There are lots of reasons to embrace technology during litigation and document review; accuracy, efficiency and client satisfaction rank among the top reasons. One that must now be added to the list and is generally overlooked by lawyers is the impact that technology may have on court approved fees for work performed during a case.
Bohannon v. Facebook, Case No. 12-cv-01894-BLF, United States District Court, N.D. California, May 23, 3216, is a potentially important case to see if the actions of one judge will be setting precedent. The judge is holding parties to a high standard when it comes to awarding fees. She slashed a third of the proposed hours submitted for document review, based on the fact that in the era of modern technology and advanced review tools, that partners should be able to review data efficiently. The list of hours that were submitted for payment reflected “no such efficiency”.
The Courts Interpretation
While there are a number of legal issues in this case that are worth reviewing, my focus today is on the court’s interpretation of what constitutes a reasonable fee to be awarded. This is based on the attorneys experience, the use of technology and that ever pesky standard, “reasonableness” of both the rates and the hours billed. The Discovery-Defendant challenged the 656.3 hours Plaintiffs submitted for discovery. The particular focus was on the time spent by Mr. Parker and Daniel Edelman, both senior attorneys, on document review and the hours Benjamin Edelman claims for attending depositions during which he never spoke.
Disputes over excessive fees, fee padding or even churning, where more hours are billed than the work justifies have been a staple since litigation billing began. When firm’s merely submitted hourly bills and clients paid, there was no real way to measure how effective a firm had been at managing costs. No one could really question how much time it took to perform a certain task. With large scale eDiscovery costs rising, these disputes have become even more commonplace. I am interpreting this case to be focused not on padding a bill, but rather the very strong suggestion that firms must use technology effectively and assign the correct legal talent for the job at hand to complete the work effectively and efficiently.
In the past, these disputes were generally settled by somewhat arbitrarily reducing the hours on the bill with very little assessment about any rational standard about how the time should have been managed by the attorneys. Judges are now more technologically savvy then ever before. They are beginning to ask lawyers to justify expenses, especially when technology would have resulted in efficiencies.
The US District Court for the Northern District of California handles some of the highest profile litigation in the country and the judges are generally considered to be some of the most technologically advanced in the county regarding eDiscovery. The case is a class action against Facebook to update their terms of service to be consistent with the California Family Code in order to help avoid children running up huge bills buying apps on their parents’ credit cards.
The settlement primarily focused on updating the terms of service and little else. Plaintiffs’ attorneys moved for $1.5 million in attorney’s fees. Facebook disputed the sum, focusing heavily on the amount of document review conducted by a handful of 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. Plaintiffs also sought a Lodestar multiplier of 1.2 to 1.5 based on the contingency nature of case and the “significant” outcome that was achieved.
Without going into all the details, the court performed an analysis of the request that focused primarily on the following factors:
- Reasonableness of Rates
- The experience level of the attorneys performing the work
- The amount of time these attorneys spent completing the work.
The area where the judge had the most difficulty in justifying the cost was in amount of time that the senior attorneys spent reviewing the rather small number of documents in question. Judge Freeman determined that instead of 100 hours, the court would only allow 67 hours to be compensated. He stated that this 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.”
Modern technology eliminates waste
This appears to me to be a warning shot across the bow that litigants should pay attention to. It is the first time in my memory that court essentially chastised a group for not using technology to become more efficient in their work. Technology speeds up legal workflows and processes that should result in more efficient operations. Future disputes on how effectively document review, analysis and productions are performed will be measured, at least in part, on how technology was or was not used during the case. With more scrutiny on how the work is performed, some experienced courts will become more focused on how discovery related fees are described and requested. They will be quicker to reduce or disallow fees that cannot be properly substantiated.
Law firms need to capture legitimate billable hours for eDiscovery and document review. But they need to pay attention to price and value that is acceptable to both clients and courts. When you use an advanced eDiscovery software platform, it automatically tracks and logs each activity performed by each person and can then create a log which can be submitted as evidence to the court. In this particular case, the judge has cried “Uncle” and determined that technology should be better deployed and used to control costs.