Judge Freeman Reduces Attorney Hourly Rate in Privacy Class Action

• U.S. District Judge Beth Labson Freeman reduced a lawyer's hourly rate from $3,000 to $1,600 in a Google privacy settlement case.
• The judge deemed the $3,000 hourly rate for David Scott of Scott+Scott "patently unreasonable."
• The ruling approved over $22.6 million in legal fees from a $68 million class action settlement.
• Judge Freeman acknowledged that named partners often charge more and rates increase, but found the $3,000 rate excessive.
• While some top-tier firms reportedly charge $3,000-$4,000 per hour, the court's decision highlights judicial scrutiny of such rates in fee awards.

Judge Freeman's decision serves as a reminder to legal practitioners that even in high-value settlements, detailed justification for billing practices, especially for elevated hourly rates, is essential to avoid significant reductions by the court.

U.S. District Judge Beth Labson Freeman, presiding in the Northern District of California, recently deemed a requested attorney hourly rate "patently unreasonable" in a significant privacy class action settlement involving Google's voice-activated assistant. The judge's order, issued on a Tuesday, specifically targeted the $3,000 per hour rate sought by David Scott of the plaintiffs' law firm Scott+Scott. This decision came as part of a larger ruling that approved over $22.6 million in legal fees from a total $68 million privacy settlement.

Despite acknowledging that named partners often command higher fees than other partners and that hourly rates generally increase year over year, Judge Freeman firmly stated that such increases do not extend to $3,000 per hour in this context. Consequently, she exercised her discretion to reduce David Scott's billing rate to $1,600 per hour for the purpose of calculating the overall class action fee award. This reduction significantly impacted the firm's compensation structure for the specific attorney involved in the case.

The ruling by Judge Beth Labson Freeman underscores the rigorous scrutiny federal courts apply to attorney fees in class action settlements, particularly concerning the reasonableness of hourly rates. While the court recognized the common practice of senior partners charging more and the natural progression of rate increases over time, it drew a clear line at what it considered an excessive charge. The judge's explicit labeling of the $3,000 rate as "patently unreasonable" highlights a judicial willingness to intervene when fee requests appear to exceed justifiable market norms or established precedents for fee awards.

This judicial oversight is a critical component of ensuring that class action settlements fairly compensate plaintiffs while also providing appropriate remuneration for legal services. The Northern District California attorney rates, and their approval by federal judges, often set benchmarks for future cases. Judge Freeman's decision serves as a reminder to legal practitioners that even in high-value settlements, detailed justification for billing practices, especially for elevated hourly rates, is essential to avoid significant reductions by the court.

The court's decision to reduce David Scott's hourly rate to $1,600, despite the firm's request for $3,000, occurs within a broader legal landscape where such high rates are not entirely unprecedented. Reports indicate that some lawyers at prominent firms like Susman Godfrey charge up to $4,000 per hour, while others at Gibson, Dunn & Crutcher and Milbank also bill in excess of $3,000. This suggests a potential disconnect between what some top-tier law firms perceive as a market rate and what federal judges deem acceptable for class action fee awards.

Adam Levitin, a bankruptcy professor at the Georgetown University Law Center, commented on this trend, noting that for better or worse, a $3,000 per hour rate is increasingly becoming the market standard for leading partners at large firms. However, Judge Freeman's reduction of attorney fees in this instance demonstrates that market perception alone may not suffice for judicial approval. The ruling emphasizes that courts will independently assess the reasonableness of requested rates, even if they align with what some consider current market practices for elite legal services, particularly when determining a class action fee award.

Lawyers and firms should note that federal judges, even in high-value class action settlements, are actively scrutinizing and may significantly reduce requested hourly rates deemed 'patently unreasonable,' impacting expected fee recovery and necessitating robust justification for billing practices.

Source: Original reporting via Reuters.