Insurance claims that are denied caused the insured to incur attorney fees unless they are going to accept the denial. So, how do Judges look at attorney fees? This is answered in a 2021 opinion from the Northern District of Texas, Dallas Division. The opinion is styled, Linda Veach v. State Farm Lloyds.
Veach sued State Farm under her homeowner’s property insurance policy, claiming she suffered damage to her roof after a storm. State Farm sent out an adjuster who decided Veach had only suffered minimal damage to her roof.
A jury decided in favor or Veach and in addition to her property damages and other damages, also awarded attorney fees in the amount of $189,045.00. State Farm filed papers with the Court objecting to several amounts, including attorney fees.
The opinion discusses various points, however here we are looking at the attorney fees.
Pursuant to the Texas Civil Practice and Remedies Code, Section 38.001(8), Veach is entitled to recover reasonable and necessary attorneys’ fees. Veach sought $189,045.00 for 353.77 hours of attorney and paralegal work on this case. State Farm objected claiming the amount is “inflated, unnecessary, and unsupported by the evidence.” The Court determined that Veach is entitled to $115,723.00.
To assess what fees are reasonable and necessary, the Court considers: (1) the time and labor required, the novelty and difficulty of the questions involved, and the skill required to perform the legal service properly; (2) the likelihood . . . that the acceptance of the particular employment will preclude other employment by the lawyer; (3) the fee customarily charged in the locality for similar legal services; (4) the amount involved and the results obtained; (5) the time limitations imposed by the client or by the circumstances; (6) the nature and length of the professional relationship with the client; (7) the experience, reputation, and ability of the lawyer or lawyers performing the services; and (8) whether the fee is fixed or contingent on results obtained or uncertainty of collection before the legal services have been rendered. Accounting for the Arthur Andersen factors, the Court uses the lodestar method for proving the reasonableness and necessity of attorneys’ fees.
Under the lodestar method, the determination of what constitutes reasonable attorneys’ fee involves two steps. First, the Court must determine the reasonable hours spent by counsel in the case and a reasonable hourly rate for such work. The Court then multiplies the number of such hours by the applicable rate, the product of which is the base fee or lodestar. The Court may then adjust the base lodestar up or down (apply a multiplier), if relevant factors indicate an adjustment is necessary to reach reasonable fees in the case.
The lodestar method is a short-hand version of the Arthur Andersen factors
and not a separate test or method. The lodestar method is a focused and objective analysis of whether the fees sought are reasonable and necessary, yielding a base figure that reflects most Arthur Andersen factors and is thus presumptively reasonable. But that figure is subject to adjustment if the presumption is overcome by other factors not accounted for in the base lodestar figure. Consequently, the fact finder’s starting point for calculating an attorneys’ fee award is determining the reasonable hours worked multiplied by a reasonable hourly rate. The fee claimant, or prevailing party, bears the burden of providing sufficient evidence on both counts. Sufficient evidence includes, at a minimum, evidence of (1) particular services performed, (2) who performed those services, (3) approximately when the services were performed, (4) the reasonable amount of time required to perform the services, and (5) the reasonable hourly rate for each person performing such services. This base lodestar figure should approximate the reasonable value of legal services provided in prosecuting or defending the prevailing party’s claim through the litigation process. Accordingly, there is a presumption that the base lodestar calculation, when supported by sufficient evidence, reflects the reasonable and necessary attorneys’ fees that can be shifted to the non-prevailing party.
In view of the evidence, which includes affidavits from Veach’s trial counsel and itemized billing statements, the Court finds that 349.77 hours (comprised of 209.65 attorney hours and 140.12 paralegal hours) was a reasonable amount of
time for Veach’s attorneys and their staff to litigate this insurance dispute and try
the case to a jury over a four-day period. The Court also finds that a rate up to
$500.00 per hour is a reasonable rate to charge for time billed by Veach’s trial
attorneys, and $150.00 per hour is a reasonable rate to charge for paralegal time.
The Court discusses this issue further and is a must read for attorney’s having to present attorney fees to the Court.