Thapedi introduces legislation on hourly billing rates, lawsuit lending

Legislation that would adopt a federal standard to determine hourly attorney billing rates has been introduced in the Illinois General Assembly.

Sponsored by Rep. Andre Thapedi, D-Chicago, House Bill 1313 would amend the Code of Civil Procedure to require state courts to use the “Laffey Matrix,” a table of hourly billing rates for attorneys and paralegals in the Washington D.C. area.

Thapedi also recently introduced a pair of measures -- House Bill 2300 and House Bill 2301 -- that would regulate the lawsuit lending industry.

In regards to his Laffey Matrix proposal,  Thapedi's bill would require Illinois courts to use a table prepared by the Civil Division of the U.S. Attorney’s Office for the District of Columbia and allowed by the courts there in Laffey v. Northwest Airlines Inc. in 1983.

On one side of the table, which gets adjusted for inflation, is the year in which the litigation occurred and on the other is the number of years the attorney has practiced law. The cell in which the two variables intersect marks the reasonable hourly billing rate for attorneys practicing in the D.C. area.

It is most commonly used to determine hourly billing rates in fee-shifting cases, but is also used to determine the “lodestar” hourly rate for attorneys’ fees in class action litigation.

Thapedi said he introduced HB 1313 after a couple of judges approached him about difficulties in determining attorneys’ fees and reasonable hourly billing rates.

“So, I suggested we consider to what the feds do,” Thapedi said, adding that as a practicing attorney, he thinks the Laffey Matrix makes sense and is a fair way to determine hourly billing rates.

Thapedi noted that some courts in Illinois already use the Laffey Matrix, but believes it should be utilized across the board, except for in cases in which the hourly billing rate is limited by statute.

As an example of an Illinois court that has applied the Laffey Matrix, Thapedi pointed to Chief Judge David Herndon’s decision in one of the several suits Rex Carr brought against his onetime partners at Carr Korein Tillery.

Carr accused his former law partners -- Stephen Tillery, Steven Katz and Douglas Sprong-- of withholding his share of attorneys’ fees from the firm that split in 2003. His suit was eventually dismissed, but the Seventh Circuit Court of Appeals remanded the matter back to the downstate district court to determine sanctions.

The defendants sought a nearly $1.5 million sanction that included attorneys’ fees.

Herndon, however, referred to that amount as unreasonable and then used the Laffey Matrix to determine Carr owed his former law partners less than half of the amount the defendants requested.

Thapedi said he’s not exactly sure how he will proceed with HB 1313 given opposition raised by the Illinois State Bar Association (ISBA) and the Illinois Trial Lawyers’ Association (ILTA).

“I respect the bar association’s views and having said that, I want to have some additional conservations,” he said, adding that on the flip side, the insurance industry has voiced support for his measure.

Jim Covington, director of legislative affairs for the ISBA, said the bar group opposes HB 1313 because “we just don’t think it’s needed.”

While the measure may intend to provide trial courts with more guidance, Covington said a survey of some of the ISBA’s sections showed that many members didn’t think there was a problem when it came to determining hourly billing rates.

Currently, Covington said, courts typically hear from both parties when rates are contested and then using a fact specific analysis, determine whether they are reasonable and necessary.

Thapedi is also the sponsor of House Bill 1447, which would require courts to use the Laffey Matrix when entering judgment for attorneys’ fees in cases brought under the Consumer Fraud and Deceptive Business Practices Act.

In regards to Thapedi's measures on the lawsuit lending industry, Covington said the ISBA has not yet determined its position on those measures.

Thapedi has introduced similar legislation in the past. He said “a lack of forthrightness by some of the parties involved” stalled his previous legislative attempt to regulate the industry he says isn't, but should be.

Lawsuit lending is the practice in which lenders give plaintiffs cash to cover expenses while their lawsuit is pending or they await a settlement.

“You’ve got some decent companies out there providing needy plaintiffs with money in the meantime, but then, you’ve got some cowboys out there making it bad for everybody,” he said, pointing to the high-interest rates some lenders charge.

He said both of his recently-filed measures are different than his previous lawsuit lending bill. The Illinois Chamber of Commerce is pushing HB 2300 and the industry is behind HB 2301, he said.

According to the Illinois Chamber of Commerce’s website, “loan repayment is contingent upon the plaintiff’s recovery of the case, but is often repaid with sky-high interest rates leaving no money left over for the victorious plaintiff.”

“The immediate implications of lawsuit lending have the potential to greatly devastate the civil justice system and greatly increase costs to unsuspecting consumers,” the Chamber asserts in its bill analysis.

Under HB2300, a lawsuit loan secured by the proceeds of a lawsuit would be subject to the same regulations as a traditional loan. Among other provisions, it would also require a plaintiff who received a lawsuit loan to file a copy of the agreement with the court and defendant.

Thapedi’s other lawsuit lending measure -- HB 2301 --would create the Non-Recourse Civil Litigation Funding Act, which would establish specific criteria that these types of loans must meet.

“I filed both bills with the anticipation that I will be able to come up with an agreed bill,” he said. “This time, I am cautiously optimistic. The parties appear to be willing to negotiate now.”

Thapedi said both of his bills fall in line with a national trend to regulate the lawsuit lending industry that is being pushed by legal reform advocates including the U.S. Chamber of Commerce’s Institute for Legal Reform, which owns The Record.

When it comes to Thapedi's proposals, Travis Akin, executive director of Illinois Lawsuit Abuse (I-LAW),  said “Adding another hand in the lawsuit till is only going to drive up the cost of litigation."

"In addition, the creation of financial incentives for lawsuits will lead to more lawsuits and yet Illinois is already ranked as one of the most litigious, plaintiff-friendly states in the country," he said in a statement. “We cannot afford to create incentives for more litigation."

All three of Thapedi’s measures – HB 1313, HB 2300 and HB 2301 - have been assigned to the House Judiciary Committee.