Legal News

Traveling But Not Working? Can?t Charge Full Hourly Rate, Court Says

By Dan Slater

Remember that legal ethics hypo about the lawyer who while traveling on behalf of one client does work for another client? The ethics conundrum concerns whether the lawyer can bill that time to both clients, and, of course, the answer is no. Today, in a different billing twist, the Court of Appeals for the Fifth Circuit ruled that a lawyer can’t bill at the full hourly-rate for travel time not spent working.

Here’s what happened: Tax firm Caplin & Drysdale was appointed national counsel for the asbestos claimants’ committee in the bankruptcy of Babcock & Wilcox, a maker of boilers and generators. The firm sought about $6.3 million in fees and costs for it services, and charged its full hourly-rate for travel time. The bankruptcy trustee objected to paying the full hourly rate for travel time not spent working, and the bankruptcy judge agreed, awarding attorney’s fees at 50% for those hours — trimming $135,685.80 from Caplin & Drysdale’s tab. The district and appellate courts agreed. Here’s the Fifth Circuit decision, and here’s an NLJ story.

While the 3-judge panel cited other bankruptcy cases that have allowed an award of a full hourly rate for travel time, the court held that Caplin “did not carry the burden of demonstrating that ‘comparably skilled practitioners’ charged the full hourly rate for travel time.”

The Law Blog reached out to the Caplin & Drysdale partner who handled the Babcock matter — Elihu Inselbuch — but, as luck would have it, he’s traveling today.

LB’ers: In interpreting the statute that allows courts to award attorney’s fees in bankruptcy cases, courts have held that “on average the gain to the estate of employing able, experienced expert counsel would outweigh the expense to the estate of doing so . . . .”

What’s the right outcome here?

Full post as published by Law Blog - WSJ.com on May 02, 2008 (boomark / email).