It’s not uncommon for disputes to arise over fee padding or churning, where more hours are billed than the work justifies. With the rise of large scale discovery projects, often black holes within which it is easy to hide both habitual and willfully inefficient behavior, those clashes have become more pronounced and more plentiful.
There are, of course, the blatant “churn that bill, baby” examples, but many of the offenses are more innocently wasteful — simply a product of culture and systemic failure to innovate. Such deep-rooted problems are encapsulated in the motto, as one former law firm attorney relayed to us: “Turn over every rock, and then turn those rocks over again.”
But while most of these fee disputes are settled simply with a striking of hours that have been over-counted, there is usually little assessment of the standard that should have been met by those billing attorneys. In Bohannon v. Facebook, an unnoticed but potentially important case, one judge is holding parties to a higher bar. Slashing a third of the proposed hours submitted for document review, she has told one party that, in the age of modern technology, partners should be able to review data efficiently and that their submitted hours reflect “no such efficiency.”
“No such efficiency here”
The case comes out of the US District Court for the Northern District of California, where some of the most high-profile litigation is waged and where the judges are, by and large, regarded as among the most forward-thinking on technology issues, including electronic discovery. The dispute arises in a class action suit against Facebook, wherein the social media giant settled by agreeing to make its refund policies consistent with the California Family Code — this after plaintiffs whose children ran up huge tabs buying apps on their parents’ credit cards sued for their money back.
Attorneys for the class of plaintiffs, who successfully compelled Facebook to update their terms of service, but not much else, moved for about $1.5 million in attorneys’ fees. Facebook disputed much of that sum and, in particular, much of the document review conducted by a handful of the plaintiffs’ most senior counsel, who collectively sought nearly 100 hours at hourly rates of between $600 and $800 to review 1,455 document spanning 11,645 pages. A Lodestar multiplier ratcheted up those fees by 20 percent.
Judge Freeman determined that 67 hours, not the 100 requested, more appropriately reflected “the amount of work an attorney of (senior) skill would be expected to accomplish in a given amount of time.”
The judge concluded: “While the Court agrees that partners may be able to review documents efficiently because they know what to look for, the Court finds that the submitted hours reflect no such efficiency here.”
(In fact, in previous testimony, one of the plaintiffs’ attorneys admitted that he was able to review and annotate all 1,455 documents in a mere 19 hours.)
Modern technology makes waste unacceptable
The case shows that, as technology that speeds once tedious legal processes becomes more widely available, courts and litigants are both less willing to put up with inefficiency and more bold in challenging it. In the growing contentiousness of disputes that center on the agility of document review and other discovery processes, there appears to be more scrutiny applied to the manner in which that work is performed and how it is billed. The sticking points tend to be how much counsel charges for routine work, the mark-up associated with those fees, and how meticulously the billing records associated with the work are kept.
Some courts, especially in the Northern District of California, have become highly attuned to the detail with which discovery-related fees are described, and are swift to disallow fees and costs that aren’t sufficiently substantiated. Their scourge, among others, is block-billing, which was found to be prevalent in the Apple-Samsung cases.
It is in this environment that law firms must thread an increasingly small needle where they are capturing legitimately billable hours associated with discovery and document review but at a price, and value, that is acceptable to clients who are tightening their belts and demanding more predictability. This case and others come at a time when cost pressures and stagnant demand have shaken the legal services market and, particularly, large law firms. Some have even suggested that these firms are headed toward a “Kodak moment,” where many of their core services may be displaced entirely as happened to the photography dinosaur.
What’s certain in this specific instance is that for the review of a mere 1,500 documents, a tab of nearly $70,000 won’t fly, and, this time, someone is going to say so.