After almost 17 years litigating ERISA cases, I say with some level of credibility – at least I hope — that there are many extraordinary and difficult aspects that employees/participants/claimants/plaintiffs face with ERISA.1 There is the absence of meaningful cross-examination, no right to a jury trial (which I thought was a Constitutional right), limited discovery, the total reliance upon an insurance company or corporate plan administrator’s claim file, and a limited evidentiary record in litigation. When you add in that conflicted decisionmakers get the first shot at deciding whether they were right or wrong, as well as the common application of a deferential standard of review firmly pressing its thumb down on the scale in favor of the defendant (with virtually unlimited resources most of the time), it can feel daunting to take up the cause for an individual who has been denied coverage for residential treatment care for their child, long-term disability benefits when they are no longer able to work, or lifesaving, medically necessary cancer treatment, to name a few of the kinds of cases typically governed by this strange paradigm of rules.
But there is at least one good thing about ERISA from the claimant’s perspective. When you do overcome these obstacles and achieve “some degree of success on the merits,” the Supreme Court instills in the trial court, broad discretion to award attorneys’ fees.2 That is significant given that there is often little ability for individuals to pay for an attorney out-of-pocket when they are out of work due to injury or sickness or have a six-figure medical bill staring back at them.
It is at this stage of the litigation, however, that it can become somewhat unpleasant for the prevailing attorneys. Filing a motion for attorneys’ fees with an accompanying sworn declaration and billing invoice to support the fee motion is a necessary evil to relieving your client’s obligation to pay for your help in securing relief. It is the court’s gatekeeper role to ultimately determine what is reasonable for you to be compensated for achieving such success on the merits for your client, thereby taking this element out of the usual attorney-client relationship. Before that, however, it is defense counsel’s responsibility to their client to scrutinize your fee request. And believe me, they do. Your hourly rate is far too high, the hours you expended are way too many, your work was not good enough to justify such a lodestar figure, you failed to effectively utilize the resources they have so they assume you must also have (irrespective of the size of your firm), you did not adequately distribute the work amongst lower rate attorneys (doesn’t every firm have 150 associates looking for work?), and, yes, you block billed.
While I think most of those attacks are unreasonable (and occasionally petty), the one that really irritates me – perhaps because some judges agree with it – is the assault on block billing as a construct. The definition of block billing is essentially the grouping of a number of individual billable tasks into one collective billing entry with a cumulative time value assigned to those tasks. I keep my time this way over the course of each day, noting times on and off where I leave and return to tasks for the case. Block billing done correctly is a practical and entirely appropriate means of accounting for an attorney’s time in a case. Nevertheless, it is almost cliché at this point how frequently it is utilized unfairly and arbitrarily to reduce fee awards.
While defense attorneys always (yes, always) seek across-the-board percentage reductions to all fees requested where block billing is present (that is, after they first argue for no fees at all), block billing is typically only disfavored by courts when the entries are vague or there are “unspecific descriptions of the work performed”3 and when items within the block are not properly compensable (more on that below). Because there are some cases out there that have applied percentage reductions for block billing, however, defense counsel have included this argument in virtually every fee opposition I have ever read (I suspect they discuss it at DRI conferences and someone gleefully presents their blueprint for going after these greedy attorneys who represent greedy individual claimants). However, these cases are cited to disingenuously because the greater weight of the case law approves of block billing without reduction of time so long as the court can determine the reasonableness of the work performed.4
Instead, defense counsel laud the “best practice” itemizing every discreet task performed separately and assigning a time value to each one. While I have never done defense work, many corporations and insurance companies mandate strict time-keeping guidelines for outside counsel that require these separate time entries for each discreet task so that in-house counsel and other corporate personnel can audit the time spent on each task. While that may be the standard employed by their corporate clients, it does not work well in representing individuals.
To demonstrate that point, let’s look at how a client is treated for the same billing activities under three different scenarios: (A) “block billing,” including rounding up, as it is often misconstrued as the standard for block billing, (B) defense counsel’s “best practice” of detailing each individual activity separately in one-tenth of an hour increments, and (C) appropriate block billing.
3 minutes are spent typing an email to the client, 20 minutes are spent drafting a motion, and 7 minutes are spent talking on the phone to defense counsel. Those actions are accounted for by three different lawyers’ billing practices, as follows:
Lawyer A (Blocky McRoundsup)
1.0 hour – drafting email; revising motion; teleconference with defense counsel.
Lawyer B (Defensey McDranktheKoolAid)
0.10 hours – drafting email
0.40 hours – revising motion
0.20 hours – teleconference with defense counsel
0.70 hours
Lawyer C (Atticus Finch)
03 mins – drafting email
20 mins – revising motion
07 mins – teleconference with defense counsel
30 mins = 0.50 hours
Lawyer A has billed his client for a half hour he did not spend. Lawyer B has billed his client 0.70 for a half hour of work. If his rate is $500/hour, he has charged his client $100 more than the time he spent on those three simple actions. Lawyer C has billed his client a half hour for a half hour of work. Which practice would an individual client think is the most reasonable?
Admittedly (and as alluded to above), block billing can present one potential problem for reviewing courts that are attempting to determine the reasonableness of the fee being sought. That is, where one or more of the activities contained within the time block is not appropriately compensable. For instance:
1.00 – drafted email to client; revised motion to amend; skateboarded to waterpark to buy churro for lunch; teleconference with defense counsel.
In this scenario, the court is, understandably, going to have difficulty determining how much of that hour was spent on waterpark churros and how much was spent on compensable legal activities that advanced the case. This problem could have been avoided, of course, had the attorney only submitted properly compensable legal
activities for the court’s consideration.5 Absent such self-editing by the lawyer, a court could certainly reduce the entry by a percentage to ensure that compensable waterpark churros do not become precedent in that district.
The problem, however, is that defense counsel regularly advocate for eliminating a percentage of the entire billing invoice, euphemistically (or pejoratively) dubbed giving it a “haircut,” simply due to the presence of block billing (and are sometimes successful). That is so even where the vast majority of time entries are in fact reasonable and compensable. It is a nuclear solution that is disproportionate to one or two ill-considered waterpark churros within a 20-page invoice.
In short, employing across-the-board reductions whenever block billing is utilized, without accounting for the reasonableness or substance of the actual entries, will likely lead to inequitable results more often than not. That is particularly so when you consider that (1) individual claimants need appropriate representation to secure benefits against companies with virtually limitless resources, (2) all applicable legal standards in these cases favor the corporate and plan entities, and (3) attorneys who choose to keep time in this way – as the examples above demonstrate – are actually being more precise in their billing.
1 ERISA, which stands for the “Employee Retirement Security Income Act of 1974”, is the federal law that establishes the minimum standards that are applicable to private employers’ disability, medical, life, and other welfare benefit plans, as well as retirement and pension plans.
2 See Hardt v. Reliance Std. Life Ins. Co., 560 U.S. 242, 255 (2010).
3 See Testa v. Becker, No. 10-cv-6229L, 2017 U.S. Dist. LEXIS 183591, at *13, 15 (W.D.N.Y. Nov. 6, 2017); Shaw v. AT&T Umbrella Ben. Plan No. 1, No. 13-cv-11461, 2015 U.S. Dist. LEXIS 164081, at *19 (E.D. Mich. Dec. 8, 2015) (“sufficient detail is provided such that the entries are not vague and the block billing is permissible.”).
4 See, e.g., Infinity Headwear & Apparel v. Jay Franco & Sons, No. 15-cv-1259, 2017 U.S. Dist. LEXIS 162387, at *24 (S.D.N.Y. Oct. 2, 2017); Testa, 2017 U.S. Dist. LEXIS 183591, at *15-16 (“Given the overall reasonableness of the time claimed by plaintiff’s attorneys, I do not believe that these occasional instances of what is arguably block billing warrant any reduction of the fee award.”); Brown v. City of Pittsburgh, No. 06-cv-393, 2010 U.S. Dist. LEXIS 52927, at *28-29 (W.D. Pa. May 27, 2010) (in declining to reduce the fee award based on block billing, the court explained “The more appropriate approach may be to look at the entire block entry, compare the listed activities with the time spent, and determine the reasonableness of the hours in correlation to the activities performed.”).
5 Look, I think we can all agree that skateboarding to waterparks to buy churros for lunch is not legal work. This example is obviously hyperbolic to make the point that lawyers can avoid large cuts to their block billed time entries by only seeking compensation for time that is appropriate and advanced the case. But, honestly, if your lawyer is either eating churros for lunch or dining at a waterpark during the business day (or anytime that doesn’t have the words “kids’ birthday” attached), you likely have a much bigger problem and I would question their judgment in other areas of the case.