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#CaseoftheWeek Episode 7: Application for Fees Following Allocation of TAR Expenses

We continue to examine the decisions, specifically on the application for fees following the allocation of TAR expenses, in Lawson v. Spirit Aerosystems, Inc. on this episode of #CaseoftheWeek.

Good morning and welcome eDiscovery enthusiasts. I’m Kelly Twigger and welcome to our first ACEDS‘ #CaseoftheWeek for 2021. Happy New Year to all of you. I hope that each one of you is safe and healthy as we start 2021 and may this be a better year for all of us. I’m Kelly Twigger as I mentioned, CEO and founder of eDiscovery Assistant and principal at ESI Attorneys. As you know, if you’ve watched our broadcast, we put together this weekly LinkedIn Live to discuss ediscovery case law and provide education in partnership with the Association of Certified E-Discovery Specialists.

This week, we’re excited to bring to you the latest decision in the saga of Lawson vs. Spirit Aerosystems. Many of you know that eDiscovery Assistant maintains a curated database of ediscovery decisions. We tag those discovery decisions by issues and including today’s issues of cost recovery and costs and fees.

Our database includes roughly 2700 cases that are tagged regarding cost recovery and cost fees, with 481 of them from 2020 alone.

You’ll see a link to this week’s case in the event section or in the event page LinkedIn.

If you are on another platform and watching us, you’ll want to switch over to the LinkedIn page to be able to see that link to the case. If you’re an eDiscovery Assistant user, you can log in and search for Lawson and you’ll see all of the decisions in the Lawson vs. Spirit Aerosystems saga. The public link is available to anyone, even non-users of eDiscovery Assistant. You can grab that link from a LinkedIn page here.

In addition, I think that Doug Austin is going to be writing about the latest decision that we’re going to discuss today in his eDiscovery Today post, so you’ll want to catch that. If you’re not an eDiscovery Today subscriber, you want to pop over to eDiscoveryToday.com and sign up.

You’ll also see a link in the events page for the University of Florida E-Discovery Conference that will be coming up in just three months now on March 18, 2021. We have finalized the agenda for the conference, and you’ll be able to see that on a conference website. If you’ll sign up with the link that will be included on the events page, we’ll send you information on registration, which I believe is either open or is opening soon.

With all of that, let’s get into our case for this week. As I mentioned, we’re talking about the latest decision in the Lawson vs. Spirit Aerosystems case. This one is very recent, came out on December 28, 2020. Judges were working during the week when most everyone else was off. This is from Magistrate Judge Mitchell out of the United States District Court of the District of Kansas. As I mentioned, this is the 11th discovery ruling in this saga. All 10 of the earlier decisions are included in eDiscovery Assistant. When you go to the link to the case, you’ll see all those additional decisions on the left-hand side of the decision.

What was the particular issue here? Well, last we talked about Lawson was in early December on our #CaseoftheWeek 4, I believe, where we talked about the court’s allocation of TAR costs to Spirit. Let’s just revisit the facts a little bit following that allocation of TAR costs. Now we’re talking about the application for attorneys’ fees associated with putting together the application for the TAR expenses.

Let’s revisit the facts. The facts in Lawson were that Lawson was the former CEO of Spirit Aerosystems. He sued Spirit when Spirit stopped paying him under his retirement agreement, and Spirit claimed that Lawson breached that agreement by consulting with another company called Arconic.

The entire dispute here between Spirit and Lawson is whether Spirit and Arconic businesses overlapped such that consulting for Arconic by Lawson was prohibited under his retirement agreement.

Much of the disputes and discovery process was driven by Lawson’s request, and the party spent months on the discovery process, on the business issues that overlap, including fights about custodians and search terms. And when search terms were revealed with low responsiveness rates on documents, Lawson wanted to conduct technology assisted review or TAR, and the court allowed that but subject to cost shifting to Lawson. As we discussed in our #CaseoftheWeek in December, cost shifting is pretty rare, but in a case where a party wants to engage in a discovery process that’s additional to what Spirit had already done, it was appropriate.

That motion that we discussed was the shifting of costs to Lawson for the TAR expenses, and in that decision, Judge Mitchell allocated $754,000 of costs to Lawson to pay for the TAR process that Spirit Aerosystems had gone through. Now, what the court did a little analysis on but didn’t get to completely was the award of costs and fees to the attorneys who had to complete the application for TAR. That $754,000 was for the expenses that the attorneys incurred on the TAR process and that the vendor incurred project management fees, all those kinds of things that are specifically delineated in that October decision.

This particular case is about the ability of the attorneys to recover fees for putting in the application for the TAR fees. The point really is that if you get to the point where you’ve gotten the court to acknowledge that they’ll be cost shifting, had Lawson been willing, which it doesn’t seem like he has been given the number of disputes here, at all to cooperate or compromise, there seems like there’s a lot of money that could have been saved, probably close to a $150,000 here in terms of not going having to go to the court on application.

How much money is really at stake? Well, the petition from or the ultimate allocation of fees to the attorneys here by Judge Mitchell is $94,407.25. That’s in connection with both what the court refers to as the original application, which was the original application put in with the motion for cost recovery under TAR, as well as the renewal application. In the October 28th decision, the court stated that they didn’t have quite enough information to be able to allocate fees at that time. They did review some of the pieces of the fee request, and we’ll talk about those a little bit today. But they asked for more information. Basically, what they said is, “we don’t have enough information; we need specifics from the attorneys in order to be able to look at the fee application.” That’s why we’re revisiting that issue today.

The original application, which again, was in conjunction with the motion for expenses on TAR, included $75,000 for one firm and $10,000 for a second firm. That was a total of $85,000.

The renewal application, which in the decision is referred to in a couple of ways as the reply brief, included an additional $11,000 for that renewed application. We’re looking at a total request of about $95,000. A good part of the analysis on the fee application for the original application, as I mentioned, was included in that October 28th decision.

What’s probably the most important piece to reiterate…and if you if you didn’t catch that #CaseoftheWeek, it was the one from December 8th; it was case number 4. You can review that decision on the eDiscovery Assistant blog. It’s just ediscoveryassistant.com/blog. We’ll put the link to that one on the events page as well so you can review that one.

Key from that discussion was that one timekeeper’s time did not specifically reference work done on the TAR process, and as a result, the court reduced recovery for that timekeeper by 25%. Our biggest takeaway from today really is going to be about making sure that your time charges are reflecting with specificity the work that you’re doing for a client on a day-to-day basis because you never know when you’re going to be seeking cost recovery.

In looking at this application, the court reiterated the same as it did the standard from the October decision, which was to state that the proper procedure for determining a reasonable attorney’s fees is to use the lodestar figure. Lodestar multiplies the number of hours that counsel reasonably spent by a reasonable hourly rate. Again, that reasonableness is still our standard, but with the lodestar, we take a number of hours and multiply that times the rate.

In the decision that we discussed in October, we looked specifically at where the court delineated who was responsible for what kind of tasks and whether those tasks or appropriately done by that person at a particular level. For example, there were at least a couple of situations where the court felt that something done in a partner level could have been done by a much lower-level person, and they would reduce that rate. In looking at the reasonableness of both the hours and the rates, the court also looks at could less time have been spent on a particular project or could it have been done by someone at a lower level. All of those things are built into the reasonableness.

There are a few other nuggets that are in this decision on evaluating reasonableness of attorney fees that you want to keep in mind when you’re moving for fees. This is important as to whether this is on this application for TAR expenses, but this is for attorneys’ fees in general. It’s always going to be this reasonableness standard. It’s always going to be looking at lodestar.

Arguments that Lawson put forward here trying to refute the fees were pretty futile, and I think given Lawson’s history here is probably at a bit of a disadvantage to the court. The court’s analysis is still pretty consistently applying the reasonableness standard and looks at the evaluation of things. It really didn’t seem like any of the fees that were requested were outlandish. If you remember the decision from early in October, the application for fees on the TAR expenses for $750,000 was pretty specific. It takes a long time to be able to put those kinds of pieces together and to work with the providers to be able to do that, to put together the level of detail that’s required to the court to do an analysis in that cost shifting.

I mentioned earlier there could have been an avoidance of about $150,000. $100,000 of it is this fee application. In addition to that, you’re probably looking at one to two times that amount for Lawson’s attorneys. Potentially even more savings that could have been done here if there could have been some cooperation between the parties.

Lawson tried to argue here that he shouldn’t be responsible for the fees on the renewal application or for what the court sometimes refers to as the reply brief that additional $11,000. The court looked at that under due process of the reasonableness consideration and said that due process accounts for all of the fees on the application, including a reply brief.

In the sense that the court asked for additional information here, it’s characterizing the decision as a bit of a reply brief. It sort of struck me as strange because in the original application for fees, if the attorneys had provided the level of specificity that the court had required, ostensibly the court could have ruled on that application during that October decision because they didn’t and they asked for additional information. I think it was worthy of an argument that Lawson shouldn’t have been responsible for those, but he lost that argument.

The court also rejected Lawson’s argument that fees should not be given because the court had already awarded the $754,000 in TAR expenses and Lawson argued essentially that some of the attorney’s fees are duplicative of what was included in those expenses. The court stated that it had already heard and rejected that argument is not substantially justified in the October decision and then cited to the fact that the District Court had affirmed its decision in November, and the District Court’s affirmance found no error in concluding that Lawson’s persistence in pursuing the costly, ineffective TAR was disproportional to the needs of the case. That’s what the district court, or sorry what the magistrate judge, used to rely on rejecting the argument that any of those TAR expenses covered attorneys’ fees.

Next, Lawson argued that a lack of documentation should be sufficient to justify a denial of fees. The court looked at the detailed time entries that were provided on the original application, as well as supporting declarations that were filed on the reply brief for the renewal application and said that those were sufficient and rejected Lawson’s argument.

In looking at the specific applications for reasonableness of the time spent, the court set forth a number of statements about how the court looks at attorneys’ fees that are worth understanding if you’re putting forth any application for attorneys’ fees. Those include 1) the party seeking fees must submit meticulous, contemporaneous time records that reveal all hours for which compensation is requested and how those hours were allotted to specific tasks.

As you’re doing your time charges and your partners or your firm are encouraging you to do them daily, this statement should encourage you even further to do that. Not only is it good business practice, but it’s going to mean that you’re going to record the activities you did that day and you’re going to be much more specific than you are if you’re trying to do it several days, a week, or weeks later. The longer you take to enter those time charges, the less likely you’ll be able to to use the specificity that you need should you be trying to seek cost recovery.

Second, the court iterates that fee applicants should use judgment with respect to the number of hours worked and built, that means that you should winnow hours to what is actually expended down to what is should have been reasonably expended. If, for example, a task takes you five hours because you went down a rabbit hole on research, that otherwise really should have taken you three hours, when you’re submitting those fees on an application for cost recovery, you should use the three-hour reasonableness requirement instead of the actual five hours expended.

Third, the court looked at if an attorney’s hours would not have been properly billed to a client, they cannot reasonably be billed to the adverse party, making certain time presumptively unreasonable. Fourth, where are the hours claimed by counsel include those that are unnecessary, irrelevant and duplicative, the court may reduce the reasonable hours awarded. We talked about that a little bit. Fifth, a court is also justified in reducing the reasonable number of hours if the attorney’s time records are sloppy and imprecise and fail to document adequately how he or she utilized large blocks of time.

There is some discussion in this decision about block billing where many activities are included in the same block and it’s difficult to discern how much time was spent on each activity. If you are in a case that is hostile, a lot of controversy, you’re pretty sure is going to go up on motions, best to use specific time charges for each activity as opposed to block billing. That’s one consideration when you’re doing your time charges every day. To the extent you can break those up into specific activities, you should do that.

The court also set out that it is justified in reducing a total number of reasonable hours, again, if those records are sloppy and imprecise. I just want to reiterate that point that I just mentioned, because sloppy and imprecise in context of this case and the October 28th decision, the court really emphasized that there was a lot of vagueness in one of the timekeeper’s entries, and it was very difficult to determine what the activity was that was being covered by that time entry. That’s just not great business practice for your client. Get out of that habit if you’re in it, or know that your application for fees is going to be reduced. If you’re an associate and it’s your partner that ends up having to take a hit on the fees as a result of you failing to use specificity or time charges, that’s not going to be a huge leg up for you.

Finally, the court has the discretion to determine what is reasonable for particular tasks and whether the right person performed those tasks.

That’s something that I mentioned earlier. All of this reasonableness is within the court’s discretion, and many of these judges have practiced law for substantial periods of time so they know how long tasks should take and who should be doing it.

The court’s analysis here was really that a review of the time charges on the original application showed reasonable costs and distribution of tasks, and that counsel had taken the time to reduce costs and hours for some tasks much as the court required. The same was true for the renewal application.

They also did note in the October 28th decision that because there had been a discount given on some of the lawyer’s time, that discount was also applied across the application. You need to be conscious of what’s happening on your billing. However you’re handling those issues, those are going to be applied across the board on a fee application.

That’s essentially the ruling for the case.

What are our takeaways?

We’ve talked about some of them. How you write your time charges to allocate them to specific tasks is going to matter substantially, and it’s next to impossible to recreate the specificity after the fact if you’re not doing them contemporaneously. Contemporaneously really means same day. I think I can tell you as an attorney who’s been practicing for more than two decades, that there are many, many times when you just can’t even remember the next day what you did the day before.

Do your time charges daily. You’ll be happier about it. Your partners, everybody will be happier about it if you’re doing them contemporaneously.

Also, make sure you’re including the ability to tell a story. I think of time charges as how do I tell my client what I spent their time and money doing that day. It’s my time, their money. What did I do that was worth the money that they are being asked to pay for that time?

Second takeaway–fee recovery really means specific documentation of tasks and allocation of responsibilities. That means keeping meeting notes, task assignments, general management of the matter to make sure that you can recover fees appropriately. If you have partner level folks doing work that could be done by paralegals, the likelihood is you would not be able to recover the full cost of those services. Plan ahead, make sure that you are staffing cases appropriately. Make sure that you’re allocating tasks to those that it’s appropriate to be doing them.

Next consideration, next takeaway is to know the lodestar that hours and rate is the general analysis for fee recovery, but that you always have the discretion of the court to be looking at those specific tasks and responsibilities. Do your own proactive analysis of the bills and look at them before you submit them on a fee recovery. Don’t you just submit your entire bill with no analysis to the court on what kinds of considerations you’ve given to reasonableness or what kinds of reductions you’ve looked at in terms of saying that a project that took 10 hours reasonably really could have just taken five. Submitting a thoughtful application to the court is going to get you a lot further than just submitting open invoices and forcing the court to do that analysis for you.

In this particular situation I think given that this is the 11th discovery decision in this case and likely there were disputes that didn’t even arise to written decisions, that Lawson was probably in such a hole based on his prior conduct, that even though reasonableness was the standard, it’s likely that the court was leaning much more in Spirit’s favor. There’s not a discussion in this decision of whether the application was for more fees than what are actually granted. But $94,000 in fees being awarded is a pretty high award for a fee application on a motion. It was pretty good result for Spirit Aerosystems here.

Those are our takeaways for the week, and that’s our case of the week for this week. Thank you so much for joining me. I’ll be back next week with another decision from a year that saw more than 2500 discovery decisions.

We look forward to continuing to bring this weekly LinkedIn Live in cooperation with ACEDS throughout 2021. If you’ve got ideas or issues that you’re particularly interested in hearing about or hearing some analysis on, please drop me a line on LinkedIn. You can also reach me on Twitter at @KellyTwigger or drop me an email.

Please remember to sign up to receive information to register for the UF Conference. Thanks so much. Have a great day.

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