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5th Circuit: Firm Can't Charge Full Hourly Rate for Travel Time
The National Law Journal
May 05, 2008
A tax law firm seeking more than $6.3 million in fees and costs for its services in an asbestos case cannot charge a full hourly rate for travel time not spent working, the 5th U.S. Circuit Court of Appeals has ruled.
The three-judge panel found that Caplin & Drysdale was not entitled to $271,370 it sought for travel time as national counsel for the asbestos claimants' committee in the bankruptcy of The Babcock & Wilcox Co., a boiler and generator maker.
In affirming a lower court decision that slashed by half the requested fees for travel time not spent working, the appeals court noted that Caplin & Drysdale was unable to show that charging a full hourly rate for such time was customary among law firms.
The appeals court decision, issued May 1, affirmed a decision by the U.S. District Court for the Eastern District, which itself had affirmed the bankruptcy court's decision to reduce the amount in question by 50 percent..
Specifically, the appeals court held that the bankruptcy court did not abuse its discretion when it reduced the fees as requested under the U.S. bankruptcy code that allows for "reasonable compensation for actual, necessary services rendered." The appeals panel noted other bankruptcy cases that have supported an award of a full hourly rate for travel time. However, it also noted that Caplin & Drysdale "did not carry the burden of demonstrating that 'comparably skilled practitioners' charged the full hourly rate for travel time." The court also observed that the bankruptcy court can award compensation that is less than the amount requested.
Elihu Inselbuch, the Caplin & Drysdale partner handling the matter, was traveling and could not be reached for comment. The 70-attorney law firm has offices in New York and Washington.
Babcock & Wilcox filed for bankruptcy in 2000 after thousands of claimants alleged exposure to asbestos from its steam generators.
