Contract attorney rates, attorney billing rates, and lodestar

Back in November 2008 we commented on the settlement negotiations around Carlson v. Xerox case (click here).   The noteworthy item for contract attorneys was the issue “can you pay a contract attorney $35/$40 an hour and bill them out at $500?”  The court was to have the final say. 

The case has now been settled, approved by the court.  It is one of the top securities fraud settlements in American history.  See full story here.

Judge Alvin Thompson in the U.S. District Court in Hartford awarded $120 million in attorneys’ fees, plus $3.3 million in costs.  There was dissent from Xerox’s lawyers during a hearing in October. They argued that contract attorneys were hired by plaintiffs’ counsel and paid $55 an hour but that their hours were included in the plaintiff attorney fee request at $300 an hour.

Note: in the October/November stories the hourly rates were quoted as $35 and $40 per hour.

Judge Thompson determined that the calculations made by plaintiffs’ counsel were fair.  Ultimately, the court determines attorneys’ fees based on the number of billable hours multiplied by an appropriate rate. The court may increase that figure, known as the lodestar, by applying a multiplier based on factors such as risk of litigation and attorney performance.   Seems astronimical to us but we don’t have all the numbers to run it so what do we know.

For more on the lodestar calculation click here, here and here.