You read that correctly: attorneys can ask for fees for the time they took asking for fees. That’s according to the Pennsylvania Superior Court decision, Richards v. Ameriprise Fin., Inc., 2019 PA Super 254, 2019 Pa. Super. LEXIS 830 (August 21, 2019).
Specifically, the court held that fees may be requested under the Unfair Trade Practices and Consumer Protection Law, 73 P.S. § 201-9.2, for time attorneys spent preparing and litigating fee petitions—within reason.
Case of Misrepresentation by a Financial Advisor
The case involved claims under the UTPCPL against Ameriprise Financial over alleged misrepresentations made by financial advisor Richard Bouchard, a representative of IDS Insurance, the predecessor to Ameriprise.
In 1994, Bouchard induced James and Helen Richards to buy a $100,000 universal life insurance policy to avoid a reduction in income should James die first. Bouchard said the annual premiums for the life of the policy would remain level at $6,000, payable at the rate of $500 per month. Based on those representations, the Richards applied for the policy, and Ameriprise wrote the policy.
But in 2000, Bouchard advised James that a $15,000 prepayment in excess of the $500 monthly premium was required to avoid lapse of the policy. The Richards complied and continued to pay $500 per month until James’ death in 2005. When he died, Ameriprise paid the $100,000 death benefit to Helen.
Helen and James’ estate brought suit for the $15,000 lump sum payment made in 2000 to prevent the policy from lapsing, which was contrary to the terms of its purchase.
The Superior Court’s Decision
A three-judge panel of the appeals court consisting of Mary Jane Bowes, Jacqueline O. Shogan, and Eugene B. Strassburger ruled that fee awards for hours spent pursuing fee awards can be acceptable. But the Court found that the Allegheny County trial judge’s award of $200,000 in attorney fees for the appeal and preparation of the second and third fee petitions by Plaintiff’s counsel, Kenneth Behrend of Behrend & Ernsberger in Pittsburgh was excessive.
Judge Mary Jane Bowes, writing for the panel, said:
We find that an award of reasonable attorney fees under the UTPCPL for preparing fee petitions is consistent with the legislature’s aim of encouraging experienced attorneys to litigate such cases, even where the damages are small. Nonetheless, we agree with Ameriprise that Mr. Behrend spent an inordinate number of hours preparing the second and third fee petitions.
Judge Bowes also acknowledged that “[t]here is a dearth of Pennsylvania authority addressing the propriety of a fee award for hours spent preparing and litigating fee petitions.” But the judge noted that “federal courts generally permit such fees, but the hours assigned to that task must be reasonable.”
High Fees were “Presumptively Unreasonable”
The Superior Court panel said the trial court determined that Behrend’s $600 per hour rate was the customary charge for members of the bar with similar experience, reputation, and skill, for similar services, but the Superior Court found the expenditure of 85 hours by “such an experienced practitioner to prepare a fee petition to be presumptively unreasonable.” Judge Bowes said that those hours translated into a fee of $51,000 for preparing the second fee petition and the supporting brief. Plaintiffs’ counsel received an additional $43,000 in fees for argument on the second fee petition and preparation of the third fee petition.
Judge Bowes went on to note that “Behrend admittedly has expertise and vast experience in UTPCPL litigation and in preparing fee petitions.” However, “the attorney affidavits he offered in support of his increased hourly rate, as well as his own affidavit in support of his fees in the underlying litigation, were recycled from a 2013 fee petition previously submitted in Boehm [v. Riversource Life Insurance Co., 2015 PA Super 120, 117 A.3d 308 (Pa. Super. 2015)].”
In addition to challenging the overall charge for preparing and litigating the fee petitions as excessive and unreasonable, Ameriprise objected to four specific entries in the fee petitions:
- One hour for an appearance in court on a Sunday;
- Two hours preparing an unopposed motion to release funds held by the Prothonotary;
- Nearly three hours allocated to the preparation of a reply brief on an issue that wasn’t before the court; and
- Eleven hours of research and drafting on the subject of “restitution and treble damages” attributed to the first appeal, but which wasn’t an issue in that appeal.
Judge Bowes found that the trial court didn’t specifically address Ameriprise’s allegations that these line items were inaccurate, excessive, or non-compensable. To that end, the appellate judge wrote:
It is our expectation that a trial court assessing the reasonableness of attorney fees will thoroughly scrutinize the specific line items that are challenged, generally evaluate the reasonableness of the expenditure of time for the services listed in the fee petition, make adjustments when they are warranted, and explain its reasons for the award. The broad-brush approach taken by the trial court impedes our ability to perform proper appellate review.
As a result, the Superior Court vacated the orders awarding attorney fees based on the second and third fee petitions, and remanded for reconsideration of those fees.
The case can be found here.