lawyer shall not make an agreement

for, charge, or collect an unreasonable fee or an unreasonable amount for

expenses.

But what does that mean? How do we know whether a fee is

“reasonable” or “unreasonable?”

The Rule sets forth eight “factors to be considered” in determining the

reasonableness of a fee. These are well-known and well-accepted in the

profession, but they are necessarily general. They don’t tell you, for

instance, whether eight hours to prepare for a deposition is unreasonable or

whether fifteen hours to draft a pre-trial order is reasonable. It is worth

emphasizing that the “time and labor required” is only one of the factors to

be considered in determining the reasonableness of a fee. Sometimes, it

seems, the profession, including disciplinary authorities, becomes too

obsessed with time.

To complicate matters, the Comments to ABA Model Rule 1.5 state

that these eight factors “are not exclusive.” Other factors may come into

play. Moreover, each factor may not be relevant in a given case. Like nearly

everything else in life, it depends upon the circumstances. As one court has

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said, the inquiry into the reasonableness of a fee is “extremely fact-

intensive.”

III. Court Authority to Determine Reasonableness

Before reviewing disciplinary rules, cases, and opinions regarding the

reasonableness vel non of attorney fees, it should be noted that courts are

often called upon to weigh in on this question. Where attorney fees can be

awarded to a prevailing party as a matter of law, or pursuant to contractual

agreement, courts examine the reasonableness of the fees to be awarded. In

doing so they usually refer to the eight factors set forth in Rule 1.5.

In the case of In Re Succession of Bankston, 2002-0548 (La. App. 1st

Cir. 2/14/03), 844 So.2d 61, writ denied, 2003-0710 (La 5/9/03), 843 So.2d

400, attorneys sought to collect a contingency fee consisting of one-third of

an estate valued at 2.4 million dollars. The attorneys argued that once a

contingency fee contract is found to be valid (as was the case here), its

“reasonableness” cannot be reviewed by the court; it is a valid contingency

fee contract which must be enforced. Making short work of this argument,

the court responded: “Irrespective of the contractual arrangement between

the client and the attorney, the courts have the right to review these contracts

to determine whether the fee is excessive.”

Yet analysis of the factors set forth in Rule 1.5 is “extremely fact

intensive” and thus requires “a full evidentiary hearing.” Summary

judgment on the attorney fee issue in Bankston was reversed. The court

pointedly noted that the services rendered by the law firm “required no more

than thirty hours of work,” suggesting the contingency fee called for under

the contract was excessive in light of the time worked. At the same time, the

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court recognized the “societal importance” of the contingency fee contract

and cautioned that in assessing the reasonableness of a fee the trial court

should consider “all factors set forth under Rule 1.5,” not simply the

attorney’s “investment of time.”3

Reasonableness of attorney fees in an expropriation proceeding

formed the subject of La. Dept. of Transp. & Dev. v. Williamson, 597 So.2d

439 (La. 1992). “Courts may inquire as to the reasonableness of attorney

fees as part of their prevailing, inherent authority to regulate the practice of

law.” Reviewing the record, the court found the trial court abused its

discretion in awarding expropriation counsel $375,000.00 in fees. But the

court of appeal also erred in reducing that sum to $68,512.50. In its wisdom,

the Louisiana Supreme Court found that $175,000 was a reasonable attorney

fee. See also, Rivet v. State, Dept. of Transp. & Dev., 96-0154 (La. 9/5/96),

680 So.2d 1154.

In Thibodeaux v. Conoco Phillips Co., 2006-1282 (La. App. 3rd

Cir.

3/7/07), 952 So.2d 912, writ denied, 2007-0725 (La. 6/29/07), 959 So.2d

518, plaintiffs’ steering committee and certain attorneys representing

individual plaintiffs entered into an agreement on allocation of attorney fees

and expenses as part of the settlement of a class action. The attorneys were

to receive four million dollars. But the trial court refused to approve the fee

agreement, finding it unreasonable. Instead, the court awarded fees of

roughly 2.5 million dollars as recommended by a Special Master. During a

3 See also, Town of Mamou v. Fontenot, 2002-1622 (La. App. 3

rd Cir. 5/8/02), 816 So.2d

958, where the court stated “the reasonableness of a contingent fee cannot be determined

by simply multiplying the hours worked by an hourly rate customary in the legal

community.”

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hearing the attorneys for the individual plaintiffs did not object to the trial

court order.

Upon reconsideration certain disgruntled attorneys filed a lawsuit

against members of the plaintiffs’ steering committee, alleging breach of

contract and unfair trade practices. In defense, the steering committee noted

that these attorneys had not objected to the court’s award, and they moved

(successfully) to enjoin the action. On appeal, the disgruntled attorneys

contended they had been so negatively affected by Hurricane Katrina they

were compelled to accept the trial court’s fee award and execute a Release.

The Third Circuit rejected this argument and affirmed the lower court

injunction.

Of particular interest is the case of Gold, Weems, Bruser, Sues &

Rundell v. Granger, 2006-859 (La. App. 3rd

Cir. 12/29/06), 947 So.2d 835,

writ denied, 2007-0421 (La. 4/27/07), 955 So.2d 687. Dr. Granger retained

the Gold, Weems law firm to represent him in a divorce proceeding. He

signed an Engagement Agreement with the firm memorializing what he

would be billed for and what work the law firm would perform on his behalf.

The document specified the law firm’s right to collect any unpaid bills. “In

the event that collection efforts and/or litigation are necessary to obtain

payment of monies due under this Agreement, Client shall be liable for all

costs and expenses thereof (including attorney’s fees, calculated at the rates

set forth above if Gold elects to handle the matter itself).”

Extensive litigation followed involving many hours of legal work

generating thousands of dollars in fees up through trial of the custody matter.

The trial court ruled in favor of Dr. Granger’s ex-wife. Dr. Granger had

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been receiving monthly, itemized bills from the law firm. On learning of the

adverse judgment, he began expressing dissatisfaction with his attorneys’

legal work. He refused to pay Gold, Weems the outstanding balances on his

bills.

Ruling in favor of the law firm, the court relied upon the signed

Engagement Agreement. Courts are vested with the responsibility of

monitoring the attorney-client relationship, but that responsibility must be

tempered with restraint, especially where the parties have signed a contract

memorializing the terms of their relationship. Absent a showing that a fee

charged was clearly excessive, a contractual relationship between an

attorney and client should not be altered.

Dr. Granger argued that the fees charged were excessive, that the

work was either unnecessary or not actually performed. However, the bills

provided detailed information regarding the work carried out, and the

evidence indicated the work was performed.

The Engagement Agreement specified that if any sum of money was

owed by Dr. Granger for thirty days or more, an interest rate of twelve per

cent would attach to the outstanding balance. Citing La. Rev. Stat. 9: 3500,

the court held this was permissible under Louisiana law. Further, the law

firm was entitled to additional attorneys fees incurred in defending against

Dr. Granger’s appeal.

Courts have not hesitated to rule that an attorney is not entitled to a

fee simply for referral of a legal matter to someone else. In Dukes v.

Matheny, 2002-0652 (La. App. 1st Cir. 2/23/04), 878 So.2d 517, a referring

attorney sought his share of a contingent fee collected by the retained

attorney. The trial court found that an oral agreement existed between the

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referral and retained attorneys and held that the referring attorney was

entitled to fifty percent of the fee.

On appeal, the First Circuit said the referring attorney “must

participate in the representation of the client.” Ordinarily, where there is no

written agreement with the client, a division of the fee under an oral

arrangement could only be made on a quantum meruit basis. But here, since

the referring attorney “had no involvement in the case,” he was not entitled

to any award.

See also Rule 1.5 (e) (3), adopted by the Louisiana Supreme Court in

2004, which provides that a division of fee between lawyers not in the same

firm may be made only if “each lawyer renders meaningful legal services for

the client in the matter.” This was meant to prohibit “case brokering.”

A unique contingency fee agreement was considered by the Louisiana

Supreme Court in the case of In Re Dalton, 2009-1288 (La. 10/2/09), 18

So.3d 743. The agreement called for the attorney to bill the client on an

hourly basis, but collection of the attorney’s fee was contingent upon client

recovery. The court held this did not violate any Rule of Professional

Conduct. If an attorney fee is reasonable, and the client has full knowledge

of the fee arrangement, it is generally deemed appropriate. Rule 1.5

provides that the contingency fee agreement shall state the method by which

the fee is to be determined. Although the rule implies that the fee will be a

percentage of the client’s recovery, a fee based on an hourly rate is not

expressly prohibited.

Although it may seem obvious, attorney’s fees must reflect work that

is both legal in nature and directly related to the task the attorney was

retained to perform. In another succession case, Fornerette v. Ward, 10-

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1219 (La. App. 4 Cir. 2011), 66 So.3d 516, the court ordered an attorney to

disgorge $24,500 in attorney’s fees, in part because the fee involved certain

services for which the executrix of the succession was responsible. Among

these duties were fifteen hours spent arranging the funeral and burial of the

decedent and seven hours spent opening a checking account on behalf of the

succession. The disgorged fees also included fees the attorney charged to

defend disciplinary complaints lodged against him by one of the heirs to the

succession, since those fees were not necessary to probate the will.

Similarly, in In re Guste, 2012-1434 (La. 12/4/12), 118 So. 3d 1023,

the attorney was hired by an elderly nursing home resident to prepare a

power of attorney and represent him in a criminal proceeding arising from a

hit and run accident. The attorney performed services and was paid an

hourly fee of $125. Thereafter, the attorney continued to work for the

elderly client, including running errands with him, helping him move from

one nursing home to another, and taking him to the bank, all the while

charging him her hourly fee of $125. The Supreme Court found that the

attorney charged the client excessive fees, suspended her for two years, and

ordered that she make restitution to the client’s heirs.

Reimbursement of $550,000 in attorney’s fees was sought in Oreck

Direct, LLC v. Dyson, Inc., 2009 WL 961276 (E.D. La. 2009). Detailed

invoices were submitted in support of the reimbursement claim, but an

opposing party submitted expert affidavits contending the attorney’s fees

were “manifestly unreasonable.” The court found that 1,098 hours expended

on a summary judgment motion was excessive. Moreover, many of the time

entries were vague. In addition, the court found that the rates charged by a

New York law firm (over a thousand dollars an hour) “are unreasonable in

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this local market, and the court must accordingly reduce them.” An hourly

rate of $400 was deemed appropriate.

As part of the courts’ authority to determine the reasonable rates of

attorneys in the local market, a court may set reasonable rates for attorneys

with various levels of skill and experience and for various types of work

performed. In Receivables Exch., LLC v. Advanced Tech. Servs., Inc., No.

CIV.A. 14-668, 2015 WL 2372434 (E.D. La. May 18, 2015), the court

determined that an attorney practicing complex commercial litigation for 23

years with numerous professional commendations commanded an hourly

rate of $340. On the other end of the spectrum, the court in CPI Card

Group-Nevada, Inc. v. Traffic Jam Events, LLC, 2013 WL 3561383 (E.D.

La. 7/11/13), awarded an attorney with only one month of experience at the

time she began working on the case an hourly rate of $135. However, not all

tasks are created equal, regardless of the attorney’s level of experience. In

CPI Card Group-Nevada, supra, an attorney with thirty years of experience

was awarded an hourly rate of $210 for work on a routine collections matter,

rather than trial work that would command higher rates.

In Reyes v. Spur Discount Store No. 4, 2007 WL 2571905 (E.D. La.

8/31/07), plaintiff sought attorney’s fees pursuant to 28 U.S.C. § 1447(c).

These fees may be recovered where a party who removed a case to federal

court lacked an objectively reasonable basis for doing so. Plaintiff’s counsel

sought to recover fees incurred in filing a motion to remand at a rate of $250

per hour. A federal magistrate found that a rate of $200 per hour was

appropriate. With respect to the hours expended, “all time that is excessive,

duplicative or inadequately documented should be excluded from any award

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of attorney’s fees.” Applying this standard, the court “excised” the time of

one attorney and reduced the time of another by thirty per cent.

In Thomas v. A. Wilbert & Sons, LLC, 2015-0928 (La. App. 1 Cir.

2/10/17), 217 So.3d 368, prevailing plaintiffs in a class action for

remediation of contaminated ground water sought attorneys’ fees pursuant to

La. R.S. 30:2015.1. The trial court awarded plaintiffs attorneys’ fees in the

amount of $6.3 million, almost twice the $3.2 million value of the

remediation plan obtained by plaintiffs. On appeal, the defendants attacked

the attorney fee award as facially excessive, given the wide disparity

between the value of the underlying relief awarded and the attorneys’ fee.

The First Circuit disagreed and affirmed the attorneys’ fees award, reasoning

that the litigation spanned more than a decade, the case involved

complicated, novel issues of law and required specialized scientific

knowledge, and the result obtained was vital to furthering the objectives of

the Groundwater Remediation Act.

In Corbello v. Iowa Production, 2002-0826 (La. 2/25/03), 850 So.2d

686, an earlier case involving plaintiffs seeking remediation of land

contaminated by an oil and gas operator who disposed of saltwater on the

leased premises, the plaintiffs’ attorneys sought fees pursuant to a lease

provision. After a jury returned a verdict awarding the plaintiffs almost $50

million, the attorneys were awarded $689,510.00 by the trial court. On

appeal, the Third Circuit raised the attorneys’ fees to $4 million,

emphasizing the excellent result obtained, the “great responsibility” of

preparing and carrying the case through an eleven-day trial, the “tremendous

effort, skill, and knowledge” of the attorneys, and the extensive time and

effort the attorneys expended.

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IV. Legacy Litigation Fee Awards

“Legacy litigation” is a term used to describe a class of lawsuits for

damages arising from past oil and gas exploration; the contamination from

drilling leaves “an unwanted ‘legacy’ in the form of actual or alleged

contamination.” Loulan Pitre, Jr., “Legacy Litigation” and Act 312 of

2006, Tul. Envtl. L.J. 347, 348 (2007). Louisiana Revised Statute 30:29,

titled “Remediation of oilfield sites and exploration and production sites”

provides a cause of action “for environmental damage to property arising

from activities subject to the jurisdiction of the Department of Natural

Resources, office of conservation.”

Section (E)(1) of R.S. 30:29 provides for recovery of costs and

attorney’s fees:

In any civil action in which a party is responsible for damages

or payments for the evaluation or remediation of environmental

damage, a party providing evidence, in whole or in part, upon

which the judgment is based shall be entitled to recover from

the party or parties admitting responsibility or the party or

parties found legally responsible by the court, in addition to any

other amounts to which the party may be entitled, all costs

attributable to producing that portion of the evidence that

directly relates to the establishment of environmental damage,

including, but not limited to, expert witness fees,

environmental evaluation, investigation, and testing, the

cost of developing a plan of remediation, and

reasonable attorney fees incurred in the trial court and the

department.

(Emphasis added).

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As a general rule a court may not award attorneys' fees to a prevailing

party unless expressly authorized by statute. Alyeska Pipeline Co. v.

Wilderness Socy, 421 U.S. 240, 95 S.Ct. 1612, 44 L.Ed.2d 141 (1975). Two

major exceptions to this rule are the power of the court to award fees against

a party who has acted in bad faith and to award fees to counsel who has

created a benefit for third parties, such as a common fund for the benefit of

the class, where the fee award and expenses are taken out of the common

fund created. Id. In legacy litigation in Louisiana attorney’s fees are

awarded pursuant to statutory authorization. Moreover, in many legacy

litigation suits, the “common fund” obtained for the benefit of an identifiable

class, i.e., the general public and/or the non-plaintiff or future owners of the

land to be remediated, provides an alternative basis for awarding attorney’s

fees. These cases provide guidance for determining the reasonableness of

attorney’s fees by reference to common fund attorney fee awards in contexts

outside of legacy litigation, where reported decisions are relatively scarce.

In the two reported Louisiana legacy litigation suits examining

attorney’s fee awards, the courts have assigned an award with apparently

minimal explanation as to the method of calculation. Common fund cases,

on the other hand, have devoted considerable attention to the calculation of

awards. In common fund cases courts typically use one of two methods for

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calculating attorneys' fees: (1) the percentage method, where fees are based

on a reasonable percentage of the common fund; or (2) the lodestar method,

in which fees are computed by multiplying the number of hours reasonably

expended on the litigation by a reasonable hourly rate and, in the court's

discretion, applying an upward or downward multiplier. See Union Asset

Mgmt. Holding A.G. v. Dell, Inc., 669 F.3d 632, 642-43 (5th Cir. 2012). In

the past, Louisiana state courts determining a reasonable attorney fee in

common fund cases have employed the “percentage of the fund” approach,

as opposed to the lodestar approach. White v. Gen. Motors Corp., 97-1028

(La. App. 1 Cir. 6/29/98), 718 So. 2d 480, 509, writ not considered, 98-2522

(La. 12/11/98), 729 So. 2d 587, and writ denied, 98-2502 (La. 12/11/98),

729 So. 2d 590, and writ denied, 98-2511 (La. 12/11/98), 729 So. 2d 591.

Similarly, federal courts in Louisiana generally employ the percentage

method in common fund cases, but add “an overlay analysis of

reasonableness, using the Johnson factors.” In re Actos (Pioglitazone) Prod.

Liab. Litig., No. 6:11-MD-2299, 2017 WL 3033134, at *26 (W.D. La. July

17, 2017) (citing Johnson v. Ga. Highway Express, Inc., 488 F.2d 714, 717–

19 (5th Cir.1974), discussed infra). The reasonableness analysis under

Johnson places significant emphasis on the amount of time expended by

counsel, which may produce the same effect as lodestar calculations, since

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the amount of time expended will have a significant impact on the total

percentage of the award. See, e.g., Pioglitazone, supra; Turner v. Murphy

Oil USA, Inc., infra. Further, in recent years, many federal district courts

include an additional step, cross-checking the percentage award against a

“rough lodestar analysis.” See, e.g., In Re: Oil Spill by the Oil Rig

"Deepwater Horizon" in the Gulf of Mexico, on Apr. 20, 2010, No. 2179,

2016 WL 6215974, at *15 (E.D. La. Oct. 25, 2016); In re FEMA Trailer

Formaldehyde Prod. Liab. Litig., No. 07-1873, 2013 WL 1867117, *3 (E.D.

La. May 2, 1013); In re Vioxx Prods. Liab. Litig., 760 F. Supp. 2d 640, 652

(E.D. La. 2010).

There are no reported decisions analyzing what constitutes

“reasonable attorney fees” or determining the appropriate method for

calculation of those fees under La. R.S. 30:29. However, the recent case of

Thomas v. A. Wilbert & Sons, LLC, analyzed “reasonable attorney fees” and

the method of calculating those fees under the Groundwater Remediation

Act, a substantially similar environmental remediation statute. 2015-0928

(La. App. 1 Cir. 2/10/17), 217 So.3d 368. In Thomas, property owners

brought consolidated class actions against Dow Chemical Company under

La. R.S. 30:2015.1, providing for “remediation of usable ground water.”

The Thomas plaintiffs claimed that Dow Chemical Company had

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contaminated an aquifer situated beneath land owned by the plaintiffs and

from which the plaintiffs pumped water for use by the plaintiffs. La. R.S.

30:2015.1 contains provisions virtually identical to those of R.S. 30:29 and,

with respect to recovery of attorney’s fees and costs, provides as follows:

In any civil action in which a party is adjudicated responsible

for damages or payments for the evaluation and remediation of

contamination or pollution that impacts or threatens to impact

usable ground water, the party or parties providing evidence, in

whole or in part, upon which the judgment is based shall be

entitled to recover from the party cast in judgment, in addition

to any other amounts to which they may be entitled, all costs,

including expert witness fees and reasonable attorney fees

attributable to producing that portion of evidence that directly

relates to the claims of contamination or pollution that impacts

or threatens to impact usable ground water.

La. R.S. § 30:2015.1(F)(1)

Though suit was filed in 2001, it was not until 2013 that the trial court

in Thomas signed a final judgment finding that there was contamination of

the area requiring remediation or evaluation; that Dow was a “responsible

party” under R.S. 30:2015.1; and that “monitored natural attenuation”

estimated to cost $3.2 million was the most feasible remediation plan. 217

So.3d at 378–79. Pursuant to R.S. 30:2015.1(F)(1), the trial court further

awarded plaintiffs attorney’s fees in the amount of $6.3 million. Id. at 402.

On appeal, Dow attacked the attorney’s fee award on three grounds.

First, Dow argued that the award violated the ex post facto clauses of the

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U.S. and Louisiana Constitutions, because attorney fee awards are penal in

nature and Dow’s actions occurred long before passage of the Act

authorizing the award of attorney’s fees. Id. at 397–98. The First Circuit

dismissed this argument, finding the attorney fees provision is primarily

non-punitive in purpose and effect as it is intended to ensure that

environmentally damaged property is remediated and to benefit private

litigants who could no longer pay contractual attorney fees out of

remediation damages recovered, due to the statutory requirement that those

damages be placed into the registry of the court.4

Alternatively, Dow argued that the trial court erred in awarding

attorney fees without use of the lodestar method, under which the plaintiffs

bore an evidentiary burden to establish the number of hours reasonably

expended on the litigation and a reasonable hourly rate. Id. at 401. Instead,

the plaintiffs offered no evidence of a reasonable hourly rate and introduced

reconstructed time records estimating the total time their attorneys spent on

the case. Id. at 401–02. Dow also argued that the $6.3 million award was

arbitrarily high considering it was nearly twice the value of the remediation

cost of $3.2 million. Id. at 402. Plaintiffs’ own expert witness in Thomas

4 Similarly, La. R.S. 30:29(D)(1) provides that “all damages or payments in any civil action, including

interest thereon, awarded for the evaluation or remediation of environmental damage shall be paid

exclusively into the registry of the court in an interest-bearing account with the interest accruing to the

account for clean up.”

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had opined that if $3 million were deposited into the court registry, a fee

award of forty percent of that amount would be reasonable. Id.

The First Circuit disagreed with Dow’s arguments. First, the court

held that the lodestar method “is not the only acceptable means of

calculating attorney fees.” Id. In Thomas the trial court employed the Rivet

factors, derived from Rule 1.5(a) of the Rules of Professional Conduct, to

determine the attorney’s fee award, rather than the lodestar method, and the

First Circuit approved. In affirming the attorney’s fee award under the Rivet

factors, the First Circuit noted that the court was “impressed with the time

and effort of the attorney’s pursuing remediation in the face of unyielding

resistance on the part of Dow.” Id. at 403. Further, the court noted that the

litigation had spanned more than a decade, the record was “astronomical”,

the case involved a res nova application of R.S. 30:2015.1 and required

specialized scientific and geologic principles pertaining to groundwater

contamination, and the result obtained was vital to furthering the objective

of the Groundwater Remediation Act. Id. Accordingly, the First Circuit held

the award did not represent a clear abuse of discretion.

In Corbello v. Iowa Production, 2002-0826 (La. 2/25/03), 850 So.2d

686, five plaintiff-landowners filed suit in 1992 against Shell Oil Company

for damages to their property due to Shell’s unauthorized disposal of

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saltwater on the leased premises. Id. at 691. The jury awarded plaintiffs $33

million to restore the leased premises and more than $16 million for Shell’s

illegal disposal of saltwater on the premises. Id. Pursuant to a lease

provision, the trial court also awarded attorney’s fees in the amount of

$689,510.00, based on the lodestar method. Id. On appeal, the Third Circuit

increased the attorney fee award to $4 million.5 The Third Circuit’s award

was based on a review of the factors identified in State, DOTD v.

Williamson, 597 So.2d 439 (Mem).6 In affirming the appellate court’s

increased attorney’s fee award to $4 million, the court reasoned that:

plaintiffs' counsel's work in this case resulted in a $50 million

award in favor of their clients; it involved great responsibility

by the attorneys to prepare and carry the case through trial; the

litigation is more likely than not the greatest monetary issue

their clients will face in their lifetimes; Plaintiffs' counsels'

presentation of the case reflect the tremendous effort, skill, and

knowledge required of them; the character of the work and the

attorneys themselves are also reflected therein; the trial itself

lasted eleven days; the volumes of exhibits and the length of the

trial are just a small reflection of the time required for

preparation of the matter for trial; the facts of the case were not

extremely complicated, but the evidence to establish Plaintiffs'

claim was extensive requiring much investigation, diligence

and skill of counsel; this matter was factually and legally

5 It is worth noting that $4 million is 8% of the $50 million awarded to plaintiffs in Corbello. This

percentage stands in contrast to the fees awarded in Thomas, supra, which were nearly double the amount

awarded to plaintiffs. 6 “Factors to be taken into consideration in determining the reasonableness of attorney fees include: (1) the

ultimate result obtained; (2) the responsibility incurred; (3) the importance of the litigation; (4) amount of

money involved; (5) extent and character of the work performed; (6) legal knowledge, attainment, and skill

of the attorneys; (7) number of appearances made; (8) intricacies of the facts involved; (9) diligence and

skill of counsel; and (10) the court's own knowledge.” Williamson, 597 So.2d at 441–42.

21

intensive; and the court's own knowledge of the law was

supplemented by counsel throughout the trial.

Other Analogous Cases

In the following cases attorney fees were awarded pursuant to

statutory authorization in other contexts.

Vela v. Plaquemines Parish Government, 2000-2221 (La. App. 4 Cir.

3/13/02), 811 So.2d 1263, involved expropriation by Plaquemines Parish of

approximately seven hundred tracts of private land for enlargement of a

hurricane protection levee. The Vela plaintiffs brought a class action to

determine the amount of compensation due to hundreds of owners of the

property. The plaintiffs sought attorney’s fees pursuant to La. R.S. 12:5111,

which authorizes an award of “such sum as will, in the opinion of the court,

compensate for reasonable attorney fees actually incurred because of the

proceeding.” Plaintiffs sought fees of $1,636,207.06, or one-third of the

total judgment of $4,908,621.18, based on the plaintiffs’ contingency fee

contract with their counsel. Id. at 1279. In awarding the amount sought by

plaintiffs, the trial court considered the Rivet factors and noted the successful

result, lengthy proceedings (more than seven years) that consisted of two

trials, appeals, and numerous writ applications, the novel and difficult nature

of the case, and the vigorous resistance by the defendants at every step in the

22

litigation. Id. at 1280. However, the court also noted that the result would be

almost the same were it to employ the lodestar method, as plaintiffs also

submitted documentation of time spent on the case and showed over 2,500

hours of service by the attorney and more than 1,300 hours of paralegal time.

Id. The court employed hourly rates of $200 for attorneys and $75 for

paralegals. Id. at 1281.

In Turner v. Murphy Oil USA, Inc., 472 F.Supp.2d 830 (E.D. La.

2007), the Eastern District approved an award of $33,150,000.00 in

attorneys’ fees, equivalent to 17% of a settlement of $195,000,000.00 to

class plaintiffs who sustained property damage due to an oil refinery spill

during Hurricane Katrina. The Turner court examined the appropriate

method of calculating attorney fee awards in “common fund”7 cases.

Though courts traditionally calculate attorney’s fees by using the lodestar

method, an exception is found in common fund cases, where courts often

award attorney fees as a percentage. In Turner the court established an

initial benchmark percentage and then determined whether the benchmark

should be adjusted upward or downward based on application of factors set

forth in Johnson v. Ga. Highway Express, Inc., 488 F.2d 714, 717–19 (5th

7 “[A] litigant or a lawyer who recovers a common fund for the benefit of persons other than himself or his

client is entitled to a reasonable attorney's fee from the fund as a whole.” Boeing Co. v. Van Gemert, 444

U.S. 472, 478, 100 S. Ct. 745, 749, 62 L. Ed. 2d 676 (1980).

23

Cir.1974).8 After establishing a benchmark percentage of 15%, the court

found that the Johnson factors justified an upward adjustment to 17%. The

court then performed a cross-check of the percentage using the lodestar

method, to confirm that the percentage was reasonable. Id. at 867–68.

In litigation involving mineral rights and royalties associated with a

production well, plaintiffs in Quality Environmental Processes, Inc. v. IP

Petroleum Company, Inc., 2016-0230 (La. App. 1 Cir. 4/12/17), 219 So.3d

349, recovered unpaid mineral royalties, intentional torts, and statutory

penalties. The trial court awarded attorney’s fees of $138,350.46, which was

25% of the total award of royalties, penalties, and interest, pursuant to La.

R.S. 31:139 authorizing recovery of reasonable attorney’s fees from actions

that are “either fraudulent or willful and without reasonable grounds.” Id. at

377. Because the attorney’s fee award under that statute is penal in nature,

the appellate court found that “the value of the attorney’s fees does not need

to be proven.”9 Yet, the court still applied the factors from Williamson,

supra, to determine the reasonableness of the attorney’s fees. Under the

Williamson factors, the court found no error in the attorney’s fee award,

8 These factors include: (1) the time and labor required; (2) the novelty and difficulty of the questions; (3)

the skill requisite to perform the legal service properly; (4) the preclusion of other employment by the

attorney due to acceptance of the case; (5) the customary fee; (6) whether the fee is fixed or contingent; (7)

time limitations imposed by the client or the circumstances; (8) the amount involved and the results

obtained; (9) the experience, reputation, and ability of the attorneys; (10) the “undesirability” of the case;

(11) the nature and length of the professional relationship with the client; and (12) awards in similar cases. 9 Compare with Thomas, supra, wherein the court found that the attorney’s fees provision in the

Groundwater Contamination Act was not primarily penal in nature.

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because the defendants “without legal justification . . . intentionally and

deliberately refused to pay the [plaintiffs] the mineral royalties to which they

were entitled.”

V. Disciplinary Cases

1. Standard Contingency Fees

ABA Formal Op. 94-389: “. . . a lawyer who always charges the same

percentage of recovery regardless of the particulars of a case should consider

whether he is charging a fee that is, in an ethical context, a reasonable one.”

The Formal Opinion approves of contingency fee agreements in

the following contexts: (1) the client can otherwise afford to pay on a non-

contingent basis; (2) liability is clear from the outset and some recovery is

likely; (3) the contingency fee agreement provides for higher contingent fees

after specific benchmarks (i.e., 25% of recovery if the case settles within six

months and 33% after trial); or (4) the contingency fee agreement provides

for higher contingent fees as the amount of recovery increases. However,

the Formal Opinion further states that the overall fee must appropriate and

reasonable.

This Formal Opinion offers an insightful overview of ethical issues

presented by contingency fee arrangements.

2. Phantom Hours

ABA Formal Op. 93-379: “In matters where the client has agreed to

have the fee determined with reference to the time expended by the lawyer, a

lawyer may not bill more time than she actually spends on a matter, except

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to the extent that she rounds up to minimum time periods (such as one-

quarter or one-tenth of an hour).”

This influential Formal Opinion contains much useful information.

In In re Moser, 2011-2790 (La. 2/10/12), 81 So.3d 650 (Mem.) an

attorney was permanently disbarred after multiple instances of “pre-billing”,

or billing clients for work she had not yet completed. The attorney had

previously been placed on probation for “pre-billing” and for falsely

reporting to her law firm that she attended a court hearing, and submitting a

report, billing records, and travel receipts to substantiate her false report.

The Supreme Court imposed a deferred suspension subject to completion of

two years of supervised probation. Less than six months later, the attorney

self-reported more “pre-billing” and was permanently disbarred.

3. Double-Billing/Travel Time

It is unreasonable for a lawyer simultaneously to bill one client for

travel time while billing another client for writing a brief on the airplane.

Similarly, it is unreasonable for a lawyer to bill one client for work product

previously prepared for another client. See, ABA Comm. on Ethics and

Professional Responsibility, Formal Op. 93-379 (1993). Lawyers should

apportion their time between the affected clients. As noted by Prof. Dane

Ciolino, “If a lawyer spends an hour traveling to an outlying parish to attend

motion hearings for two separate clients, the lawyer should not bill each

client for one hour of time. Rather the lawyer should bill each client for

one-half hour.” See, www.lalegalethics.org.

4. Fees Exceeding Legislative Cap

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A lawyer’s fee in a workers’ compensation case cannot exceed the

twenty percent statutory maximum. La. R.S. 23:1141; See also, In Re

Wimmershoff, 3 P.3d 417 (Colo. 2000).

An attorney was publicly reprimanded for a fee agreement designed to

circumvent the statutory cap in a medical malpractice case. In Re Stephens,

851 NE 2d 1256 (Ind. 2006).

5. Fees for Doing Nothing or Very Little

By definition, it is unreasonable to charge for work not done. The

case of In Re Cleaver v. Bascombe, 892 A.29 396 (D.C. 2006) involved

submission of a false Criminal Justice Act voucher for legal work not

actually performed by counsel appointed to represent an indigent criminal

defendant. This violated Rule 1.5(a), regardless of whether or not the lawyer

actually collected on the voucher.

The remarkable case of In Re Calahan, 2006-0005 (La. 5/17/06), 930

So.2d 916 involved a man who retained counsel to represent him in a

maritime personal injury case. When the case settled, his attorney charged

him a fee in excess of $36,000. Believing this sum excessive, the client

retained Mr. Calahan to assist him in recouping a portion of the fee.

Attorney Calahan sent a one-page letter to the client’s former attorney,

demanding he refund $30,000 of the $36,000 fee he charged. Two days

after receiving this letter, the attorney refunded $30,000 to Mr. Calahan.

Evidently proud of his quick work, Calahan then paid his client the sum of

$17,500, keeping $12,500 as his attorney’s fee. The client found this

excessive and filed both a disciplinary complaint and a civil lawsuit against

Mr. Calahan.

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During the civil case Calahan claimed he had devoted 81 hours to

recovering the excessive legal fee. Rejecting Calahan’s “reconstructed”

time sheets, the court found he performed four to five hours of service for

which an appropriate fee would be $1,000.

The Disciplinary Hearing Committee found the attorney in violation

of Rule 1.5(a). The Louisiana Supreme Court characterized the alleged 81

hours as a “fabrication.” In light of this and other violations, the court found

the appropriate sanction was disbarment.

An excessive fee was charged in the case of In Re Levingston, 2000-

0161 (La. 2/25/00), 755 So.2d 874. Respondent attorney charged a fee of

over $47,000 to handle an uncomplicated succession where no

administration was necessary. The attorney calculated his fee by charging a

flat five percent of the value of the gross estate, subtracting $10,000 as a

“professional discount.” The attorney was suspended from the practice of

law for a period of three years.10

Unreasonable fees under Rule 1.5(a) were addressed in In Re Cucci,

09-DB-014 (LADB 10/10/11). The attorney in that matter charged a client

$3,500 to prepare an application for post-conviction relief. The application

was nearly identical to an application previously filed by the client, which

had already been denied. Because the application prepared by the attorney

violated the Code of Criminal Procedure’s prohibition of repetitive and

10

See also, In Re Simpson, 2007-0070 (La. 6/29/07), 959 So.2d 836, wherein a one-third

contingency fee in the amount of $130,000.00 charged by an attorney to contest a

succession was held to be excessive, given that the attorney admitted that he only worked

twenty to thirty hours on the matter and only filed one pleading. The excessive fee,

combined with a finding that the attorney engaged in “harassing litigation” was found to

warrant a three-year suspension from the practice of law.

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duplicative applications, the trial court summarily denied it. The attorney

refused to appeal the denial without payment of an additional fee.

The client filed an ethical complaint with the Office of Disciplinary

Counsel, which referred the matter to the Louisiana State Bar Association

Fee Dispute Resolution Program. Although the arbitrator in those

proceedings ordered the attorney to return the entire fee, the attorney only

returned $500. Formal Charges were thereafter instituted against the

attorney, resulting in a finding of a violation of Rule 1.5(a). According to

the LADB, the attorney’s services appeared to be little more than refiling the

original application for post-conviction relief, rendering the $3,500 fee

excessive.

6. Fees Involving Illegal Conduct

In the case of In Re Defrancesch, 2004-0289 (La. 7/2/04), 877 So.2d

71, a Ms. Wattigney was arrested in Jefferson Parish and charged with

felony drug possession. Attorney Defrancesch agreed to handle her defense

for a fee of $2,000, which Ms. Wattigney was to pay in weekly installments.

Since she did not pay her fee installment one morning, Defrancesch

proposed as “punishment” that his client accompany him to Mississippi for a

sexual rendezvous. Instead, she sought the advice of her parents, and her

father contacted the Office of Disciplinary Counsel.

Subsequently, an ODC investigator taped certain telephone

conversations between Ms. Wattigney and Mr. Defrancesch during which he

analogized his demand for sex “as a penalty fee like, [on a] Discover card.”

If she cooperated, then “we’ll be square and I’ll be taking care of you

again.”

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Respondent was charged with violating Rule 1.5(a) – that is, a

lawyer’s fee shall be reasonable. Attempting to coerce sex from a client as a

“late payment fee” constitutes a violation of Rule 1.5(a).

7. Padding/Double-Billing

In the case of In Re Dyer, 99-1652 (La. 10/19/99), 750 So.2d 942, Mr.

Dyer served as co-counsel for plaintiff in a civil case pending in the United

States District Court for the Eastern District of Louisiana. The client

terminated his representation, and Mr. Dyer intervened to recover his

attorney’s fees and costs. In that regard, he submitted a statement of his

costs and fees, many of which were disallowed by a federal magistrate

judge. Some fees were for legal-related services not rendered, such as the

service of subpoenas.

Subsequently, Formal Charges were brought by the Office of

Disciplinary Counsel. A hearing committee did not believe Dyer’s assertion

that numerous over-charges and fictitious charges were innocent “mistakes.”

On review, the Louisiana Supreme Court concurred, stating it “defies belief

that so many ‘mistakes’ could occur in favor of respondent and none in favor

of his client.” 750 So.2d at 948. The court found that respondent sought to

“pad” the expense charges for his own benefit and to the detriment of his

client. Accordingly, the court accepted the Disciplinary Board’s

recommendation of disbarment.

Padding of time was admitted by the respondent attorney in the

unusual case of In Re Lawrence, 2004-0019 (La. 10/19/04), 884 So.2d 561.

Respondent was employed by a Gretna law firm representing a plaintiff in a

personal injury matter. Later, he resigned from the firm and accepted a

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position as an associate with a Covington law firm which happened to be

acting as defense counsel in the same case. Naturally, the Gretna law firm

moved to disqualify him and his new firm from continuing to represent the

defendants. In support of its motion, the Gretna firm produced time records

showing the respondent attorney had put fifteen hours of work into the case,

performing tasks such as interviewing the client, writing correspondence to

the client and medical providers, drafting pleadings, and making telephone

calls.

In response, the respondent attorney prepared an affidavit saying, in

part, that regardless of what his time sheets showed, he really only worked

on the case at the Gretna firm for about one hour; that he “padded” his time

sheets with hours he did not actually work. He claimed he recorded those

fictitious hours “to satisfy the billing requirements of the firm to save my

job.”

The Louisiana Supreme Court said it did not matter that respondent’s

time sheets were not used to bill the client. His conduct in recording time

not actually spent “is dishonest, fraudulent, and deceitful.” A three-month

suspension from the practice of law was ordered.

In the matter of In Re Petal, 2007-1299 (La. 1/25/08), 972 So.2d

1138, plaintiff retained counsel to represent him in an Equal Employment

Opportunity complaint against his employer. He contended he was

discriminated against based on age and mental impairment. His attorney

proffered to him an agreement whereby plaintiff would pay a contingency

fee of one-third of the gross amount recovered, as well as a “non-refundable

advance” fee of $2,500. There were numerous other disciplinary charges

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involved in the case, but in Petal the court strongly suggested there is no

such thing as a “non-refundable fee.”

In Iowa Supreme Court Bd. of Prof’l Ethics & Conduct v. Lane, 642

NW 2d 296 (Iowa 2002), a lawyer charged $9,000 in order to prepare a bill

and claimed he performed eighty hours of work when in fact he plagiarized

the entire portion of a legal argument from a treatise. He violated the Code’s

prohibition against excessive fees.

VIII. Selected Thorny Issues

A. Determining the amount of effort necessary to generate the

highest return possible.

B. Varying the contingency fee percentage rate in accordance with

the amount of risk a particular case presents.

C. Determining the “base amount” to be used in determining the

contingency percentage—that is, a reasonable contingency

percentage may result in an unreasonable fee if applied to an

unjustifiably large base amount (i.e., an uncollected judgment

or non-discounted sum of structured-settlement payments).

C. Billing the client for “thinking” about the case or developing a

legal theory. Is that legitimately billable time? If not, why not?

D. Young lawyers still learning how to practice: Is their excessive

time billable or should it be cut?

E. Firm minimum billable hour requirements. Should these be

encouraged or discouraged?

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F. A lawyer’s duty of competence and diligence vs. the client’s

desire to restrict the lawyer’s hours.

G. A firm compensation system which rewards high billable hours.

H. Duty of supervising partners—are you responsible for

overbilling by others?

I. Billing for budgets, litigation plans, and compliance with

guidelines.

J. Scheduling—is this ever a billable activity?

IX. Avoiding Problems with Fees

A. It is almost always advisable to have a signed engagement letter

in place. Courts will construe any ambiguity in a fee agreement

against the lawyer who drafted it. For model engagement

letters, see Dane S. Ciolino at www.lalegalethics.org.

B. Under Rule 1.5(c), a contingent fee agreement shall be in

writing.

C. Use detailed billing descriptions.

D. Always create work product.

E. Communicate, communicate, communicate with clients.

F. Seek client pre-approval for expenses and billable work.

G. Keep time contemporaneously.

33

H. “Vet” bills for reasonableness and compliance with guidelines

before sending them to clients.

I. Avoid fee disputes and, if necessary, use LSBA program to

resolve.

X. One Lawyer’s View

“The matter of fees is important far beyond the mere question of bread

and butter involved. Properly attended to fuller justice is done to both lawyer

and client. An exorbitant fee should never be claimed. As a general rule,

never take your whole fee in advance, nor any more than a small retainer.

When fully paid before hand, you are more than a common mortal if you can

feel the same interest in the case, as if something was still in prospect for

you, as well as your client. And when you lack interest in the case, the job

will very likely lack skill and diligence in the performance.”

“Resolve to be honest at all events; and if, in your own judgment, you

can not be an honest lawyer, resolve to be honest without being a lawyer.

Choose some other occupation, rather than one in the choosing of which you

do, in advance, consent to be a knave.”

4822-3782-7352, v. 1