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Rich corporations that run up large legal tabs by overlawyering simple cases against much smaller adversaries should not expect the loser to foot the bill, a federal judge in Camden, N.J., has ruled. U.S. District Judge Stephen Orlofsky of the District of New Jersey cut by more than $110,000 the legal fees requested by Microsoft Corp. in Microsoft Corp. v. United Computer Resources of New Jersey Inc., Civ. 96-4860. “Having a wealthy client does not justify a legal feeding frenzy resulting in the escalation of attorney’s fees and costs,” Orlofsky said in his Aug. 15 ruling. The bulk of the fees, $236,434, was billed by attorneys in the Cherry Hill, N.J., office of local counsel, Philadelphia’s Montgomery, McCracken, Walker & Rhoads, with the remaining $16,042 sought for work done by national counsel, Preston Gates & Ellis of Seattle. “The duty imposed by the Rules of Professional Conduct to represent a client zealously does not create a license to write a blank check for excessive legal fees,” wrote Orlofsky in chopping the total $252,476 fee request to $141,746. Orlofsky did, however, allow the full $63,064 in costs, for a total award of $204,810. Microsoft requested a total of $315,541 in fees and costs for bringing an order to show cause to enforce two 1997 orders by Orlofsky that barred the defendants from violating Microsoft’s copyrights and trademarks. The defendants were United Computer Resources of New Jersey, successor company Kehtron Computers Inc. and principals Alfonso and Sophia Keh. Orlofsky held them in contempt on May 23 for selling two units of counterfeit software and possessing an additional 42 units. Orlofsky imposed a $8,750 penalty, calling Microsoft’s request for $1,750,000 in sanctions “excessive.” The contempt finding also triggered a stipulated settlement that required payment of $150,000 to Microsoft. The defendants did not challenge the hourly billing rates, which ranged from a high of $350 for Montgomery McCracken’s Richard Hyland, a former New Jersey Superior Court judge, to $150 for junior associates at the firm. Those rates “appear to be consistent with the prevailing market rate in the community for similar work performed by attorneys of comparable skill, experience and reputation,” Orlofsky noted. The judge, however, took issue with what he viewed as duplicative efforts, inefficiency, unnecessary effort, overstaffing and use of high-priced partners or senior associates for tasks that could be handled by a junior associate. Overall, he criticized the expenditure of 1,066.6 hours of attorney time and 73.6 hours of paralegal time by Montgomery McCracken on a civil contempt matter “against an adversary with whom it was already familiar and who had a fraction of Microsoft’s resources, involving legal issues that Microsoft had previously argued and prevailed on in numerous similar proceedings in other courts.” Montgomery McCracken staffed the case with three partners, five associates and five paralegals. Microsoft blamed the high fees on the need to respond to four defendants represented by six law firms. Microsoft also accused the defendants of complicating things by an aggressive defense that raised issues of chain of custody, selective enforcement and possible invocation of the Fifth Amendment Orlofsky refused to fault the defendants for strenuously opposing $1.75 million in sanctions and called their arguments creative but not baseless. In addition, it was Microsoft who decided to name four defendants, he reminded. In opposing the fee request, the defendants raised the relative financial strength of the parties. Orlofsky acknowledged the relevance of that factor but found that the reductions he had already made obviated the need to consider it further. Among the items axed by Orlofsky: � 78.1 hours by Hyland and partner Michael Epstein for legal research and brief writing, cut because such routine tasks should be done by associates; � 154.7 hours by Hyland, Epstein and senior associate James Cashel and 54 hours in paralegal time to prepare for the hearing, which amounted to 17 times the duration of the hearing, cut down to 24 hours, three times the length of the hearing; � 30 hours spent by Hyland and Epstein in overseeing “routine” discovery, reduced to one partner hour; and � 12 hours spent by Hyland preparing a witness for deposition, but allowed 55.5 hours by partner Epstein and 86.1 hours by Cashel. Orlofsky termed it “chutzpah” to assign two partners to the task. Calls to Montgomery McCracken were referred to Microsoft. Tim Cranton, an attorney with the company, says it will not appeal the fees, though it is seeking review of the sanctions amount. He declines comment on the opinion but defends the company’s approach as justified because the defendants were repeat offenders. The sanction requested was the maximum provided under the statute, he says. Cherry Hill solo practitioner I. Domenic Simeone, who was local counsel for United Computer and Alfonso Keh, calls the case “a classic David & Goliath situation.”

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