Can Bills In A Receivership Be Redacted?
Can Bills In A Receivership Be Redacted?

Q: I represent a receiver in a contentious family law receivership. In order to prevent attorney client and work product information from being disclosed to one of the parties, the receiver does not want to attach my detailed bills to his monthly reports or to an upcoming interim fee application. I am concerned that not attaching my detailed bills may result in my fees not being allowed. Should I be concerned? Is there a way to protect such sensitive information and still have my fees approved?

A: Surprisingly, California law does not generally require detailed time sheets to be attached to fee requests. This, however, is not the case where a statute or rule requires otherwise, or where fees to be awarded only relate to a portion of a lawsuit, such as a specific claim or defense. In such a case, the fees requested must be shown to relate to the claim, which is best done by showing the hours billed and work performed relate to the claim. For example, in Gregg v. Revelle, 2004 WL 2601780, a cross-defendant won its summary judgment motion and sought attorneys’ fees and costs pursuant to the underlying contract. The evidence in support of the fee claim was a declaration of one of the attorneys setting forth the hours expended on the cross-complaint, the rates charged, and the background of the professionals who rendered services. The attorney stated where time was spent on issues unrelated to the cross-complaint, the fees were excluded. A detailed bill was not included in order to protect the attorney-client privilege.

When the cross-defendant objected that without detailed time records it and the court could not determine whether the amounts sought were reasonable and properly apportioned to only the cross-complaint, the attorneys supplemented the request with heavily redacted copies of its bills, with many line items only having a few words, such as “research” or “telephone conf.”  The trial court awarded all the fees requested and an appeal followed.

Reversing, the appellate court, citing the landmark case of Serrano v. Priest, 20 Cal. 3d. 25 (1977), stated: “…the court’s role in equity is to provide just compensation for the attorney, must be a calculation of the attorney’s services in terms of the time he has expended on the case…[t]he experienced trial judge is the best judge to the value of the professional services rendered in his court.” It then stated: “In applying these principles, our court have constantly found fees may be awarded even in the absence of detailed time sheets.” Id. at *4 (citations omitted). It went on, however, that there are circumstances where more than a declaration of hours performed and a general description of the work is needed. It cited as an example, Bell v.Vista Unified School Dist., 82 Cal. App. 4th 672 (2000), where fees were only awardable on one of the claims brought. In such cases, more detailed information that connects the tasks performed to the claim are needed. However, the court stated that actual billing records are not required so long as there is a general description of the tasks performed, which connects the tasks to the claim. Gregg, supra. at *4.

This general description of what is required for fee requests does not apply to receiverships, however, given the specific receivership Rules of Court. Rule 3.1182, dealing with monthly reports, states: “The receiver must provide monthly reports to the parties…” The reports “must include: (1) a narrative report of events; (2) a financial report; and (3) a statement of the fees paid to the receiver, employees, and professionals showing: (A) itemized services; (B) a breakdown of the services by 1/10 hour increments; (C) If the fees are hourly, the hourly fees…” (emphasis added). Given that the Rule states the report must include not only itemized services, but that they be broken down in 1/10-hour increments, it is clear that the general fee application requirements discussed in Gregg, supra. and the general cases it cites are not applicable.

Of course, in order for the receiver to be paying his or her own fees or professionals’ fees, that must be authorized in the order of appointment or a subsequent order. If there is no such authorization, the receiver and professionals can either file motions for interim fees or wait until the end of the receivership and file final fee applications. While the rule relating to interim fee applications is silent on what must be included (Rule 3.1184 (a)), it can be inferred that an interim fee request must include the same detail given the detail to be included in the monthly reports and the fact that the rule for final fees (Rule 3.1184(d)) also requires the request: “must state in detail what services have been performed.”.

Where it is necessary to protect disclosure of sensitive information, because of privilege or otherwise, there are a number of possible ways of doing so. Counsel can try to get the parties to agree to a protective order or stipulation regarding redacting the bills. Counsel can ask the court to allow unredacted bills to be filed under seal or in camera  for court review. The receiver and professionals can choose not to seek to be paid on an interim basis for the specific sensitive line items and instead indicate that compensation for those items will be sought at the end of the receivership, when disclosure may no longer matter. Finally, the receiver and professionals can just redact those portions of the bills necessary to protect the confidential or privileged matters. Care in doing so, however, is required. If there is excessive redaction the court may deny the fees requested or parties may object claiming they cannot make “specific” objections as required by Rule 3.1183 (b). In addition, an explanation should be provided why the redactions were necessary and what the redactions generally relate to, so the court understands why the redactions were made. A number of bankruptcy cases have addressed this problem. The court in In re Las Vegas Monorail Co., 458 B.R. 553 (Bankr.  D. Nev. 2011),  denied portions of interim fee requests because counsel had not disclosed, until the hearing, why the redactions were made, did not try other methods to protect the confidential  matters, and overly redacted the bills. One firm redacted 13% of its time, another 6%. The court concluded: “Simply put, the existence of either confidential or privileged information, and the attorney’s duty to protect both, does not excuse or alter the burden that an attorney must satisfy before a court may award fees…” Id. at 559. While, admittedly, bankruptcy rules are different, this same tension exists in receivership cases.


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