Construction attorneys don’t argue many cases in front of juries because contracts require most disputes to go before arbitration panels or mediators.
The interest that accumulates on substantial damage awards provides another incentive to settle cases early. Expert witness testimony and attorneys fees also add to the size of damage awards.
Expenses and Fees
According to Foltz, Pennsylvania's payment statute provides for shifting of fees and costs in the event of a payment dispute under private construction contracts.
"Some award fees routinely to the 'prevailing party,' others require that fees are shifted only when a party acted in bad faith," Foltz said in an email prior to the settlement. Unless there is a fee-shifting statute, U.S. courts generally rule that parties to a dispute are responsible for their own litigation expenses, win or lose, he added.
In a memo to the court, Pepper, Hamilton and another law firm that worked on the case explained in detail how they calculated the attorneys fees and other expenses due to Utility Line Services. Only the the unpaid balance owed to the contractor was subject to the 2% per month interest under Pennsylvania law.
Nine out of ten dollars spent on attorneys fees, cost and expenses such as expert witness, a total of $4.3 million, were connected to recovery of money owed to Utility Line Services, the memo stated.
Another $479,000 in attorneys fees were connected to recovering the damage award.
The complexity of the case required review and coding of documents from numerous companies related to the work. Contract attorneys, at a rate of $53 an hour, and project attorneys at a rate of $75 an hour, compiled a total of 172,000 documents into a database.
Top attorneys at Pepper, Hamilton billed for their work at $612 and $526 an hour initially, with modest rate increases starting in Jan. 2013. Pepper, Hamilton billed for a less senior attorney at $315 an hour.
"There is no hard and fast standard for what is a reasonable expense," said Foltz in his email. In general, courts consider time and effort, quality of services, results achieved, public benefit, the case's magnitude and complexity and whether the fee was contingent on success.
"Especially in light of the results of the case, we firmly believe that our fees were reasonable and our client was provided with outstanding value," Foltz said. He added that Pepper, Hamilton has an outstanding track record and that one of the senior partners on the case, Bruce Ficken, is one of the country's most successful construction litigators.
Once the settlement was reached, the memo to the court on expenses owed became moot.
