January 29, 2019 Adventures in the Law

Adventures in the Law: Reflections on a Dog’s Reflection

Norm Tabler

Remember Aesop’s fable of the dog crossing a stream with a bone in its mouth? Taking its own reflection for another dog with a bigger bone, it opens its mouth to bark. The result is that the dog not only fails to get the bigger bone but loses the one it was carrying.

A Third Circuit opinion brings this fable to mind. It tells the story of how a law firm with a right to collect attorneys’ fees from the opposing party forfeited that right by overreaching.

The firm represented a client in an uninsured motorist claim, as well as a claim under Pennsylvania’s Bad Faith Statute, against an auto insurer. The parties settled the underlying claim for $25,000. After four days of testimony, the jury awarded the plaintiff $100,000 for the bad faith claim.

The Bad Faith Statute provides that the court may assess attorneys’ fees against a losing insurer. The plaintiff’s firm submitted a bill—for $1,122,156, including $48,050 for the underlying claim, $827,515 for the bad faith claim, $175,631 in interest, and $27,090 for preparing the fee request!

Astounded by the size of the bill, the trial court demanded documentation. The documentation proved woefully inadequate. For one thing, the firm had maintained no contemporaneous time records. For another, the records that it presented had been reconstructed by a single attorney, who acknowledged “guessing” at the amounts of time expended by various personnel over the six years of the engagement.

The court’s 100-page opinion began by invoking the purpose of the right to attorneys’ fees: to make the prevailing client whole. That was an ominous sign for the law firm because its fee arrangement called for one-third of recovery before trial and 40% after trial. In other words, the client owed the firm at most $48,375—a pittance next to the $1.1 million-plus fee request.

The court found the documentation wholly inadequate and the size of requested fee outrageous. But it didn’t simply reduce the requested fee by the amount it considered excessive. It denied the firm any recovery whatsoever, ruling that when a fee request is “outrageously excessive,” the court has “discretion to deny a fee request altogether.” The Third Circuit affirmed, commending the trial judge in the process.

Like the dog that not only failed to get the bigger bone, but lost the one it had, the law firm failed not only to collect the excessive fee it requested but lost the right to even a modest fee.

The case is Clemens v. New York Central Mutual Fire Insurance (3d Cir. 2018).

Author

Norman G. Tabler, Jr. 
Columnist and Editorial Member, Voice of Experience

Norman G. Tabler, Jr., is a retired partner with Faegre Baker Daniels, where he led the firm’s health law practice. He serves on the editorial advisory boards of the ABA Senior Lawyers Division’s Voice of Experience, the ABA Health Law Section’s The Health Lawyer, and Law360 Health. He is the host of the American Health Lawyers podcast The Lighter Side of Health Law. He was educated at Princeton (A.B.), Yale (M.A.), and Columbia (J.D.). He may be reached at Norman.Tabler@FaegreBD.com.