Judge: Mark H. Epstein, Case: 23SMCV04459, Date: 2025-02-04 Tentative Ruling

Case Number: 23SMCV04459    Hearing Date: February 4, 2025    Dept: I

The matter is here on a fee motion.  The court understands that the matter has been otherwise resolved.  Defendant does not dispute that plaintiff is entitled to fees.  Defendant contends that the fees requested are not reasonable, however.  Plaintiff seeks $56,664 in fees, which includes a 50% enhancement on the lodestar.

Plaintiff has two lawyers on the case.  One bills at $595/hour and the other at $475/hour.  The paralegal bills at $175/hour.  The vast bulk of the work was done by Mr. Kaufman, who is the attorney billing at $595/hour.  A total of about 75 hours was billed on the case in total.  The defense seeks a reduction.  Defendant contends that 80 hours for this case is unreasonably high.  The defense makes another argument: Mr. Lynn, who billed 16.3 hours at $475/hour, is not a California attorney and was not admitted pro hac vice.  Defendant claims that to award Mr. Lynn fees would be tantamount to condoning the practice of law in California without a license.  Accordingly, the defense suggests striking the $7742.50 billed by him.  There is also a question as to hourly rates.

The court is concerned about Mr. Lynn.  Plaintiff states that Mr. Lynn’s work was always supervised by California counsel and that two ethics country bar opinions state that it is not improper for him to work on the case.  Plaintiff notes that Mr. Lynn is an employee of the firm, he bills at a lower rate than does Mr. Kaufman (thereby reducing fees), and that his expertise in the area adds value.

Defendant offers no published authority that states that Mr. Lynn’s hours cannot be charged, although the logic is clear.  Plaintiff cites to a San Diego County Bar Association Ethics Opinion from 2007 that states that there was no impropriety where a California lawyer contracted with a firm in India to provide legal research and develop case strategy.  Plaintiff also cites to an Orange County Bar Association Formal Opinion from 2014 finding no impropriety where an out of state lawyer drafts pleadings and other documents in connection with a case pending in California.  The San Diego case involved a situation where a small California firm retained a firm in India to help develop strategy and do legal research.  The San Diego Bar, relying on our Supreme Court’s opinion in Birbower, Montalbano, Condon & Frank, PC v. Superior Court (1988) 17 Cal.4th 119, concluded that under the circumstances, the Indian firm was not practicing law in California and the California firm did not violate any duties in hiring that firm to do the work performed (although there was a duty to tell the client that such was being done).  The opinion noted that there is no bright line rule as to when something constitutes unauthorized practice and when it does not.  Rather, it depends on the type of work performed, whether the California lawyers exercised independent judgment in deciding what to do with the work provided to them, the amount of supervision over the work by the California lawyer, and the extent to which the non-California lawyers were providing legal advice or influencing the legal proceedings.  The Orange County opinion discussed two hypotheticals.  In one, a California attorney hires a non-California lawyer who writes documents that are reviewed and signed by a California lawyer but where the documents filed in court do not indicate that an out of state attorney drafted them.  The other hypothetical was that a non-California lawyer drafts documents for a California attorney and the documents are filed under the name of the California lawyer, but the client is unaware that a non-California lawyer was involved.  The opinion referred to both hypotheticals as dealing with “ghostwriting.”  The opinion noted Winterrowd v. American General Annuity Insurance Co. (9th Cir. 2009) 556 F.3d 815, in which the Ninth Circuit concluded that so long as all of the pleadings were signed by a California lawyer who was responsible for making the legal decisions and who vouched for all of the work, there was no unauthorized practice where a non-California attorney helped draft pleadings.  As a result, the opinion concludes that in the first hypothetical there is no violation of any duty (although the court noted that such was the case “unless a fee request is made”), but it is clear that the ultimate decision would be fact-specific.  In the second hypothetical, the opinion concluded that there was no ethical violation of candor, but that it could be that the client would “not be able to obtain an award of attorneys’ fees for the work of Contract Lawyer.”  In its conclusion, the opinion notes that there is nothing unethical about hiring a contract lawyer who is not licensed to practice in California to ghostwrite, and that “only when the client or lawyer seeks to recover his attorneys’ fees must the contract lawyer’s role be disclosed to the court.”

This court notes that it is not bound by any of the ethics opinions discussed above (or the Ninth Circuit case, for that matter).  The opinions do, however, provide some context and a framework for thinking about this case.  This is a tough one.  The court, on the one hand, notes that the attorney here is not a contract lawyer, but rather is an employee of the firm, and that the principal attorney is a California lawyer who is a partner in the firm.  Mr. Lynn’s substantive work includes drafting a motion to compel, for which he spent 8 hours (and upon which Mr. Kaufman spent .4 hours reviewing and revising), 3 hours analyzing the opposition and drafting a reply (and upon which Mr. Kaufman spent .3 hours reviewing and revising), .3 hours to review a tentative ruling, and 5 hours drafting the fee motion (for which there is no time by Mr. Kaufman).  The court gleans the following.  First, Mr. Lynn did not provide strategy or that sort of legal advice to the client, nor did Mr. Lynn engage in most of the legal aspects of the case.  There were essentially two or three tasks for which Mr. Lynn had a substantive role, and they were for a discovery motion and the fee motion.  However, it hardly seems like there was a lot of supervision by Mr. Kaufman, who spent a few minutes reviewing and revising the discovery papers and apparently no billed time on the fee motion (although he signed the fee motion and a declaration).  The court views this as a dangerous practice.  While discovery motions and fee motions are not the strategy items that other aspects of a case might be, discovery and fees in California do require an analysis of California law in a way that the analysis of a federal antitrust case might not.  Had Mr. Kaufman spent more time supervising Mr. Lynn or reviewing and revising the papers, the court would be more comfortable, although that would only have added to the bill.  The better way to have done this might have been for Mr. Lynn to be admitted pro hac vice, although that is not a good solution if he is involved in a lot of cases.  Or, of course, Mr. Lynn might choose to become a member of the California Bar.  The court also notes that in the Orange County opinion, there was no ethical problem found, but the opinion went out of its way to say that was true so long as there was no fee request.  The theory of it might be that getting some aid from a non-California lawyer is not unethical as long as the opposing party is not paying for it.  Frankly, the court has a bit of trouble seeing why that is, although the focus of that opinion was largely on a duty of disclosure.  The court’s concerns are a bit higher in this case because in reviewing Mr. Kaufman’s declaration in support of the fee motion, it does not appear to state that Mr. Lynn is not a member of the California Bar.  It might be there somewhere and the court just missed it, but it was not in paragraph 19 of the Kaufman declaration, which is where the court expected to find it.

Here, the court notes that Mr. Lynn’s name nowhere appears on any pleading and he was not disclosed at all until the fee motion.  Of course, his name could not appear on a pleading (because he is not a member of the California Bar and is not admitted pro hac vice), but even so, there is the ghostwriting issue and there does not seem to have been all that much oversight by Mr. Kaufman.  On balance, the court is concerned enough about this issue that it is inclined not to allow the fee for Mr. Lynn to be recovered.  That said, though, the court will take the unusual step of stating expressly the hope that plaintiff appeals this issue so that perhaps the Court of Appeal can provide some useful guidance on what might be a widespread practice.  The court should note that it is not making a finding that either Mr. Lynn or Mr. Kaufman acted unethically—it is not being called upon to do so and the court is not hinting that were it at issue, such a finding would result.  What the court is being called upon to do is to determine whether, pursuant to a fee-shifting statute, the defendant must pay for legal services performed by a non-California lawyer in cases such as this one.

Turning to the other objections, the court does not believe that $595/hour is unreasonably high for an attorney with Mr. Kaufman’s experience, especially in this specific area of law.  Nor does the court believe that the paralegal rate is too high.  The rates appear to the court to be reasonable, and the court believes that the hours are not excessive.  Indeed, there was quite a lot of efficiency here, given that the case was handled principally by one attorney. 

Turning to the enhancement, the court agrees that this is a contingent fee case and that there is some delay in getting paid.  But that said, the court’s experience is that Song Beverly cases are such that the likelihood that there will be no fee is low.  Low is not zero, but neither is it the kind of risk that justifies a large enhancement.  And here, the delay was not that great.  The case was filed in September 2023, so most of the work did not yield a lengthy delay.  But a relatively short delay is not no delay.  The court’s view is that a modest enhancement on the fees is appropriate, and the court will therefore order an enhancement of 15% of the fees other than the fees related to the fee motion, which were not really contingent and for which there is not much delay.  To be clear, the fees on the fee motion are recoverable (other than those billed by Mr. Lynn), but they are not enhanced.