Court Slashes Discovery Fee Award

An Alexandria U.S. Bankruptcy Court awards debtor investment firm attorney’s fees of $4,815 for its successful motion to compel discovery of investor information in its suit against a real estate fund, instead of the $28,748.95 the firm requests; counsel’s hourly rate is outside the reasonable range in this community for the services provided and some of the time expended was unnecessary.

Debtor Acadia Investments LC is a family-owned investment company that had borrowed significant amounts to fund its investments. The economic conditions around 2008 caused Acadia to have financial difficulties and default on its loans. It filed a voluntary petition in bankruptcy on April 7, 2011, and received a confirmed plan of reorganization on Dec. 28, 2012.

Acadia filed this adversary proceeding on July 11, 2013, seeking recovery of about $1 million from UBS Real Estate Opportunity Fund III LLC. Discovery requests were directed to the manner in which the fund handled Acadia’s and other investors’ defaults. The fund objected, albeit late, on the grounds that the information regarding third parties – that is, the other defaulting investors – was irrelevant; that the production of the requested information was unduly burdensome; and that the third party investors’ information was protected by the investors’ right of privacy. The court overruled the objections and the funds was ordered to provide the information. Privacy concerns were resolved by a confidentiality order and redaction of personal identifying information. Much of the material sought was electronic which was the basis of the burdensome objection. The objection was resolved by narrowing the search to specified search terms. Lastly, counsel could not agree on the form of the order and an additional hearing was held to consider the form of the order. The order entered by the court incorporated portions of both draft orders.

Acadia sought fees for 48 hours, billed at $28,668, for the work of three attorneys with hourly rates of $680, $490 and $410. Their earliest bar admissions were 1999, 2003 and 2006, respectively. These rates are outside the reasonable range for attorneys who could represent Acadia in this case. While the case is interesting, it does not require counsel with specialized knowledge or experience. The reasonable range for experienced counsel in this community capable of handling this litigation is currently from $425 to $550 for partner-level attorneys and $300 to $350 for experienced associate-level attorneys. The rates here should be $525, $350 and $300.

The written work was very nicely and comprehensively done – just largely unnecessary. Counsel was well prepared for the hearing, but a large portion of time spend on preparation for the hearing was unnecessary. Counsel reviewed the papers. An associate prepared an outline for the argument. Counsel and the associate met and discussed the planned argument. In light of the nature of the motion, it was simply overkill. No award for attorney’s fees will be made for the time expended on the hearing on the competing orders because neither party substantially prevailed on that narrow issue.
The court concludes the appropriate amount of attorney’s fees for the motion to compel is $4,815.

Acadia Investments LC v. UBS Real Estate Opportunity Fund III, LLC (Mayer) Adv. No. 13-1189, July 3, 2014; USBC at Alexandria, Va. VLW 014-4-006, 6 pp.