In the

United States Court of Appeals

For the Seventh Circuit ____________________ 

No. 21-2914 

USA GYMNASTICS, 

Plaintiff-Appellee, 

v.

LIBERTY INSURANCE UNDERWRITERS, INC., 

Defendant-Appellant. 

____________________ 

Appeal from the United States District Court for the

Southern District of Indiana, Indianapolis Division.

No. 1:18-cv-01306-RLY-MPB — Richard L. Young, Judge. 

____________________ 

ARGUED MAY 17, 2022 — DECIDED AUGUST 16, 2022 

____________________ 

Before SYKES, Chief Judge, and HAMILTON and BRENNAN,

Circuit Judges. 

BRENNAN, Circuit Judge. Larry Nassar, who was affiliated 

with nonprofit USA Gymnastics, Inc. (“USAG”), sexually assaulted hundreds of female athletes. After Nassar’s conduct 

came to light, USAG faced many lawsuits and multiple investigations. USAG and its insurers, including Liberty Insurance 

Underwriters, Inc., litigated questions about insurance coverage in an adversary proceeding before a bankruptcy court. In 
2 No. 21-2914 

a previous appeal, among other rulings, we affirmed the decision that Liberty had a duty to defend USAG. 

There were also ancillary disputes over the amount of attorneys’ fees that Liberty owed USAG. While the first appeal 

remained pending, USAG sought to enforce the order entitling it to reimbursement. Liberty resisted, asserting that large 

portions of the fees USAG claimed were not reasonable and 

necessary. After a bench trial, the bankruptcy court recommended that the district court award USAG nearly all the requested fees. The district court agreed, so it adopted most of 

the bankruptcy court’s findings and conclusions and entered

judgment for USAG. Liberty appeals.

The bankruptcy and district courts correctly concluded

that USAG was entitled to a presumption that the fees it incurred were reasonable and necessary. Liberty must therefore 

rebut the presumption by showing that various portions of 

the fees did not meet that standard. Because Liberty fails to 

do so, we affirm. 

I 

Our opinion resolving the previous appeal recounts the 

underlying facts in detail. USA Gymnastics v. Liberty Ins. 

Underwriters, Inc., 27 F.4th 499, 508 (7th Cir. 2022). In short,

Nassar used his position with USAG to sexually assault hundreds of women and girls over several decades. Because of 

that abuse, USAG has faced hundreds of lawsuits by former 

athletes, as well as several investigations by federal and state 

entities, including Congress, the Indiana Attorney General,

and the United States Olympic & Paralympic Committee 

(“USOPC”). Id. at 509. 
No. 21-2914 3

USAG sued several insurers in Indiana state court, arguing the companies were required to defend it and pay legal 

expenses related to the lawsuits and investigations. Id. One of 

those insurers was Liberty, from which USAG had purchased

a claims-made directors and officers liability insurance policy.

The insurers removed the case to the United States District 

Court for the Southern District of Indiana under diversity jurisdiction. USAG filed for bankruptcy under Chapter 11, and

the insurance-coverage litigation between USAG and Liberty 

took place in an adversary proceeding as part of that bankruptcy. Id. The district court retained jurisdiction.

Faced with cross-motions for summary judgment, the 

bankruptcy court concluded that Liberty’s policy covered the 

“athlete lawsuits” and various investigations. Id. at 509–10. 

Liberty filed objections to the bankruptcy court’s findings and 

conclusions, but the district court overruled those objections. 

In January 2020, the district court ordered Liberty to “provide 

a complete defense” to USAG with respect to several matters, 

including the athlete lawsuits and several investigations. The 

district court also ordered Liberty to reimburse USAG for its 

defense costs, but the court did not award damages in any 

specific amount. Liberty appealed the district court’s order. 

In February 2022, we held that Liberty had a duty to defend USAG against nearly all the athlete lawsuits. See id. at 

525, 528, 530–31. We also ruled that the Congressional, 

USOPC, and state-level investigations were “formal proceedings” or “formal investigations” for which coverage exists under the insurance policy. Id. at 531–33. We remanded, though, 

for further factfinding on the question of whether the policy’s 

“Third Party EPL” sublimit restricted the scope of coverage. 
4 No. 21-2914 

Id. at 533–34. Liberty’s petition for rehearing was denied, and

our mandate in that appeal issued in April 2022. 

While the first appeal was pending, the parties continued 

to dispute and litigate issues concerning payment. Shortly after the district court ordered Liberty to provide coverage and 

reimburse USAG for its defense costs, USAG sent Liberty a 

calculation of damages. USAG sought about $3.18 million in

past defense costs, including $1.77 million for investigations 

and $205,000 in prejudgment interest on past defense costs. 

Liberty did not agree to USAG’s demand and sought to stay 

the district court’s defense order. In turn, USAG moved to 

enforce the order. After the district court denied Liberty’s motion to stay, USAG sent Liberty another letter, demanding that 

the insureridentify the specific amounts of attorneys’ fees that 

it disputed. Consistent with the defense order, USAG also insisted that Liberty “enclose a check payable to USAG for the 

entire amount [Liberty] agrees is reasonable and necessary on 

the Covered Matters.” Liberty declined.

The bankruptcy court held a bench trial on USAG’s motion to enforce the defense order. Stipulated exhibits and deposition testimony were entered into the record. USAG’s Chief 

Legal Officer, C.J. Schneider, testified about his role within the 

organization and his efforts to retain and oversee the efforts 

of six law firms, which performed various types of legal work

for USAG. In addition, USAG offered the expert testimony of

attorney Gene Schoon, who had prior experience serving as a 

national coordinating counsel during his days as a practicing 

lawyer. He testified that in his opinion, all the fees USAG 

sought were reasonable and necessary. 

On the other hand, Liberty presented the expert testimony 

of attorney Brand Cooper. Cooper testified that because of 
No. 21-2914 5

several issues with the invoices submitted by the retained law 

firms, he could not conclude that the attorneys’ fees USAG 

sought were reasonable and necessary. When the court asked 

whether he had an opinion on what the bottom-line number 

of reasonable and necessary fees for one of the law firms 

should have been, Cooper responded he had “no problem 

with the billings that they provided, with the exceptions that 

[he] noted.” Later, the court requested “a joint statement 

about identifying costs that are not disputed.” The court

noted the fees that both sides agreed were reasonable and necessary appeared to be “the lion’s share” of those that USAG 

claimed. 

At that point, Cooper testified that he determined certain 

fee amounts incurred by USAG—which totaled about $1.43 

million—were reasonable and necessary. Yet almost immediately, Cooper contradicted his prior testimony. On redirectand recross-examination, Cooper stated his general objections 

to the law firms’ invoices prevented him from determining

that any amounts were reasonable and necessary. Then, in answer to the court’s questions, Cooper expanded on the nature 

of his objections but refused to give concrete figures that were 

not disputed. 

Shortly after the bench trial concluded, USAG sent Liberty

a third demand letter. USAG noted that Cooper’s testimony 

suggested large portions of the fees were reasonable and necessary. In its written response, Liberty claimed that Cooper 

“could not make any final assessment of the amount of reasonable and necessary defense costs,” and Liberty further asserted that his testimony did not bind it. 

In September 2020, the bankruptcy court entered proposed findings and conclusions. The court rejected Liberty’s 
6 No. 21-2914 

arguments and concluded that under applicable case law,

USAG was entitled to a presumption that the fees incurred 

were reasonable and necessary. The court also found Schoon 

“to be the more credible and reliable expert witness.” According to the bankruptcy court, USAG had proved by a preponderance of the evidence that $1,944,354.26 of the fees it 

incurred were reasonable and necessary. So, the court recommended that the district court enter judgment in that amount, 

plus prejudgment interest. Liberty filed objections to the 

bankruptcy court’s proposed findings and conclusions.

The district court overruled those objections and declared 

its intent to enter judgment for USAG in the amount of 

$1,889,278.26 ($1,944,354.26 minus $55,076.00 in legal research 

costs that the district court concluded were not recoverable), 

plus prejudgment interest. Liberty requested that the court 

enter final judgment under Federal Rule of Civil Procedure 

54(b) on the part of USAG’s case seeking reimbursement of 

past attorneys’ fees. The court agreed and entered final judgment for USAG in the amount of $2,171,951.18, plus prejudgment interest. Liberty appealed from that judgment. Simultaneously, Liberty moved to approve a supersedeas bond and 

stay execution on the judgment. The court granted the motion 

and stayed execution on the judgment pending our mandate 

in this appeal. 

Long after briefing concluded, and just days before oral 

argument, the parties notified this court that Liberty had paid 

USAG $1,655,680.19 toward the judgment. According to the 

parties, Liberty is without recourse to seek return of that payment. As the parties agree, that renders moot any remaining 

dispute about the amounts that Cooper testified were reasonable and necessary, as we cannot grant “any effectual relief” 
No. 21-2914 7

in that respect. See Germeraad v. Powers, 826 F.3d 962, 967 (7th 

Cir. 2016) (citations omitted). The live controversy before us 

concerns the remaining $458,472.26 of the judgment. 

II

We first address the parties’ arguments about a presumption, under which the attorneys’ fees that a policyholder

claims after an insurer has breached its duty to defend the

policyholder are assumed to be reasonable and necessary.

Then, we consider whether Liberty has identified any special 

circumstances that preclude the presumption’s application. 

Finally, we review Liberty’s challenges to the trial courts’ factual findings. 

Liberty contends the bankruptcy and district courts improperly applied the law when they concluded that the fees 

USAG incurred were reasonable and necessary. We review

the assessment of attorneys’ fees “under a highly deferential 

abuse of discretion standard.” Vega v. Chi. Park Dist., 12 F.4th 

696, 702 (7th Cir. 2021) (citation omitted). To the extent that 

Liberty contends the bankruptcy and district courts applied 

the wrong legal framework, though, our review is de novo. 

Id. (citing Nichols v. Ill. Dep’t of Transp., 4 F.4th 437, 441 (7th 

Cir. 2021)). 

In Taco Bell Corp. v. Continental Casualty Co., this court considered a scenario in which an insurer had breached its duty 

to defend but later argued the policyholder had incurred excessive fees. 388 F.3d 1069, 1075–76 (7th Cir. 2004). Under 

those circumstances, the court held, the policyholder “had an 

incentive to minimize its legal expenses” such that there was 

“no occasion for a painstaking judicial review.” Id. at 1076. 
8 No. 21-2914 

The Indiana Court of Appeals, faced with the same scenario, adopted Taco Bell’s holding. Thomson Inc. v. Ins. Co. of 

N. Am., 11 N.E.3d 982, 1023–24, 1031 (Ind. Ct. App. 2014). In 

Thomson, the court ruled that when an insurer has breached 

the duty to defend and the policyholder “has secured, supervised and paid for a defense without any expectation of payment, those costs are market tested and are presumed to be 

reasonable and necessary.” Id. at 1023–24 (internal quotation 

marks omitted). Along with Taco Bell, the court in Thomson 

also relied on Metavante Corp. v. Emigrant Savings Bank, where

this court rejected the need to conduct a line-by-line analysis 

of the attorneys’ fees claimed by a prevailing party—provided 

that those fees were market tested. 619 F.3d 748, 772–76 (7th 

Cir. 2010); Thomson, 11 N.E.3d at 1024. 

This case comes to us through diversity jurisdiction, so we 

apply state substantive law and federal procedural law. Hahn 

v. Walsh, 762 F.3d 617, 629 (7th Cir. 2014). Our task is to determine how the state’s highest court would rule. Smith v. 

RecordQuest, LLC, 989 F.3d 513, 517 (7th Cir. 2021). If the 

state’s highest court has not addressed the issue, we follow 

the decisions of the intermediate appellate courts unless there 

is a convincing reason to depart from them. Id. “[A] state appellate court’s decision can provide controlling guidance.” Id. 

at 517–18 (citations omitted). 

Whether a particular rule is substantive or procedural can 

be a close question. Romspen Mortg. Ltd. P’ship v. BGC Holdings 

LLC – Arlington Place One, 20 F.4th 359, 369 (7th Cir. 2021). In 

such “gray areas,” we consider whether “the scope of any federal rule or statute is broad enough either to cause a direct 

collision with the state law or otherwise controls the issue before the court.” Id. (internal quotation marks omitted). No 
No. 21-2914 9

conflict is apparent here because Thomson adopted the rule in 

Taco Bell. See Thomson, 11 N.E.3d at 1023–24. 

Burdens of proof in diversity cases are matters of substantive law. Romspen, 20 F.4th at 369. The presumption at issue

here is akin to a burden of proof because it “determines the 

outcome in cases where the evidence is in equipoise” and 

therefore “advances the substantive policies of a state.” James 

River Ins. Co. v. Kemper Cas. Ins. Co., 585 F.3d 382, 385 (7th Cir. 

2009). This points to the presumption as more substantive 

than procedural. So, state law controls, and we apply the Taco 

Bell framework except where the Indiana Court of Appeals

explicitly modified it in Thomson. 

Liberty offers two reasons why it believes the Thomson presumption does not apply. In Liberty’s view, USAG is not entitled to the presumption because it failed to adequately supervise the outside counsel it engaged, and it did not pay in 

full the fees it incurred. We address each of these arguments, 

reviewing legal questions de novo while bearing in mind that 

our review of the ultimate fee determinations is for abuse of 

discretion. Vega, 12 F.4th at 702; see also Metavante, 619 F.3d at 

775 (stating that a district court’s assessment of whether fees 

are reasonable and necessary is reviewed for abuse of discretion). When Liberty challenges portions of fees that were adjudicated solely based on factual findings, our review is for 

clear error. See, e.g., Wilborn v. Ealey, 881 F.3d 998, 1004, 1006

(7th Cir. 2018) (findings of fact are reviewed for clear error); 

Anderson v. City of Bessemer City, 470 U.S. 564, 573 (1985) (findings of fact are to be overturned only when the reviewing 

court “is left with the definite and firm conviction that a mistake has been committed”). 
10 No. 21-2914 

A 

According to Liberty, USAG did not meaningfully supervise outside counsel because Schneider never requested 

write-offs from outside counsel and rarely followed up with 

them to ask questions about invoices they submitted. USAG 

counters that neither Thomson nor any decision of this court

has required requests for write-offs or particular questions 

about bills as requirements for supervision. 

Ultimately, Liberty cannot cite precedent to support its position. Liberty relies on Metavante, where this court observed

that a “prevailing party’s general counsel, or similar corporate 

officer, has a duty, imposed by various provisions of federal 

and state law, to scrutinize the bills before paying them.” 619 

F.3d at 775 n.22. But that duty does not require a party to either request write-offs from outside attorneys or ask them 

questions about invoices.

We hold that a litigant may supervise its outside counsel 

without refusing to pay portions of legal bills or engaging in 

hairsplitting about those bills. Nothing in the case law provides otherwise. Liberty’s challenge to the courts’ determinations that USAG adequately supervised its outside counsel 

therefore targets factual findings. Those findings are due significant deference. See Vega, 12 F.4th at 702; Wilborn, 881 F.3d 

at 1004, 1006. We analyze these aspects of the appeal in Section III.

B 

Liberty argues next that the Thomson presumption does

not apply because USAG failed to pay about 30 percent of the 

fees it incurred. USAG responds that Liberty seeks to invent

conditions on the presumption of reasonableness that no 
No. 21-2914 11

court has ever imposed. USAG further contends that its payment of nearly 70 percent of the fees is sufficient evidence that 

all the fees are reasonable. 

Important to this analysis are Taco Bell and Metavante, 

which the Indiana Court of Appeals adopted in Thomson. 11 

N.E.3d at 1023–24, 1031. The presumption applies when there 

is “uncertainty about reimbursement” of legal expenses such 

that there are “market incentives to economize.” Taco Bell, 388 

F.3d at 1075–76; see also Metavante, 619 F.3d at 774–75. Neither 

case mentions a requirement that the party seeking fees must 

have paid its fees in full. So, under the Seventh Circuit case 

law that the Indiana Court of Appeals adopted in Thomson, 

payment in full is not a requirement for the presumption of 

reasonableness to apply.

We take this opportunity to clarify an aspect of the rule in 

Taco Bell. The market-tested presumption applies when, 

following an insurer’s breach of the duty to defend, a policyholder has supervised and incurred legal fees without any expectation of payment by the insurer. See Taco Bell, 388 F.3d at 

1075–77. Payment by the policyholder is not necessarily required. This is because, as here, the policyholder may lack sufficient funds to pay fees that are reasonable and necessary to 

its defense. But if the policyholder does pay a significant 

percentage of its fees—particularly when it has difficulty covering its day-to-day operating expenses—that is strong 

evidence of market incentives to economize, rendering the 

presumption applicable. 

It is undisputed that USAG paid nearly 70 percent of the 

attorneys’ fees for which it now seeks reimbursement. That is 

compelling evidence of a market test. This element of the 

Thomson presumption supports, rather than contradicts, the 
12 No. 21-2914 

bankruptcy and district courts’ conclusions that the fees

USAG claimed are presumed to be reasonable and necessary. 

III

Beyond the critiques relating to USAG’s supervision of 

outside counsel and its payment of fees, Liberty also contends 

that USAG is not entitled to the presumption because of additional “special circumstances.” Although that phrase originates in Metavante, Liberty offers it here without context. 

There, we said that “special circumstances may arise in which 

a district court will have reason to doubt whether market considerations alone were sufficient to ensure reasonable fees. In 

those instances, the district court, as a matter of its sound discretion, can require additional information of the parties.” 

Metavante, 619 F.3d at 775. 

Key here, though, is the phrase “as a matter of its sound 

discretion.” With narrow exceptions, a trial court need not require further information from the parties when the court is 

satisfied that market considerations suffice to ensure reasonable fees. See id. Still, we discuss three special circumstances 

that Liberty believes render the Thomson presumption inapplicable.

A 

Liberty notes first that Schneider, USAG’s Chief Legal Officer, was an attorney with Miller Johnson, one of the law

firms USAG engaged as outside counsel. Because of this conflict, Liberty contends, Schneider “could not provide disinterested and meaningful oversight of Miller Johnson’s bills on 

behalf of USAG.” Liberty then asserts that “[j]ust as they did 

not scrutinize the fees of the other firms representing USAG,” 
No. 21-2914 13

the nonprofit’s executives “did not scrutinize Miller Johnson’s 

fees despite Mr. Schneider’s patent conflict of interest.” 

Despite Liberty’s contentions, the governing case law does 

not hold or suggest that the presumption is inapplicable when

there is an apparent conflict of interest. To the contrary, an 

insurer’s objections to a policyholder’s selection of defense 

counsel lose force when the insurer disclaims its duty to defend and turns out to be wrong on the law. “Had [Liberty] 

mistrusted [USAG’s] incentive ... to economize on its legal 

costs,” Liberty could have reserved its defense that it had no 

duty to defend and assumed USAG’s defense. Taco Bell, 388 

F.3d at 1076. In that scenario, Liberty could have “selected and 

supervised and paid for the lawyers defending [USAG],” and

Liberty “could later have sought reimbursement if it proved 

that it had indeed had no duty to defend.” Id. Liberty chose 

not to do so, instead electing to gamble by not defending 

USAG. See id. With the benefit of hindsight, Liberty now identifies a purported conflict of interest. The case law does not 

reward such a choice, and Liberty cannot use the purported 

conflict to render the presumption inapplicable.

Even more, Liberty undermines its own argument about 

the supposed conflict of interest by equating USAG’s review 

of Miller Johnson’s invoices with its review of the other firms’ 

bills. Testimony at the bench trial was sufficient to support the 

bankruptcy court’s finding that USAG’s internal review of legal bills, which involved at least two executives other than 

Schneider, was adequate. USAG’s CEO reviewed the legal 

bills that outside counsel submitted to ensure they were appropriate and matched the organization’s needs. The Chief Financial Officer also reviewed the bills and approved them for 

payment. Because Liberty claims USAG’s review of Miller 
14 No. 21-2914 

Johnson’s bills was equivalent to its review of other legal bills, 

Liberty effectively concedes that any conflict of interest did 

not materially impact USAG’s review of the bills that Miller 

Johnson submitted. 

In any event, the bankruptcy court was aware of Schneider’s dual role. The court concluded USAG’s practices were 

nevertheless sufficient to support the Thomson presumption’s 

application, as “[i]nvoices were reviewed at three different 

levels which included review by the Chief Financial Officer 

responsible for overseeing and authorizing payment of 

USAG’s expenses.” As a fact-specific ruling concerning attorneys’ fees, that determination is due significant deference. See

Vega, 12 F.4th at 702; Pickett v. Sheridan Health Care Ctr., 664 

F.3d 632, 639, 646 (7th Cir. 2011). There is not an adequate basis to disturb it.

B 

Liberty also contends that the bankruptcy court violated 

Metavante by applying the presumption despite a special circumstance involving Gibson Dunn & Crutcher LLP, another 

law firm that USAG hired. Schneider testified that during 

Gibson Dunn’s representation of USAG, the two organizations agreed Gibson Dunn would seek further reimbursement

only from USAG’s insurers, not USAG. According to Liberty, 

this means any fees that USAG incurred through Gibson 

Dunn’s representation from then on were not market tested. 

Liberty is correct that after this arrangement was made, 

USAG was no longer entitled to the presumption for fees that 

Gibson Dunn later charged. From the point at which the deal 

was reached, USAG knew it would not be responsible for 
No. 21-2914 15

paying Gibson Dunn’s fees, so USAG lacked an adequate incentive to keep those bills low.

But that conclusion does not fully resolve the issue of the 

reasonableness of the fees that Gibson Dunn charged. Cooper 

testified that $379,541 of those fees was reasonable and necessary. Moreover, the payment Liberty made to USAG in May 

2022 includes the amount Cooper found reasonable for Gibson Dunn’s work. Given that Liberty has effectively conceded 

that $379,541 was reasonable and necessary, whether that 

amount is entitled to the presumption does not present a live 

controversy. Only $73,556 of Gibson Dunn’s fees is in dispute.1 

The bankruptcy court received testimonial and documentary evidence about those fees. Based on the record, that court 

concluded the entire amount USAG claimed for Gibson

Dunn’s work was reasonable and necessary. That is a factual 

finding, and Liberty has a “high hurdle” in seeking to overturn it. Wilborn, 881 F.3d at 1006. We address this question in 

greater detail in Section IV.

C 

Liberty’s final challenge to applying the Thomson presumption involves grants USAG received from the National 

Gymnastics Foundation (“NGF”), another nonprofit organization. Schneider testified that USAG received $1.6 million in 

grant money from NGF in May 2020, and as of July 2020 

USAG expected to receive another payment of around

$800,000 to $900,000. The bankruptcy court later found USAG 

1 $453,097, the total amount USAG sought for Gibson Dunn’s work, 

minus $379,541.
16 No. 21-2914 

had accepted at least $7.73 million in grants from NGF. In Liberty’s view, this “pipeline of third-party support removed the 

incentive for USAG to drive down costs, the basis for the presumption in Thomson.” 

According to USAG, most of the grant funds were used to 

pay legal bills other than those for which USAG claimed reimbursement in this litigation. The grant funds merely helped 

USAG to stay afloat and keep providers from halting their services.2 NGF’s grants did not create a surplus that removed 

USAG’s motivation to keep legal expenses down. Though 

Liberty disagrees, it does not cite evidence to contest this fact. 

Again, under Thomson the question is whether the policyholder has market incentives to economize. 11 N.E.3d at 1023–

24, 1031 (citing Taco Bell, 388 F.3d at 1075–77). The bankruptcy 

court found that the grants left USAG’s market-based incentives intact. In that court’s view, “USAG’s acceptance of funds 

from third parties for the very purpose of paying fees when it 

had insufficient resources itself” was not a special circumstance that negated the presumption. 

We agree with the bankruptcy court. There is no dispute 

that USAG was bankrupt and lacked money to spare. Liberty 

has not identified evidence to challenge the factual finding 

that USAG used the grant money to stay afloat by paying 

some bills it had incurred. The record does not support, much 

less require, any finding that USAG stockpiled vast sums of 

money for legal expenses, which would have removed any 

need to economize. So, the NGF grants do not preclude application of the Thomson presumption.

2 Oral Arg. at 33:30–35:30.
No. 21-2914 17

IV

Next, we turn to Liberty’s arguments for why the bankruptcy and district courts clearly erred in finding the Thomson

presumption was not rebutted. When the presumption applies, the insurer has the burden of proof to show the attorneys’ fees for which the policyholder seeks reimbursement 

were unreasonable or unnecessary. See Thomson, 11 N.E.3d at 

1031–32. Courts need not conduct a detailed, line-by-line review of legal invoices. Metavante, 619 F.3d at 773–76; Taco Bell, 

388 F.3d at 1076. 

We discuss the deference we owe to the bankruptcy 

court’s findings. Then, we analyze the court’s treatment of the 

parties’ opposing experts. Finally, we summarize Liberty’s remaining challenges to the reasonableness and necessity of the 

work that each law firm performed.

A 

The bankruptcy court’s determinations that the fees 

USAG sought for each law firm’s work were reasonable and 

necessary rest primarily on factual findings. Our review of the 

factual findings is for clear error. Wilborn, 881 F.3d at 1004, 

1006. “We will overturn them only if the entire record leaves 

us with the definite and firm conviction that a mistake has 

been committed, giving due deference to the [trial] court’s 

better opportunity to see and hear the witnesses.” Id. at 1006 

(internal quotation marks omitted). Because trial courts are 

better equipped to adjudicate factual matters and fine details 

than we are, that rationale applies with special force in litigation about attorneys’ fees. Vega, 12 F.4th at 702. 

After considering whether the Thomson presumption applied, the bankruptcy court scrutinized the disputed amounts 
18 No. 21-2914 

as to each law firm’s work on behalf of USAG. The court’s assessment of whether the fees at issue were reasonable and 

necessary was heavily informed by its evaluation of the parties’ expert witnesses—Schoon for USAG, and Cooperfor Liberty. We turn to that issue now.

B 

As the bankruptcy court observed, Schoon and Cooper 

took “vastly different approaches” in determining whether 

the fees USAG incurred were reasonable and necessary. Both 

experts agreed Indiana Rule of Professional Conduct 1.5 

supplied the relevant standard.3 Schoon used a “total value” 

approach that accounted for various factors, including the nature and complexity of the legal work that outside counsel 

performed. Cooper, on the other hand, employed a “taskbased” approach that focused on the time and labor required 

for each task and the fee that is customarily charged for it. 

The court found Schoon’s “total value” approach to be the 

appropriate one under Indiana law. We agree. In Thomson, the 

Indiana Court of Appeals resolved a highly similar conflict 

between two parties with differing views about how to measure reasonable and necessary fees. See 11 N.E.3d at 1024–26. 

According to the state appeals court, the approach for which 

the insured’s expert advocated was “more sound and more 

consistent with Indiana law.” Id. at 1025. “Rule 1.5 mandates 

3 That rule gives eight factors for determining whether fees are reasonable. Some of those factors include the “time and labor required, the 

novelty and difficulty of the questions involved, and the skill requisite to 

perform the legal service properly”; the “fee customarily charged in the 

locality for similar legal services”; the “amount involved and the results 

obtained”; and the “experience, reputation, and ability of the lawyer or 

lawyers performing the services.” IND. R. PROF. CONDUCT 1.5. 
No. 21-2914 19

a multi-factor total value approach. In addition to time spent, 

the [c]ourt is to consider novelty, difficulty, skill, experience, 

reputation, and ability.” Id. A myopic focus on timekeeping 

and billing practices, Thomson explained, conflicts with Rule 

1.5. Id. 

This resolves the issue of the experts’ competing methodologies in USAG’s favor. Schoon applied the total-value approach required under Rule 1.5 and Thomson, while Cooper 

applied an approach erroneous under Indiana law. So, the

bankruptcy and district courts properly applied Indiana law 

in crediting Schoon’s analytical framework rather than 

Cooper’s. 

The bankruptcy court also found Schoon more credible 

than Cooper, as Cooper did not base his conclusions on empirical studies or data. That credibility determination, which 

also encompasses a witness’s demeanor, is a factual finding 

properly within a trial court’s discretion. See BRC Rubber & 

Plastics, Inc. v. Cont’l Carbon Co., 981 F.3d 618, 622 (7th Cir. 

2020); Madden v. U. S. Dep’t of Veterans Affs., 873 F.3d 971, 973 

(7th Cir. 2017). We will not disturb a court’s finding that one 

expert witness in a bench trial is more credible than another

unless the finding is clearly erroneous. Madden, 873 F.3d at 

973–74. USAG is correct that Liberty has not identified a clear 

error. In a case of “dueling experts,” it is “left to the trier of 

fact, not the reviewing court, to decide how to weigh the competing expert testimony.” Id. (citation omitted). We lack an adequate basis on which to override the bankruptcy court’s determination that Schoon was more credible than Cooper.
20 No. 21-2914 

C 

Because the total-value approach for which Schoon advocated applies here, it is unnecessary to scrutinize individual 

line items in the manner Liberty requests. See Metavante, 619 

F.3d at 774–76; Taco Bell, 388 F.3d at 1075–77. But we will still 

analyze several of Liberty’s objections that the bankruptcy 

and district courts clearly erred in finding that the insurer 

failed to rebut the presumption of reasonableness. The objections are considered in descending order of the quantities of 

fees at issue.

1) Jenner & Block LLP

USAG retained Jenner & Block LLP as its bankruptcy 

counsel, and that firm also represented USAG in connection 

with an investigation conducted by the Indiana Attorney General. For Jenner & Block’s work, USAG was awarded 

$213,234.71, as the bankruptcy court concluded that amount 

of the firm’s fees were reasonable and necessary. Liberty objects to that conclusion. 

Cooper’s first concern with Jenner & Block’s fees was that 

its invoices contained excessive redactions. The bankruptcy 

court found that objection was misplaced because “the redactions are almost entirely for costs USAG is not seeking from 

[Liberty].” On appeal, Liberty fails to explain why the bankruptcy court’s finding is incorrect, much less clearly erroneous. 

Cooper also objected to work Jenner & Block performed as 

unnecessary. Jenner & Block worked on clawback requests, 

seeking to recover for USAG privileged documents that had 

inadvertently been produced in the Chapter 11 bankruptcy 

proceeding. Cooper claimed this work was both unnecessary 
No. 21-2914 21

and duplicative of efforts made by another law firm, Barnes 

& Thornburg LLP. As the bankruptcy court noted, though, the 

representation of USAG in the Chapter 11 bankruptcy was 

novel and complex; the investigations involved “millions of 

documents.” The court was therefore well within its discretion to reject Liberty’s arguments that it was inherently unnecessary and duplicative for multiple firms to conduct clawback reviews and seek the return or destruction of privileged

documents “to avoid a potentially catastrophic privilege 

waiver.” Liberty has failed to identify a clear error in this respect.

2) Barnes & Thornburg LLP

USAG hired Barnes & Thornburg to work on the Indiana 

Attorney General investigation, among other matters. The 

bankruptcy court awarded USAG the full amount of fees requested for Barnes & Thornburg’s work—$789,049.76. Liberty 

objects to $82,472.76 of those fees. Along with making criticisms concerning block billing, Liberty also claims Barnes & 

Thornburg performed tasks that were duplicative of those

done by another law firm. 

Under the total-value approach required by Indiana law, 

the bankruptcy court was within its discretion to overrule Liberty’s objection to Barnes & Thornburg’s fees. As that court 

noted, it was reasonable and necessary for that firm to familiarize itself with the essential aspects of the allegations made 

against USAG and the supporting evidence for those allegations. Indeed, had Barnes & Thornburg failed to do so, it could 

have potentially risked malpractice.
22 No. 21-2914 

3) Gibson, Dunn & Crutcher LLP

USAG engaged Gibson Dunn to prepare USAG’s thenCEO for Congressional testimony. As noted earlier, Liberty 

disputes $73,556.01 of the amount USAG was awarded for 

Gibson Dunn’s work. Liberty argues too many lawyers participated in the preparation sessions. 

The bankruptcy court rejected that argument. In that 

court’s view, Schoon testified credibly about the intensive nature of Congressional testimony and the need for many lawyers to prepare a witness. Given the record evidence and that 

credibility determination, we have no basis to disturb the 

court’s finding that all of Gibson Dunn’s fees were reasonable 

and necessary. See Madden, 873 F.3d at 973–74. 

4) Faegre Baker Daniels LLP

Faegre Baker Daniels LLP served as USAG’s national coordinating counsel on Nassar-related, mass-tort litigation before ultimately withdrawing because of a conflict of interest. 

Liberty objects to Faegre’s bills totaling $48,199.50. Several 

lawyers at Faegre assisted with preparation for Congressional 

testimony, and USAG sought reimbursement for work performed before the conflict of interest forced it to withdraw. 

Because of the conflict, Liberty submits those fees should not 

be reimbursed. 

Considering Schoon’s expert testimony, the bankruptcy 

court was within its discretion to overrule Liberty’s objection. 

Likewise, the court was within its discretion to find reasonable and necessary the fees attributable to work that Faegre 

performed before its withdrawal. Without the benefit of the 

hindsight Liberty employs, neither USAG nor Faegre knew 
No. 21-2914 23

Faegre would later have to withdraw at the time the work was 

performed. 

5) Miller Johnson

Miller Johnson, a Michigan-based law firm, defended

USAG in the athlete lawsuits filed in that state. USAG 

eventually asked Miller Johnson to take over as its national 

coordinating counsel for all Nassar-related matters. Liberty 

objects to $35,362.29 of Miller Johnson’s fees as purportedly

unnecessary and duplicative of other firms’ work. 

The bankruptcy court, relying on Schoon’s testimony, rejected Liberty’s argument. Most relevant, in the court’s view, 

was Miller Johnson’s role as national coordinating counsel: 

“USAG has shown that this sort of work is reasonable and 

necessary, in part based on the testimony of someone who has 

actually served in that role.” Given that Cooper had no experience comparable to serving as a company’s national coordinating counsel in this type of nationwide litigation, Schoon’s 

testimony went unrebutted. Liberty has not identified a 

clearly erroneous factual finding in the bankruptcy court’s 

analysis of the fees USAG claimed for Miller Johnson’s work.

6) Hilder & Associates, P.C.

Hilder & Associates is a criminal defense firm that represented USAG in one of the “revocation lawsuits,” which were 

brought by coaches and owners of gyms associated with 

USAG to recover financial losses allegedly stemming from its

handling of Nassar’s crimes. Liberty objects to $5,646.99 of 

fees incurred, contending Hilder spent too many hours on a 

successful motion to compel arbitration. 

The bankruptcy court was not persuaded. It cited Schoon’s 

testimony that “winning the motion undoubtedly saved 
24 No. 21-2914 

USAG a lot of time and money as a loss on that motion would 

have led to adjudication in a very unfriendly forum.” That testimony was uncontradicted. Once again, Liberty fails to identify a clearly erroneous factual finding.

* * *

To sum up, the bankruptcy and district courts did not 

clearly err in concluding Liberty did not rebut the presumption that the fees USAG incurred were reasonable and necessary.4

V 

In adjudicating this fee dispute, the bankruptcy court concluded that the Thomson presumption applied despite Liberty’s challenges to the nature of USAG’s supervision of outside counsel and the proportion of fees paid by USAG. That 

ruling adhered to both Thomson and the Seventh Circuit authority it adopted. The particular form of supervision for 

which Liberty advocates is not a prerequisite for the presumption that attorneys’ fees are reasonable and necessary, and 

4 In its brief, USAG requests sanctions under Federal Rule of Appellate Procedure 38. USAG argues that Liberty used this appeal to delay 

payment without any basis in controlling law, and that on appeal Liberty 

has misrepresented legal principles and omitted crucial facts. 

Generally, if a party requests monetary sanctions only in its brief, rather than by separate motion, we do not consider the request. FED. R. APP.

P. 38 advisory committee’s notes to 1994 amendments (“A statement inserted in a party’s brief that the party moves for sanctions is not sufficient 

notice.”); Waldon v. Wal-Mart Stores, Inc., Store No. 1655, 943 F.3d 818, 824 

(7th Cir. 2019); Matter of Lisse, 921 F.3d 629, 645 (7th Cir. 2019). USAG did 

not file a separate motion for sanctions, so we do not consider its request.

Although upon proper notice we may award Rule 38 sanctions on our own 

motion, we decline to do so here.
No. 21-2914 25

neither is the policyholder’s full payment of all the fees it incurred.

The special circumstances that Liberty identifies also do 

not categorically preclude the presumption’s application. Rather, the bankruptcy and district courts were within their discretion to conclude it applied, subject to limited exceptions. 

Finally, Liberty failed to rebut the presumption by showing 

any portion of the fees was not reasonable and necessary.

For all these reasons, we AFFIRM the judgment.