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$1 Fee Ruling Pits Law Firm Against Judge

3 min read

The Sanford Law Firm PLLC of Little Rock has appealed an award of $1 in attorneys’ fees from U.S. District Judge Billy Roy Wilson, who wrote a blistering order about the firm’s billing practices in June. Attorney Josh Sanford asked the U.S. Court of Appeals for the 8th Circuit to reverse the fee award so that a reasonable fee could be assessed by a newly assigned judge.

In his appeal brief filed last month, Sanford said Wilson “wholly lacked the authority to review, much less reduce, the agreed fees.” Since Sanford’s brief was filed on Aug. 3, Wilson has also slashed the firm’s request for fees from nearly $9,000 to $2,953 in another case involving the Fair Labor Standards Act.

Sanford told Arkansas Business last week that he hasn’t decided if he was going to appeal Wilson’ latest order. “We’re satisfied that we have followed the law,” he said. The firm touts itself on its website as being “one of the leading employment law firms in Arkansas.”

In 2018, the Sanford firm, on behalf of its clients, sued Welspun Pipes Inc. to collect unpaid overtime wages, a violation of the FLSA.

Attorneys reached a settlement that called for about $270,000 to be paid to 250 people. The settlement also called for the Sanford firm to receive $96,000 in attorneys’ fees.

U.S. District Court judges are required to review FLSA settlements to make sure employees are treated fairly and that the company has complied with the FLSA. The FLSA allows for reasonable attorneys’ fees.

“While the concept is good in theory, it has become apparent that, in practice, lawyers’ fees are the driving force in many FLSA cases,” Wilson wrote in his June 9 order. “Unfortunately, this often results in abuse, as seen in this case.”

Sanford Law Firm used 17 lawyers, a law clerk and several assistants in this case, Wilson observed in his order. “There were over 250 intra-office conferences regarding a simple FLSA case. Why? The answer is obvious: more fees,” Wilson wrote.

Wilson also said it was apparent that liability damages and lawyers’ fees were not negotiated separately, as required by the 8th Circuit.

He said the case was driven by fees. In August 2019, Sanford Law agreed with Welspun’s liability damages offer but rejected the offer of $45,000 in fees the week after it rejected $25,000, Wison said. The firm had done about $22,000 worth of work, the judge said, but wanted $115,000 in fees.

“Defendant blindly (and this happens far too often) agreed to pay fees of $96,000. But for what?” Wilson wrote.

He said Welspun agreed to the fees because Sanford Law Firm leveraged the settlement on the fact that it could reject the offer and demand even more fees later.

“SLF essentially extorted the higher fees from Defendant by simultaneously settling liability damages and fees,” Wilson wrote. “Defendant was trapped because there would be no settlement until SLF received the arbitrary amount of fees it wanted rather than the fees it earned.” Wilson said that was “evidence of bad faith, and possibly in violation of the Rules of Professional Ethics.”

Instead, Wilson awarded the law firm just $1. Wilson said if the 8th Circuit believes he doesn’t have the authority to award that amount, $25,000 should be awarded instead. “I must note that this would be especially painful in view of what I believe to be the singular intransigence of Plaintiffs’ lawyers,” he said.

Sanford said Wilson’s statements about the firm aren’t accurate. “And I think that on appeal, we will be proved correct,” he said.

In his brief, Sanford said Wilson abused his discretion by awarding the firm $1, which he attributed to Wilson’s “desire to humiliate and punish counsel and to impose its own unreasonable standards on the parties regarding how they can negotiate fees in FLSA cases.”

Sanford said both sides had agreed to the settlement. He also asked that the case be assigned to another judge because of the “unmistakable appearance of bias here,” evidenced by what he called baseless charges of extortion and unethical acts.

Sanford Law Firm asked the 8th Circuit for 10 minutes of argument for each side. A response from Wilson had not been filed with the appellate court as of Wednesday afternoon.

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