fees under a private contractual arrangement. But in this case, the inference is fairly obvious that
plaintiff fell victim to “the tendency to take additional risks (or run up extra costs) if someone
else pays the tab.” Medcom, 200 F.3d at 521. No reasonable individual in plaintiff's shoes
would have spent over $20,000 to seek clarification of the two narrow points at issue. The Court
can only conclude that plaintiff incurred those fees only because he and his attorneys knew, from
the fact that they had been paid by defendants as the case was proceeding, that plaintiff would not
be on the hook. The fees arguably are unreasonable at even half the amount requested, but we
think that one-half is a reasonable reduction, resulting primarily from the unnecessary
participation of two separate law firms in this effort. The Court will award plaintiff $10,000 for
the clarification/reconsideration work.

We reach a similar conclusion with regard to the 10% holdback issue” Again, we have
no quarrel with plaintiff raising the issue. But for the work necessary to bring the issue to a head,
bring it to the Court’s attention, and work it out (plaintiff served a 10-page motion plus affidavits
on November 13, 2001, a brief court appearance as discussed at p. 2 supra was held on
November 16, and on November 20, the parties resolved the matter), plaintiff claims attorney’s
fees of $27,628.75 (!!). This bears repeating: plaintiff seeks over $27,000 for fees incurred to
recover a sum of approximately $25,000. Again, this results from the commitment of multiple
law firms and numerous lawyers to what was a narrow factual dispute over whether plaintiff's
attorneys had agreed that defendants did not need to pay the other 10% or had waived their claim

to the remainder. This was unreasonable within the meaning of Medcom. Plaintiffs over-

2 Together with this issue, plaintiff raised a claim of “anticipatory breach” of defendant’s
alleged obligation to pay attorney’s fees for plaintiff's not-yet-taken appeal.

4


a direct result of the first party’s breach. The court read a “reasonableness” limitation into the
agreement but stated that the best evidence of market value (and thus reasonableness) is what
people pay for it, and that “the best guarantee of reasonableness” is whether the party seeking to
recover its attorney’s fees has actually paid them to its lawyer. Id. at 153. In Medcom Holding
Co. v. Baxter Travenol Laboratories, Inc., 200 F.3d 518 (7th Cir.1999), the court expanded on
Balcor, reiterating that “[i]f the bills were paid [by the party seeking to recover fees], this
strongly implies that they meet market standards.” Jd. at 520. It noted that the reason for reading
a reasonableness requirement into such agreements is “to guard against moral hazard--the
tendency to take additional risks (or run up extra costs) if someone else pays the tab.” Id. at 521.
But the proper way to assess fee requests in this context is “to ensure that they were reasonable in
relation to the stakes of the case and [the opposing party’s] litigation strategy...” Jd. In other
words, were the requested amounts “fees that commercial parties would have incurred and paid
knowing that they had to cover the outlay themselves?” Id.

In this case, the Court is forced to conclude that the answer is no. Though we do not
question the reasonableness of raising any of the three post-summary judgment issues, the
amount of attorney’s fees sought, however, is far beyond what is reasonable.

With regard to the motion for reconsideration and/or clarification, a four-page motion
supplemented with another four-page filing after a court hearing, plaintiff seeks to recover
$20,173 Specifically, he seeks $10,828 for time spent by three lawyers and (it appears) a
paralegal from a local law firm and $9,345 for time spent by an attorney from Michigan. Even a
cursory review of counsels’ time records shows significant duplication of effort and over-

commitment of time. Under the Seventh Circuit cases cited earlier, that is not enough to deny


commitment of time and effort is symptomatic of a tendency all too common in the practice of
law: a penchant to send the entire army into battle, armed to the teeth, when all that is needed is
a single commando with a sharp knife. Plaintiff's attorneys could have ably and amply
performed the necessary work with no more than one-third of the time committed.? We will
therefore reduce this aspect of plaintiff’s request by two-thirds, to $9,000. Defendants are
entitled to credit for the $8,000 that they have already paid.

The third post-summary judgment issue concerned the calculation of damages on the one
issue on which we ruled in plaintiff's favor: defendant’s failure to provide him with appropriate
investment options. Plaintiff claims $5,890, saying that his attorneys were required to verify the
accuracy of calculations provided by defendant and that this was difficult to do for various
reasons. In the course of this effort, plaintiff says, discrepancies were discovered in plaintiff's
account that had to be corrected. That said, plaintiff's commitment of attorney time was
excessive and unreasonable within the meaning of Medcom — primarily due to the unnecessary or
at least unjustified participation of Michigan counsel, who largely (though not entirely)
duplicated the work being done by Chicago counsel. The $2,500 that defendants have already
paid plaintiff on this point is more than sufficient.

Finally, there is the issue of plaintiff's entitlement to fees for making the motion that we
have addressed in this Memorandum Opinion and Order. For this plaintiff claims approximately
$12,500 ($8,963 for the motion and $3,500 for the reply). Again, this is a dramatic

overstatement of the amount of time and effort reasonably necessary. Indeed, a good deal of the

> One-third, approximately $9,000 of attorney time, would have represented over 23
hours of the time of the primary counsel who has appeared in court (at $385 per hour), or over 40
hours of the time of the second-in-command (at $210 per hour).

5


Minute Order Form (06/97)

United States District Court, Northern District of [linois

Name of Assigned Judge
or Magistrate Judge

Matthew F. Kennelly

Sitting Judge if Other
than Assigned Judge

CASE NUMBER 00 C 6538 DATE 12/17/2001

CASE Gerow vs. Rohm and Haas Co.

TITLE

{In the following box (a) indicate the party filing the motion, ¢.g., plaintiff, defendant, 3rd party plaintiff, and (b) state briefly the nature
MOTION: of the motion being presented.]
DOCKET ENTRY:
(1) o Filed motion of [ use listing in “Motion” box above.]
(2) i] Brief in support of motion due
(3) Qo Answer brief to motion due. . Reply to answer brief due.
(4) oO Ruling/Hearing on_____sset for_ att
(5) oO Status hearing[held/continued to] [set for/re-set for] on setfor_ at.
(6) oO Pretrial conference[held/continued to} (set for/re-set for] on setfor_ se aat__.
(7) aq Trial[set for/re-set for]on__at
(8) Oo [Bench/Jury trial] [Hearing] held/continued toa
(9) Oo This case is dismissed [with/without] prejudice and without costs[by/agreement/pursuant to]
OOFRCP4(m) (General Rule 21 OFRCP41(a)(1) OO FRCP41(a)(2).

(10) (Other docket entry] Enter Memorandum Opinion and Order. For the reasons set forth on the attached

order, plaintiff's supplemental motion for reconsideration is granted in part. Counts 2 and 4 are reinstated. The
Court finds in favor of plaintiff to the extent described in this memorandum and finds that plaintiff is entitled to
attorney’s fees in the amount of $23,200. Against this amount, defendants are entitled to a credit for $10,500 they
have already paid. The parties are directed to prepare an appropriate form of judgment and to submit it to the
Court by 12/20/01. Status hearing set to 12/21/01 at 9:30 for entry of a final judgment.

(1)

[For further detail see order attached to the original minute order.]

Document
Number

No notices required, advised in open court.

No notices required.
umber of notices

Notices mailed by judge's staff. BEC 4.9 200

Notified counsel by telephone.

date docketed

Y | Docketing to mail notices.

Mail AO 450 form.

LL

docketing deputy initials

Copy to judge/magistrate judge.

date mailed notice

courtroom : wt
deputy’s
initials

OR

Date/time received in

central Clerk’s Office mailing deputy initials



work resulted from the fact that plaintiff made unreasonably large claims on each of the three
points previously addressed. All told, plaintiff requested just under $53,700, not including the
amount he seeks for litigating the fee request. The Court has awarded him $21,500, of which
defendants had already paid $10,500, making plaintiff's net gain only $11,000. A reasonable
person in plaintiff's shoes, knowing that the fees were on his own tab, would have called it
square on the 10% holdback and calculation of damages issue when defendants paid $10,500,
and would have raised only the issue of the motion for reconsideration and/or clarification. The
commitment of time on the other issues was unreasonable; plaintiff should have known when to
stand pat and when to ask for new cards. The Court will reduce by two-thirds, to $4,200, the fees
requested for litigating the attorney’s fee issue.
Conclusion

For the reasons stated above, plaintiff's supplemental motion for reconsideration is
granted in part. Counts 2 and 4 are reinstated. The Court finds in favor of plaintiff to the extent
described in this Memorandum Opinion and Order and finds that plaintiff is entitled to attorney’s
fees in the amount of $23,200. Against this amount, defendants are entitled to a credit for
$10,500 they have already paid. The parties are directed to prepare an appropriate form of
Judgment and to submit it to the Court by December 20, 2001. The case is set for 9:30 a.m. on

December 21, 2001 for entry of final judgment.

“WAYMMLMUE

MATTHEW F. KENNELLY
United States District/Judge

Date: December 17, 2001


IN THE UNITED STATES DISTRICT COURT
FOR THE NORTHERN DISTRICT OF ILLINOIS

EASTERN DIVISION
STEPHEN A. GEROW, ) DOCKETED
Plaintiff, PEC 1 9 2001
vs. Case No. 00 C 6538
ROHM AND HAAS CO., et al., }
Defendants. }

MEMORANDUM OPINION AND ORDER
MATTHEW F. KENNELLY, District Judge:

The purpose of this order is to deal with lingering issues regarding attorney’s fees.
Plaintiff sued defendants for alleged breaches of an employment agreement. The Court largely
ruled in defendants’ favor but did rule in plaintiff's favor on some points. The agreement
provided that

{t]he Company agrees to pay, from time to time promptly upon invoice, to the full

extent permitted by law, all legal fees and expenses which the Executive may

reasonably incur as a result of any contest or controversy (regardless of the

outcome thereof and whether or not litigation is involved) by the Company, the

Executive or others of the validity or enforceability of, or liability under, any

provision of this Agreement or any guarantee of performance thereof.

Agreement §7. The obligation to pay attorney’s fees under this provision did not depend on
whether plaintiff won the case.

Pursuant to this provision, defendants paid nearly all of plaintiff's legal fees as the case

proceeded, though they held back 10%. At the time of our summary judgment ruling, the parties

believed that the issues regarding payment of plaintiffs attorney’s fees had been resolved, so we

{7


dismissed without prejudice plaintiff's claims for attorney’s fees (Counts 2 and 4). After the
Court’s summary judgment ruling, however, things changed, and for a time it appeared that the
Court would have to hold an evidentiary hearing to resolve a dispute regarding whether the 10%
holdback was to be permanent or temporary. When, however, we learned that the amount in
controversy was no more than $25,000, we urged the parties to try to settle the dispute, and they
did so.

Though we thought for a second time that this would end matters, we turned out to be
incorrect. Plaintiff asked defendants to reimburse his attorney’s fees for three disputes that
followed the summary judgment ruling: an issue regarding reconsideration and/or clarification of
the summary judgment ruling itself; an issue regarding calculation of damages on the one issue
on which we ruled in plaintiff's favor; and the 10% holdback issue. Defendants agreed to pay a
total of $10,500 on the latter two points but declined the rest of plaintiff's request, which totaled
around $53,000. Plaintiff then filed the present motion, seeking to reinstate Counts 2 and 4 and
to obtain an order compelling payment of the remaining fees as well as the attorney’s fees that he
incurred in bringing and briefing the motion. Defendants argue that the post-summary judgment
matters were not reasonably pursued by plaintiff, and that in any event the amount of fees
plaintiff claims is unreasonable. This is the dispute that we now resolve.'

In two recent cases, the Seventh Circuit has limited the scope of a court’s inquiry
regarding the award of attorney’s fees pursuant to a private contract. In Balcor Real Estate
Holdings, Inc. v. Walentas-Phoenix Corp., 73 F.3d 150 (7th Cir.1996), the parties’ agreement

required one party to hold the other harmless against any attorney’s fees and expenses incurred as

' Neither party has suggested that a jury trial on the attorney’s fee issues is required.

2