In Global Link Logistics, Inc. v. Olympics Growth Fund, III, L.P., C.A. No. 4444-VCP (Del. Ch., Feb. 24, 2010), read letter decision here, the Court granted plaintiffs’ entire fee request based on a fee-shifting provision.

Danielle Blount, an associate in our firm, prepared this case summary.

The Court found no support for the argument that the plaintiffs’ filings and the brevity of the documents demonstrated the unreasonableness of plaintiffs’ attorneys’ fee request. The Court dismissed defendants’ contentions and relied upon the following facts: (1) that the plaintiffs were opposed by multiple sets of defendants; (2) the arbitration was highly contentious; and (3) a balance of $9 million remained unpaid when plaintiffs commenced the action. The Court concluded that plaintiffs were justified in relying on expensive counsel to obtain confirmation of the arbitration award. The Court did not find as a justifiable basis to dispute a fee request, the disparity of the amounts expended by each side, or an argument premised upon not needing “such an expensive partner to bill so many hours.”

Delaware courts evaluate the reasonableness of fee requests pursuant to eight factors articulated in Rule 1.5(a) of the Delaware Lawyers’ Rules of Professional Conduct. The factors to be considered in determining the reasonableness of a fee include the following:

1. the time and labor required, the novelty and difficulty of the questions involved and the skill requisite to perform the legal service properly;

2. the likelihood, if apparent to the client, that the acceptance of the particular employment will preclude other employment by the lawyer;

3. the fee customarily charged in the locality for similar legal services;

4. the amount involved and the results obtained;

5. the time limitations imposed by the client or by the circumstances;

6. the nature and length of the professional relationship with the client;

7. the experience reputation, and ability of the lawyer or lawyers performing the services; and

8. whether the fee is fixed or contingent.

Delaware Lawyer’s Rules of Professional Conduct, Rule 1.5(a).

Although the confirmation of the arbitration award was unopposed, the Court found that the plaintiffs had good reason “to take every procedural step, submit every pleading, and file every motion, brief, and affidavit to obtain confirmation.” Upon determining that plaintiffs’ lawyers and law firms were “commensurate with the amount at issue” and the expertise of [d]efendants’ counsel”, the Court held that the relatively high hourly rates charged were appropriate. The Court stated that the amount charged for obtaining confirmation of the arbitration award was relatively high, however it was not unreasonable in view of the size of the judgment at stake, the legal resources defendants used against plaintiffs and defendants’ efforts to delay confirmation.

In its holding, the Court relied upon the reasoning in EDIX v. Mahani to support the award of the full amount of fees requested. 2007 WL 417208 (Del. Ch., Jan. 25, 2007). In EDIX, upon reviewing the reasonableness inquiry of a request for attorneys’ fees under a contractual fee shifting provision, the Court remarked that the acts of defendants elongated the litigation. In the present case, Vice Chancellor Parsons determined that the defendants could have minimized plaintiffs’ attorneys’ fees by promptly consenting to the confirmation of the arbitration award. Instead, as in EDIX the defendants chose to draw out the conflict by raising defenses and seeking to delay entry of the judgment. Ultimately, the court determined that the “defendants’ actions and the amount at issue created a situation in which plaintiffs could not take anything for granted in their prosecution of the matter.”

For another recent decision addressing the reasonableness of fees based on a fee-shifting provision in an agreement, see Concord Steel summarized here.