The district court appointed a special master to resolve the amount of attorney’s fees to which Defendants, including Cisco, were entitled. As the special master noted, the fees claimed by Cisco were paid under an alternative flat monthly fee arrangement with its counsel, which in recent years, have increased as law firms have begun offering alternatives to the traditional hourly billing model.
In analyzing the fee request, the special master explained that “[t]here are advantages to such models, but also risks in circumstances like this where the scope and reasonableness of fees are subject to judicial review. This report concludes that such alternative fee arrangements, whether flat fee or otherwise, may be compensable under Section 285, but that prevailing parties must be required to satisfy appropriate reasonableness standards to ensure fairness and to protect against potential abuse.”
To evaluate whether it would be appropriate to include such arrangements in determining a fee award, the special master noted that “prudential and reasonableness concerns arise when assessing the quantum of these fees to be awarded in a fee-shifting environment. For example, flat-rate billing structures could compensate counsel at an unreasonable rate, much like a large contingency fee, which Cisco acknowledges would not be recoverable in at least an extreme case. Flat-fee arrangements also potentially sweep in fees unrelated to the fee-shifting at issue, such as the exceptional conduct here. And opportunity for mischief exists, such as in cases involving manifestly unequal resources, or where counsel enjoys multiple lines of engagement with the same client that might allow mixing and matching among different matters and the shifting of fees as part of an unwritten understanding between attorney and client.”