Opinion ID: 2814903
Heading Depth: 2
Heading Rank: 3

Heading: Division of the Contingency Fee

Text: The remainder of Doyle’s claims challenge the district court’s apportionment of the contingency fee between the parties under Alabama law. Specifically, Doyle contends that the district court erred in “altering the contractual terms of plaintiffs’ written employment agreement,” not using the lodestar methodology to calculate WCQP’s fees, misapplying Alabama’s quantum meruit law, and not paying WCQP from gross settlement proceeds. We consider these arguments unpersuasive and hold that the district court’s division of the contingency fee was not an abuse of discretion. Alabama allows a discharged attorney to recover reasonable compensation for work performed before discharge, including in cases with contingency fees. Owens v. Bolt, 2118 So. 590, 594 (Ala. 1928). Alabama employs a flexible multi-factor test when determining attorney’s fees under a quantum meruit recovery theory. Triplett v. Elliott, 590 So. 2d 908, 910 (Ala. 1991) (citing the multi-factor test in Peebles, 439 So. 2d 137). 6 The district 6 The twelve factors are: “(1) the nature and value of the subject matter of the employment; (2) the learning, skill, and labor requisite to its proper discharge; (3) the time consumed; (4) the professional experience and reputation of the attorney; (5) the weight of his responsibilities; (6) the measure of success achieved; (7) the reasonable expenses incurred; (8) whether a fee is fixed or contingent; (9) the nature and length of a professional 9 Case: 14-60567 Document: 00513105668 Page: 10 Date Filed: 07/07/2015 No. 14-60567 court started its analysis of the Peebles factors by examining the time consumed by each party. Peebles, 439 So. 2d at 141 (stating that “the first yardstick . . . is the time consumed.”). WCQP submitted hours for four attorneys, including one partner, Fisher (billed at $550/hour), two associates, including Doyle (billed at $300/hour and $275/hour), and one paralegal (billed at $125/hour). Doyle and Fisher worked 139.96 and 117.75 hours, respectively, and the firm worked a total of 384.58 hours. The bill for these hours was $140,700. However, WCQP argues that the 331.88 hours it worked on the case prior to settlement represent seventythree percent of the work performed on the case before settlement and thus should result in payment of seventy-three percent of the contingency, $255,500, less expenses. Doyle argues that WCQP actually performed 239.36 hours of attributable work. He further argues that the billing rates are excessive and that the court should apply the rates of $250/hour for partners, $200/hour for associates, $100/hour for paralegal work, and $50/hour for investigative work, based on the district court’s recent use of those rates in Alexander v. City of Jackson, Miss., 2011 WL 1059293, at  (S.D. Miss. Mar. 21, 2011) aff’d, 456 F. App’x 397 (5th Cir. 2011). He also argues that the paralegal work should be classified as investigative. Using those rates and multiplying them by the lower total number of hours worked, Doyle concludes that WCQP should relationship; (10) the fee customarily charged in the locality for similar legal services; (11) the likelihood that a particular employment may preclude other employment; and (12) the time limitations imposed by the client or by the circumstances. Of course, not all of the criteria will be applicable.” Van Schaack v. AmSouth Bank, N.A., 530 So. 2d 740, 749 (Ala. 1988) 10 Case: 14-60567 Document: 00513105668 Page: 11 Date Filed: 07/07/2015 No. 14-60567 receive $52,334.50, 7 and that the remainder of the contingency fee should be paid to him. 8 The district court determined the distribution of the contingency fee not by applying a pure lodestar analysis, but by considering each party’s “relative contribution to the outcome” of the underlying suit and the Peebles factors. The district court considered that Fisher and WCQP had more experience than Doyle in litigating Section 1983 prison death cases and that their work was “of greater value to bringing this suit to resolution.” Following from this, the district court also found that Doyle’s work after leaving WCQP primarily involved speaking to “opposing attorneys, the mediator, and his clients” and that this work did not “appreciably alter[ ] the posture and strength of his client’s case after the discharge of WCQP.” The court also noted that the use of the lodestar method is problematic when dividing a contingency fee among counsel (as opposed to determining the total amount of fees owed). The issue is that were the court to use a lodestar calculation for one party, the other party would receive the remainder of the contingency: remuneration far in excess of their lodestar calculation. For example, if the court accepted Doyle’s original calculations, WCQP would receive $52,334.50 and then Doyle would receive the remaining $297,665.50 (minus expenses) for performing, at most, 259.25 hours of work after he left WCQP, an hourly rate of over $1,100, even though Doyle himself objects to 7 Doyle filed notice of supplemental authority and adjusted this number downward to $46,344.50. He then filed a response to WCQP’s motion to supplement and adjusted the lodestar payment due to WCQP to $32,954.50. 8 Doyle does not reconcile the fact that applying the same calculation he applied to WCQP to his work—259.25 hours x $250/hour (the partner billing rate)—would result in a lodestar amount of $64,813, approximately one-fourth the amount he requests on appeal. 11 Case: 14-60567 Document: 00513105668 Page: 12 Date Filed: 07/07/2015 No. 14-60567 Fisher’s $550 hourly rate as excessive. Basically, the lodestar method cannot be applied to the division of a contingency fee because the amount to be distributed is fixed. Based on this analysis the court calculated the division of the contingency as follows. It paid Doyle and WCQP their claimed expenses, $2,623.00 and $6,913.91, respectively. This left $340,463.09. The court then calculated the total hours worked on the case by everyone from inception to settlement. It found that WCQP worked 306.88 hours on the case while Doyle worked 123 hours on the case after leaving WCQP. 9 Represented as a percentage, WCQP worked seventy-one percent of the hours and Doyle worked twenty-nine percent of them. Thus the court apportioned the contingency in proportion to the hours worked, which resulted in WCQP receiving $241,728.79 and Doyle receiving $98,734.30. Due to rounding, WCQP was paid $787.70 an hour and Doyle was paid $802.72 an hour. This division, determined by applying the relevant factors under Alabama Law, was not an abuse of discretion. The other issues Doyle raises on appeal do not render this division of the contingency fee an abuse of discretion. The court also notes that Doyle’s suggestion that attorney’s fees should be paid to WCQP from the gross 9 The district court’s 123 hour determination appears generous. Doyle engaged the non-standard practice of billing his time in quarter-hour increments. Many of his quarterhour time entries were for sending e-mails and making phone calls. His hours could have been reduced for this reason. See Welch v. Metro. Life Ins. Co., 480 F.3d 942, 948–49 (9th Cir. 2007) (reducing attorney’s alleged hours by twenty percent when the records were “replete with quarter-hour or half-hour charges for the drafting of letters, telephone calls, and intra-office conferences” that “likely took a fraction of the time”); Ingalls Shipbuilding, Inc. v. Dir., 46 F.3d 66 (5th Cir. 1995) (table opinion) (text available 1995 WL 29263, at ) (remanding for a recalculation of the fees without quarter-hour minimum billing). 12 Case: 14-60567 Document: 00513105668 Page: 13 Date Filed: 07/07/2015 No. 14-60567 settlement proceeds, rather than the contingency fee, thus reducing the amount his clients receive, is inconsistent with the spirit of the attorney-client relationship and not supported by authority.