Insurance Company Challenges Latham's Fees in Toxic Tort Case

Drew Combs

The American Lawyer

April 22, 2009

A fee of $450 per hour for a Latham & Watkins associate who hasn't passed the bar? Insurer Century Indemnity Co. claims that's what Latham billed in an ongoing toxic tort case, and it calls the fee excessive. The alleged overcharge is one of the reasons Century filed a petition to compel arbitration on Friday against Latham and firm client Montrose Chemical Corp. of California in Los Angeles Superior Court.

In an e-mail, a Latham & Watkins spokeswoman wrote: "I apologize, but unfortunately we will not be commenting on the topic."

Since 2002, Latham & Watkins has represented Montrose in a large toxic tort case. According to a Latham client alert, it involves as many as 1,900 plaintiffs who lived in the vicinity of or worked at a pesticide formulating and mixing facility in Mission, Texas. Montrose is one of approximately 30 defendants targeted in the case.

Century, one of Montrose's insurers, has covered a portion of the company's legal fees. According to the petition, from June 2002 to December 2006, Latham charged Montrose $21,803,050, and Century paid $5,849,760 -- 26.83 percent of that total bill -- based upon an agreement with Montrose's other insurers. In the petition filed last week, Century attacks both Latham's rates and the value of much of the work the firm has billed for. Century challenges Latham's hourly rate, which the insurer alleges started at $380 per hour and rose to $450 per hour for all attorneys.

The insurance company alleges it has the right to limit Latham's fees. "The hourly rate charged by Latham exceeds the rate Century is obligated to pay under [California] Civil Code section 2860," Century's petition states. Century suggests that an hourly rate of between $140 and $180 for attorneys would have been reasonable. (According to the petition, Latham's paralegal rates ranged between $160 and $210.)

Additionally, Century asserts that Latham did work that was unreasonable and unnecessary. "For the most part, the team of 15 attorneys and 11 staff spent their time reviewing the same things and then billing to confer among themselves about what they had reviewed," the petition says. More than $330,000 was allegedly billed for internal communications and memoranda.

Among Century's other claims: in January 2006 a "bar pending" law graduate billed 137.1 hours at $450 an hour for a total of $61,695; Latham billed out a "banking, finance and real estate" associate who worked on the case at the same rate as associates with toxic tort litigation experience; and multiple "timekeepers" met with a single expert over a two-day period for a cost of $104,402.

Century also alleges that Latham has refused to record time by tasks. Instead, timekeepers make a single bulk entry for each day, which, according to Century, makes it difficult to determine how much time was spent on specific tasks.

In May 2007, Century says it demanded Latham and Montrose submit to arbitration to resolve issues concerning Latham's work and bills, but the insurance company was rebuffed. It is now seeking a court order to force Latham and Montrose to arbitrate the dispute.

H. Douglas Galt, the attorney at Los Angeles law firm Woolls & Peer who filed the petition for Century, declined to comment in detail. "The petition speaks for itself," he says.

This article first appeared on The Am Law Daily blog on AmericanLawyer.com.