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Budget Rent A Car System Inc. v. Consolidated Equity

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, deemed it 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, the junior associate will be performing legal tasks without prior experience and will be learning by doing: he or she will never have dealt with the underlying issue before, will need to spend time doing research to familiarize himself or herself with the issue, will need to double-check the cases cited, will do a first draft that requires extensive editing from the partner, will need to spend time implementing the partner's edits, will need to coordinate with the client for the client's approval of the brief and answering the client's questions about the issues and making the client's edits, and then will need to spend time researching the Seventh Circuit's very particularized rules for brief-filing (including electronic filing and service). This last task is not a trivial issue when the Clerk of the Seventh Circuit regularly rejects filings for small technical violations and the judges on the court threaten sanctions for other such violations (e.g., In re Galvan, 92 F.3d 582 (7th Cir.1996) (sanctioning attorneys for violation of Cir. R. 30 relating to contents of brief appendix)). The Seventh Circuit perhaps should be shocked at how much it costs to generate a simple "exiguous filing," but these costs, while perhaps on the high side and perhaps reflecting a false start by the associate, are hardly "inconceivable" and reflect the very real expense of litigation. The court should not be penalizing (much less humiliating) the attorneys in this case. It's not possible to wish a brief into existence with a nose-twitch, � la Samantha in "Bewitched." And the mistake of thinking that legal practice is so frictionless is what encourages so many judges to deny motions to dismiss and deny motions for summary judgment and fail to restrain discovery.

The complaint about the time spent by the attorneys is especially ironic when the same opinion essentially criticizes the attorneys for making a technical mistake and erroneously classifying the $165 admission fee that was the prerequisite for filing the brief as a "cost." The same opinion that complains that attorneys are spending an average of three hours per page of legal filing also complains that the attorneys did not do enough research to know that a cost that would not have been incurred but for the filing of the appeal is not a "cost" for purposes of Fed. R. App. Proc. 38.

The result? Budget is now not only stuck with the expense of opposing the frivolous appeal, but has now spent an extra $4354 in a fruitless attempt to thread the needle (spending enough time to comply with the Seventh Circuit's exacting requirements for advocacy but not so much that the time spent is "exorbitant") and recover the fees to which it would have been entitled.

The only way Budget could have avoided this problem would be to insist that only experienced attorneys work on its cases, the type of experienced attorney who could've turned around this brief for filing in three or four hours without fear of missing an argument or filing requirement and being sanctioned by the Seventh Circuit for doing so. (Budget must also effectively waive oversight of its attorneys' work, as such oversight adds to billing time if Budget wishes changes to the brief or consideration of additional issues.) Of course, how inexperienced attorneys are supposed to gain experience in such a regime under the status quo where law schools (including the one where Posner has an office) do not teach such skills remains a mystery. And the attorneys familiar with the underlying contractual law and facts of the Budget v. Consolidated Equity dispute are not necessarily those who are familiar with Seventh Circuit filing requirements and the nuances of motions to dismiss appeals for lack of jurisdiction.

Blogospheric and press commentary have avoided these questions.

Update: Gail Heriot agrees.



Rafael Mangual
Project Manager,
Legal Policy

Manhattan Institute


Published by the Manhattan Institute

The Manhattan Insitute's Center for Legal Policy.