Winning a lawsuit and establishing the right to recover attorneys’ fees can feel like the end of the dispute. Sometimes it is not.

In significant litigation, the amount of attorneys’ fees can become a contested issue of its own.

Suppose a business spends $400,000 successfully litigating a contract dispute. The agreement allows the prevailing party to recover reasonable attorneys’ fees, and the court determines that the business is entitled to recover them.

Does the losing party automatically owe $400,000? Not necessarily.

The right to recover attorneys’ fees and the amount of attorneys’ fees that can be recovered are two separate questions.

Once entitlement has been established, the party seeking the award generally must demonstrate that the requested fees are considered “reasonable” under the law. The opposing party may challenge the hourly rates, the amount of time spent, the work performed, the billing records, the relationship between the work and the successful claims, and other aspects of the request.

In a substantial case, that can mean the litigation is not quite over.

A Right to “Reasonable Attorneys’ Fees” Is Not Necessarily a Right to Your Entire Legal Bill

Contracts and statutes that authorize fee shifting commonly permit recovery of “reasonable” attorneys’ fees. That word matters.

A court is not necessarily determining whether the client was properly billed under its engagement agreement with its attorneys. Instead, the court is determining how much of that expense should legally be shifted to another party. Those are different questions.

A sophisticated client may reasonably decide that a particular litigation strategy, staffing decision, investigation, motion, or level of preparation is worth paying for.

That does not necessarily require a court to make the opposing party pay for all of it.

The party requesting fees therefore generally bears the burden of demonstrating the reasonable value of the legal services for which reimbursement is sought.

What Makes an Attorney’s Fee “Reasonable”?

There is no single mathematical formula that answers the question in every case.

New York courts may consider factors such as:

the time and labor required;
the difficulty of the issues involved;
the skill necessary to handle the matter;
the attorneys’ experience, ability, and reputation;
the amount at stake;
the benefit achieved for the client;
customary fees for similar legal services;
the results obtained; and
the level of responsibility involved in the representation.

These considerations make sense when viewed from a business perspective.

A complicated dispute over control of a valuable closely held business may reasonably require more attorney time and more experienced counsel than a straightforward collection action.

A case requiring emergency injunctive relief, extensive electronic discovery, expert witnesses, depositions, a trial, or an appeal may require substantially more work than a case resolved on an early motion.

At the same time, complexity does not give counsel an unlimited license to bill the opposing party.

The court determines what was reasonable.

The Results Obtained Can Matter

One particularly important factor is what the attorneys actually accomplished.

Consider a plaintiff asserting five claims and seeking $5 million in damages. If the plaintiff wins one relatively minor claim and recovers $100,000, a request that the defendant reimburse every dollar spent pursuing the entire case may face a different analysis than a plaintiff that succeeds on the central claims and obtains substantially the relief it sought.

The same issue can arise for defendants.

A defendant might successfully defeat the principal claims while losing on a comparatively small issue. Depending upon the source and language of the fee-shifting right, that result may affect both who qualifies as the prevailing party and the amount of fees that should be awarded.

Commercial litigation frequently produces mixed results. That makes it important to think about attorneys’ fees not simply as an accounting exercise at the end of the case, but as something potentially connected to the claims pursued, the defenses asserted, and the results achieved.

Your Lawyers’ Billing Records May Become Part of the Case

A client ordinarily thinks of its legal invoices as bills. When the client asks a court to make someone else pay those bills, however, the records can take on another role:

They become evidence supporting the requested award.

Courts expect a party seeking attorneys’ fees to provide adequate information concerning the work performed and the time devoted to it. That makes the quality of the billing records important.

A time entry identifying the particular motion, deposition, contract issue, witness, or legal question being addressed generally provides considerably more information than an entry that simply says: “Research,” “Strategy,” “Trial preparation, ” “Emails,” or “Attention to matter.”

The issue is not that research, strategy, emails, or trial preparation are inappropriate legal work. They obviously may be necessary. The problem is that a court asked to make another party pay for the work needs enough information to evaluate what was done and whether the time spent was reasonable.

Vague Billing and Block Billing Can Create Problems

Another potential issue is “block billing. “Block billing occurs when several different tasks are combined into a single time entry.

For example:

“Review correspondence; research damages issues; telephone conference with client; revise motion papers; prepare for deposition — 8.4 hours.”

Some or all of that work may have been entirely appropriate. But if the opposing party challenges the fee, the court may have difficulty determining how much time was spent on each activity and whether that amount was reasonable.

Courts reviewing fee applications have scrutinized block billing, vague descriptions, excessive redactions, inadequate documentation, and entries that make it difficult to determine the nature of the work performed.

Depending upon the circumstances, inadequate records can result in reductions to the amount requested. For a substantial fee application, relatively small percentage reductions can translate into significant dollars.

Redacting Legal Bills Can Create a Difficult Balance

Fee applications can also create a tension between proving the claim and protecting confidential information.

Legal invoices may contain descriptions of litigation strategy, attorney-client communications, legal research, witness issues, settlement considerations, or other sensitive information.

A party understandably may not want to disclose all of that information to its adversary.

But heavily redacted invoices can create another problem: the court still needs sufficient information to evaluate whether the work was reasonable.

That can require careful consideration of what information must be disclosed, what information may appropriately be protected, and whether the remaining documentation gives the court an adequate basis to evaluate the request.

The larger the fee application, the more important that issue can become.

The Court Can Hold a Hearing About the Fees

A fee application is not necessarily resolved by submitting copies of invoices and asking the judge to total them.

If the amount is genuinely disputed or the existing record is insufficient, further proceedings may be necessary.

A court can require additional evidence concerning the services performed, the hours expended, the rates charged, and the reasonableness of the requested amount.

The issue can also be referred for a hearing before the court, a Judicial Hearing Officer (JHO), or Special Referee. That proceeding can resemble a smaller trial focused specifically on attorneys’ fees.

The party seeking fees may need to establish the work performed and why the requested amount is reasonable. The opposing party may challenge particular entries, staffing, hourly rates, duplication of work, time devoted to particular issues, or the relationship between the work and the successful claims.

Thus, a contractual right to attorneys’ fees can sometimes create another phase of litigation after the underlying merits have been decided.

What Hourly Rate Will the Court Accept?

The amount of an attorney’s fee award is affected not only by the number of hours but also by the rates applied to those hours.

Courts can consider customary fees for comparable legal services as part of determining a reasonable award.

That does not necessarily mean that the lowest available legal rate is the reasonable rate.

Complex commercial litigation may reasonably require experienced litigators. The difficulty of the case, the skill required, the lawyers’ experience and reputation, the stakes involved, and the nature of the representation can all be relevant. But the fact that a client agreed to a particular hourly rate does not automatically establish that another party must reimburse that rate.

Again, there is a distinction between what a client reasonably agrees to pay its chosen attorneys and what a court will require an adversary to pay as part of a fee award.

Staffing Can Be Examined Too

Large cases often require teams.

Partners may develop strategy and handle important arguments or examinations. Other attorneys may conduct research, manage discovery, prepare witnesses, draft motions, review documents, or prepare for trial. Paralegals and other professionals may perform additional work.

That division of labor can make litigation more efficient. But when another party is being asked to pay the bill, staffing decisions may be examined.

Was work unnecessarily duplicated?
Did multiple lawyers attend proceedings when fewer would have been sufficient?
Was work performed at an appropriate level?
Were experienced lawyers performing tasks that could reasonably have been handled by someone billing at a lower rate?

On the other hand, sophisticated litigation sometimes legitimately requires multiple lawyers or substantial senior-attorney involvement.

The question remains one of reasonableness under the circumstances.

Not Every Hour in the Lawsuit is Necessarily Recoverable

Another issue can arise when some claims permit fee shifting and others do not.

Imagine litigation involving several related claims arising from the same business relationship. The contract may authorize attorneys’ fees for an action enforcing the agreement, while the lawsuit also contains tort, statutory, or other claims that arguably fall outside that provision.

If the legal work can be separated, questions may arise over whether the opposing party should be responsible for work devoted to claims for which attorneys’ fees are not recoverable.

Sometimes the claims and legal work are so intertwined that separating them is difficult.

Sometimes they are not.

That is one reason sophisticated litigation counsel should identify potential fee-shifting issues early in the case. How lawyers describe and track their work can matter considerably later.

Can You Recover the Fees Spent Proving Your Fees?

There is an almost circular problem that sometimes develops. A party spends substantial money winning the lawsuit. It then spends more money establishing its contractual right to attorneys’ fees. The losing party challenges the amount. The prevailing party then incurs still more attorneys’ fees preparing the fee application, responding to objections, producing supporting records, and potentially participating in a hearing.

Can those additional attorneys’ fees also be recovered?

Sometimes referred to as “fees on fees,” the answer is not necessarily automatic. The language creating the right to attorneys’ fees and the circumstances of the particular case can matter.

A general right to recover attorneys’ fees in the underlying litigation does not necessarily mean that every dollar spent litigating the subsequent fee application will also be recoverable. That possibility should be considered when deciding how aggressively to litigate the amount of a fee award.

The Losing Party Has Strategic Decisions Too

Fee litigation is not only a concern for the party requesting reimbursement. The party facing the fee application also has strategic decisions to make. A $500,000 fee request should not necessarily be accepted merely because the requesting party prevailed.

The opposing party may have legitimate grounds to challenge whether:

the requested rates are reasonable;
the hours are adequately documented;
time entries are too vague;
work was unnecessarily duplicated;
the staffing was reasonable;
unsuccessful or unrelated claims are included;
the fees sought fall within the contractual provision;
the results justify the amount requested; or
fees incurred litigating the fee application itself are recoverable.

But there is another side to that analysis.

Litigating aggressively over attorneys’ fees costs money too.

If the dispute over a $500,000 application requires another $100,000 in legal expense, both sides should consider the probable range of outcomes rather than treating the fee proceeding as a matter of principle.

As with the underlying lawsuit, strategy should remain connected to economics.

The Size of the Fee Claim Can Change Settlement Leverage

Attorneys’ fees can become especially important in litigation involving substantial assets.

Consider a dispute between business owners over a buyout, ownership interest, or significant contractual payment. If one party has a strong claim and an enforceable right to attorneys’ fees, the potential exposure may grow as the litigation continues.

A party considering whether to settle cannot necessarily evaluate the case based only on the amount originally in dispute.

The analysis may need to include: Underlying claim + accumulated attorneys’ fees + future litigation expense + potential fee award.

The numbers can become significant.

Conversely, a party seeking attorneys’ fees should not automatically value its claim at the total amount appearing on its invoices. The possibility of reductions and the expense of litigating the fee application should be incorporated into the analysis.

That is why the attorneys’ fee issue can become an important part of settlement strategy.

Preparing for a Potential Fee Application Starts Before You Win

The worst time to discover problems with a substantial attorneys’ fee claim is after the underlying case has been won.

If fee shifting may be available, counsel should consider the issue throughout the litigation.

That can include:

identifying which claims fall within the fee-shifting provision;
maintaining sufficiently detailed contemporaneous time records;
avoiding unnecessarily vague descriptions;
considering whether covered and uncovered work should be separately identified;
monitoring staffing and duplication;
documenting significant litigation events and results;
evaluating whether billing redactions may later create proof problems; and
periodically considering the accumulated fee claim when evaluating settlement.

This does not mean litigation decisions should be driven by the possibility of recovering fees.

The client's objectives and the merits of the dispute remain paramount.

It means that if attorneys’ fees could ultimately represent a substantial asset—or liability—the issue should be managed deliberately.

The Bottom Line

Winning the right to attorneys’ fees does not necessarily mean recovering your entire legal bill.

The party seeking fees generally must prove that the amount requested is reasonable. The court may examine the work performed, hours spent, rates charged, quality of the billing records, staffing, complexity of the matter, results obtained, and other circumstances.

The opposing party can challenge that evidence.

And in a significant case, the dispute over attorneys’ fees may require additional briefing, evidence, or even a hearing after the underlying litigation has been decided.

For businesses, owners, executives, and professionals involved in high-value disputes, that creates an important strategic distinction:

The right to attorneys’ fees can be valuable. The ability to prove and recover those fees is what ultimately determines how valuable that right actually is.

When the potential fee award is substantial, preparing for that issue should begin during the litigation—not after it.

The Glennon Law Firm represents businesses, business owners, executives, professionals, fiduciaries, beneficiaries, and other individuals in significant disputes involving businesses, employment relationships, trusts and estates, and other substantial financial interests.

With offices in Albany, Buffalo, Rochester, and New York City, we can help you across New York State. 

You may learn more about us and how we operate by visiting these pages: About Us and What Sets Us Apart.   

To learn more about these topics, check out our other related blog posts, including:    

Blog posts:

This blog post is for informational purposes only and does not constitute legal advice. For specific legal counsel, please contact our office directly.  