The Right Coast

November 24, 2005
That's What Litigation Costs, Judge Posner
By Gail Heriot

I believe that Ted Frank at has Posner's recent opinion pegged right. Saith he:

"In Budget Rent A Car System Inc. v. Consolidated Equity (7th Cir. Nov. 4, 2005), the defendant submitted a frivolous appeal, Budget filed a four-page jurisdictional brief that resulted in the successful dismissal of the appeal, and the Seventh Circuit awarded Budget its fees—but then changed its mind.

"Budget made the mistake of actually filing papers showing what its fees were—3.3 hours of partner time and 10.4 hours of associate time, for a total of $4626.50. The opinion, authored by Judge Posner, called this "exorbitant," and, combined with a similar request for fees for the preparation of the motion for sanctions, was deemed a frivolous request meriting the rejection of all fees entirely.

"The opinion exhibits a fundamental problem with much of the judiciary: a complete lack of understanding of how much litigation actually costs clients. (This problem is exhibited most frequently in discovery disputes, where judges weighing costs and benefits of permitting broad discovery to go forward regularly and consistently underestimate the side of the equation reflecting burdens.) There are, no doubt, attorneys out there who can generate a Seventh-Circuit-quality brief in less than 13.7 hours, especially if they have a client who does not wish to be consulted on such matters, especially if the associate working on the case is already a good writer who has knowledge of the underlying law and doesn't have to do much research because he or she knows, and is confident of, which cases to cite off the top of his or her head. But, in the messy reality of real life, ...."

Some of the blame for the judiciary's ignorance, of course, lies in the with the bar litself. I remember when I worked for Hogan & Hartson back in the 1980s, we would routinely understate the amount of our attorneys' fees when faced with a situation in which our clients were entitled to recover for those fees from their litigation opponents. We feared that exactly the thing that happened to Budget would happen to us: The Court might get annoyed. But the fees we charged were the market price for our services and our clients were going to end up paying them if they weren't reimbursed by someone else.

Litigation is frighteningly expensive, and it's about time that the judges who devise the rules that make it expensive know the truth.