Monday, April 13, 2015

SOURCE v. County of San Bernardino (Cal. Ct. App. - April 13, 2015)

It's hard to win attorney fee appeals that dispute the amount awarded.  So when the trial court only awards roughly $20,000 in fees, whereas the request was $230,000-plus, the appeal is unlikely to be successful.  There's simply too much discretion underlying the award.

Which is why the appellant here loses.  It's not a surprising result.

Much of Justice McKinster's opinion says exactly what you'd expect it to (rightly) say.  There's only one part of the opinion about which I thought comment might be appropriate.  Since that opinion says something that legions of opinions have previously said as well, and yet, I wonder if the argument is one that actually holds much -- or any -- water.

Here's what the Court of Appeal says in today's opinion:

"The trial court found that the law firm’s expenditure of 246 hours over a period of a year did not deprive it of the ability to take on other fee-generating work. SOURCE dismisses this finding as 'illogical,' in that the law firm would have made substantial fees for 246 hours spent on other, fee-generating work. It did not, however, offer any evidence that it had to turn down other work that it might otherwise have been able to accept in order to devote those 246 hours to this case. Accordingly, it did not show that its income suffered as a result of taking this case on a partial contingency."

In a way, I understand this sentiment.  I'm sure that Justice McKinster is right that the law firm was hardly in the habit of turning down paying work.  I strongly doubt that some client came in and said  "We want to pay you to do some legal work" but the law firm's response was "Oh, sorry, we're just too busy, so we'll have to turn you down:  We've got a case that's taking up a couple of hundred hours of our time already."  So, in one sense, the Court of Appeal is exactly right.

But hours -- and workload -- are nonetheless always fungible at the margin.  Sure, the firm may not have turned down a particular, would-have-paid client.  But it had to staff the case, and those lawyers expected to be paid.  And if they did more work, and put in more hours, they'd expected to be paid more.  Maybe not directly.  It's not like lawyers get overtime.  But the more hours you put in, the higher your salary generally has to be in order to compensate you for the hassle.  Similarly, the more hours a law firm has to work, the more lawyers it needs.

You may not be able to directly tie 246 hours to having to hire another associate.  Or partner, or whatever.  But 246 hours is never "free".  It always displaces something else of value.  Other work.  Other lawyers.  Other things to do.

Plus, what's true in one case is presumably true ad nauseum.  You can't get paid extra for one 246 hour case you took because it didn't "deprive" you of the ability to take on new work.  Similarly, you can't get paid extra for a second 246 hour case because you can't make the same showing there either.  Ditto for the third, fourth, tenth, and hundredth similar case.  So you can take on a thousand 246 hour cases and the Court of Appeal will still say that you can't "show" that this stops you from taking on other work.  Even though obviously it does.  You can't do a thousand 246 hour cases and still do the work you're presently doing.  You've either got to turn down work or hire more lawyers.  That's what you want to get paid extra for.  But that's what the Court of Appeal says you don't get.

So the Court of Appeal's argument here is true as far as it goes.  Almost never will a firm be able to prove that a single case displaced other paying work.  Law firms simply aren't in the habit of turning down work.

But that reality may prove too much.  Since it's always true.  Which would make the underlying factor meaningless.

Work trades off with other work, which trades off with leisure, which trades off with a leaner staff (and lower expenses).  There's no such thing as a free lunch.

Even at the 246-hour level.