Law And Legal Expert Not Allowed to Opine on Overbilling

The Harbisons, who managed more than forty business entities, took out roughly $5 million of loans from Patriots Bank for four of their businesses.

Like spawning salmon, litigation that dies often begets more litigation. Litigation Lawyers unsurprisingly resort to, well, litigation to recover a six-figure legal bill from its former clients. Having hired Litigation Lawyers to defend loan-collection actions by a formerly friendly but now bellicose bank, the Harbisons both defend and counterclaim by accusing Litigation Lawyers of breaching various duties, overbilling, and acting in bad faith.

After a long and tortured history, including that the Harbisons have cycled through three law firms as counsel in this case, the parties' fee dispute has turned into a morass of dueling motions.

The Harbisons retained Henry F. Luepke III to conduct an independent analysis of the fees that Litigation Lawyers, P.C., including Stephen Bruce Rakusin (“Litigation Lawyers” or “Rakusin”), billed in defending Chris and Regina Harbison (the “Harbisons”) and their affiliated companies in two (2) collection actions arising out of debts owed to Patriots Bank under certain promissory notes and personal guarantees. Litigation Lawyers filed a motion to strike or exclude the opinions of Luepke.

While Litigation Lawyers made passing references that this is Luepke's first opinion-testimony engagement, it did not challenge Luepke's extensive qualifications, instead challenging only his opinions and methodology.

Law And Legal Expert Witness

Henry F. Luepke, III is a licensed civil trial attorney in good standing with the Missouri Bar, and with more than thirty years of experience in civil litigation.

Luepke earned his undergraduate degree from the University of Notre Dame, with honors, and graduated cum laude from the Saint Louis University School of Law.

Want to know more about the challenges Henry Luepke has faced? Get the full details with our Challenge Study report.

Discussion by the Court

Litigation Lawyers classified the opinions in Luepke's report into four groups: (1) his opinions related to the feasibility of settling the underlying litigation earlier; (2) his opinions that Litigation Lawyers litigated and billed excessively for unnecessary legal work; (3) his opinions that Litigation Lawyers breached duties owed to the Harbisons; and (4) his opinions on Rakusin's disciplinary proceedings.

1. His opinions related to the feasibility of settling the underlying litigation earlier

Litigation Lawyers first objected to Luepke's opinions about the feasibility of settlement during Litigation Lawyers' representation of the Harbisons and, relatedly, that settlement was the Harbisons' goal.

These opinions include that "the pre-litigation history and the successful efforts of the attorneys who took over representation of the Harbisons after Litigation Lawyers demonstrate that a reasonable settlement was available and could have been achieved early on in the underlying litigation," "the factual record supplied indicated that the Harbisons' practical objective was to resolve the Bank's claims (via refinancing or settlement) rather than to pursue protracted litigation," that "the Harbisons believed the prospect of refinancing looked promising," and that "the Harbisons' express objective was to resolve the Patriots Bank Cases through refinancing/settlement."

According to Litigation Lawyers, "Luepke's opinion is based on the unsubstantiated and conjectural assumption that the same (or a better) settlement reached in December 2023 could have been reached before LLPA withdrew from representation."

The Court agreed. First, Luepke's legal experience, while extensive, gives him no "specialized knowledge" about whether the specific parties involved in the underlying litigation would have been willing or able to reach a settlement while Litigation Lawyers was representing the Harbisons, nor about whether the Harbisons were hoping to settle the underlying litigation.

The Court also found that Luepke's opinions lacked the required "sufficient facts or data" to support his opinion "that a reasonable settlement was available and could have been achieved early on" in the underlying litigation. An earlier settlement would have worked only if both parties consented, and the evidence indicates that, after the initial attempts to negotiate a deal failed, neither party was interested in settling.

Luepke's opinions that the "Harbisons' practical objective was to resolve the Bank's claims (via refinancing or settlement) rather than to pursue protracted litigation" and that "the Harbisons believed the prospect of refinancing looked promising" similarly lacked support. Luepke and the Harbisons identified no evidence suggesting that the Harbisons pursued or were interested in settlement or refinancing while Litigation Lawyers represented them.

2. His opinions that Litigation Lawyers litigated and billed excessively for unnecessary legal work

Litigation Lawyers next objected to a handful of Luepke's opinions about billing, including that Litigation Lawyers billed "an extraordinarily large amount" of hours and fees "in absolute terms for the described dispute," that Litigation Lawyers spent substantial time "on unsuccessful and repetitive procedures," and that Litigation Lawyers billed disproportionate to the novelty and difficulty of the case and the "routine commercial litigation skills" required.

For several reasons, the Court found that Luepke's opinions did not cross the threshold required for admissibility. First, while Luepke asserted that "the aggregate hours . . . and fees . . . billed in 16 months for these two collection/receivership matters are excessive and unreasonable," he identifies no specific actions of Litigation Lawyers that were unnecessary and excessive. Next, Luepke offered no calculation whatsoever about how many hours he claims Litigation Lawyers should have expended on the various tasks it performed for the Harbisons, or about which hours should not have been expended or which tasks should not have been performed.

Luepke's conclusion that "reasonable litigation strategies . . . would likely have cost the Harbisons reasonable fees no more than between $200,000 and $500,000" similarly failed to cross the Rule 702 threshold. Luepke's report did not articulate what principle or method he used to reach the conclusion that $200,000 to $500,000 would have been a reasonable fee—an opinion that shows up, for the first time, in the final paragraph of Luepke's report. The record indicated that Litigation Lawyers' various actions were done with the advice and consent of the clients; Luepke just assumes that the Harbisons were unaware of, didn't approve of, or were duped into approving the actions taken by Litigation Lawyers. The record demonstrates just the opposite. The parties agreed that the Harbisons exercised significant oversight over the underlying litigation.

The Court acknowledged that Litigation Lawyers billed a lot. But "a lot" is not necessarily "too much." Rule 702 requires more rigorous analysis than vague assertions unsupported by calculations, comparisons to billing in similar suits, or anything other than an unquestionably experienced lawyer's general sense of what charges would have been appropriate. Accordingly, the Court granted Litigation Lawyers' motion to exclude Luepke's opinions about Litigation Lawyers litigating and billing excessively.

3. His opinions that Litigation Lawyers breached duties owed to the Harbisons

Litigation Lawyers' third objection concerned Luepke's opinion that "failure to advise or to pursue settlement under these facts is contrary to Litigation Lawyers' duty to protect the Harbisons from unnecessary costs, fees, and delays and to act in their best interests."

Luepke briefly mentions the fiduciary implications of Litigation Lawyers' litigation strategy. But while he refers to Litigation Lawyers' "duties to communicate with clients," "to act in the clients' best interests," and "to protect the Harbisons from unnecessary costs, fees, and delays," he does little to flesh out the source of these "duties" nor to explain the specific actions that Litigation Lawyers took or failed to take that violated the duties.

But the only "breaches" that Luepke identified seem to be that Litigation Lawyers did not try to settle earlier, litigated too aggressively, and billed too much, in his estimation. As discussed above, the Court determined that Luepke's opinions about the viability of earlier settlement and about excessive litigation and billing are inadmissible under Rule 702. Because Luepke bases his opinions about Litigation Lawyers' supposed breach of duties on his inadmissible opinions related to settlement and billing, the Court found that the Harbisons have once again failed to satisfy the requirements of Rule 702(b)-(d).

4. His opinions on Rakusin's disciplinary proceedings

Finally, Litigation Lawyers objected to Luepke's opinions about Rakusin's disciplinary proceedings. Luepke opined that "the existence of an active disciplinary proceeding in Florida when Litigation Lawyers accepted the engagement, plus the subsequent disbarment for misconduct, is probative of unreasonably excessive services and fees." Luepke went on to conclude that "Rakusin's pending disciplinary action for overcharging at the time of engagement and subsequent disbarment for misconduct, including overcharging, are probative of a pattern and support a conclusion that the services and fees were unreasonable, unwarranted, and were neither provided nor incurred in the best interests of the Harbisons."

Contrary to Luepke's assertions that Rakusin's pending disciplinary action was "for overcharging" and that Rakusin was disbarred "for misconduct, including overcharging," the ethical violations discussed in the referee's report did not involve overcharging. The referee discussed a provision in one of Rakusin's earlier fee agreements that authorized him to voluntarily dismiss a client's litigation if the client failed to pay his bills within ten days. The referee also evaluated evidence suggesting that Rakusin (1) continued managing clients' cases during a suspension, (2) "leveled an unfounded accusation against [a judge] contending that he engaged in ex parte communications with another judge," and (3) misrepresented a canon of the Code of Judicial Conduct." Based on that misconduct—not on overcharging—the referee recommended disbarring Rakusin, and the Florida Supreme Court adopted and implemented the referee's recommendation.

Therefore, Luepke’s opinions “overlooked critical information”—the actual grounds of Rakusin’s disciplinary proceeding and disbarment.

Aside from an inaccurate characterization of the nature of Rakusin's disciplinary proceedings, Luepke doesn't explain why misconduct unrelated to overcharging is "probative of a pattern and supports a conclusion that the services and fees were unreasonable or unwarranted."

Without any explanation of the rationale underlying Luepke's opinion, Luepke's opinion about Rakusin's disciplinary proceedings does not pass muster under Rule 702(c) or (d). Because the Harbisons failed to show that Luepke's opinions about Rakusin's disciplinary proceedings more likely than not satisfy the requirements of 702(b), (c), or (d), the Court granted Litigation Lawyers' motion to exclude Luepke's opinions about Rakusin's disciplinary proceedings.

Held

The Court granted Litigation Lawyers' motion to strike or exclude the expert opinions of Henry F. Luepke, III.

Key Takeaway

Because Luepke's opinions about overbilling lacked underlying facts, and further lacked articulated principles or methods, the Harbisons failed to show that Luepke's opinions are "expert opinion evidence based on good grounds" rather than "subjective speculation that masquerades as scientific knowledge."

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