New York: Federal Court’s Denial of Fees to Attorney Improper without Further Inquiry into Time Records

The U.S. Court of Appeals for the Second Circuit has held that a lower court abused its discretion when it denied an attorney’s application for fees for her services without further inquiry into whether she did or did not keep contemporaneous time records.

Marion Mishkin was allegedly appointed liaison counsel by a New York court to plaintiffs suffering physical injury from working at the site of the World Trade Center after the September 11, 2001 attack. In 2005, the plaintiffs’ cases were removed to a federal district court, and Mishkin was appointed their liaison counsel in that court in 2008, continuing as counsel until 2012, except for about one year. Denying Mishkin’s first application for over $1,000,000 in fees, the district court stated that she could only request fees related to her work, not including her alleged state appointment or one year absence. Mishkin refiled, requesting much less. The court again denied her application, determining she had reconstructed her time records.

Mishkin’s alleged appointment by the New York State Supreme Court as liaison counsel for the plaintiffs occurred prior to 2005, the year that the plaintiffs’ physical injury cases were removed to the United States District Court for the Southern District of New York. After denying a removal motion to state court on December 4, 2006, the district court requested a report from Mishkin concerning the plaintiffs, with the court subsequently referring to Mishkin as “liaison counsel,” although she was not officially appointed as such in federal court until May 21, 2008.

However, dissatisfied with Mishkin’s performance, the district court terminated her as counsel on August 28, 2008, yet reinstated her on April 3, 2009, due to a joint letter written by the attorneys for the plaintiffs expressing how vital she had been throughout the whole litigation. On January 23, 2012, Mishkin filed an application for $1,868,445 in fees for her services rendered. The district court denied the application, finding that the fees exceeded her work as liaison counsel. The court also stated that she could not calculate fees from her appointment in state court—which she had never proved happened—or the period of termination in federal court.

Consequently, Mishkin submitted a second application for fees amounting to $418,995 beginning after her May 1, 2008 appointment and excluding her termination period. She sought payment for 931.1 hours of work, with 197.7 of the hours used to prepare her application. Finding the hours spent on preparing her fee to be ridiculous, the district court also determined that certain aspects of her work exceeded the scope of her appointment, such as reviewing summary judgement motions. Despite admitting that Mishkin “is entitled to a fee,” the court denied the application on June 11, 2013, concluding that her time records “are not contemporaneous.” They “are all reconstructions [and] show a complete misunderstanding of what her work was as liaison counsel.”

On appeal, Mishkin argued that (1) the litigation began in state court, and under state law, she was not required to keep contemporaneous time records and that (2) she was owed for her work as liaison counsel before her appointment by the district court. The appellate court disagreed, holding that as Mishkin had been appointed by the district court, federal, not state, law dictated her entitlement to fees, and thus, she was required to “document [her]…application with contemporaneous time records [including] the date, the hours expended, and the nature of the work done.” The appellate court further stated that Mishkin could not collect fees based on plaintiffs who had settled their suits preceding her appointment.

Nevertheless, the district court erred with its absolute denial of fees. In reaching this conclusion, the appellate court relied on Mishkin’s counsel’s statement that “[Mishkin] did have everything time-stamped,” and the district court’s own words, that she “may have had notations at the time she was performing this work…We will not know for sure unless and until there might be discovery of her records.”

Accordingly, the appellate court ordered the district court “to determine whether Mishkin kept sufficiently detailed contemporaneous records as to be eligible for a fee award.” See: Marion S. Mishkin Law Office v. Lopalo, 767 F.3d 144 (2d Cir. N.Y. 2014).

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