The original case began when BMC sued IBM, accusing it of improperly replacing BMC software on AT&T’s mainframes—an alleged breach of a long-standing licensing agreement. Although BMC initially won a staggering $1.6 billion judgment in 2022, an appellate court reversed that decision in IBM’s favor in 2024.
IBM, having ultimately prevailed in the lawsuit, asked the court to award it $46 million in attorney’s fees—a request that Judge Miller found to be excessive. In his decision, the judge sharply criticized IBM’s legal team for practices including block billing, vague time entries, and charging New York rates for work done on a Texas case.
“The requested fees offend any notion of reasonableness,” wrote Judge Miller. “No paying client would blindly accept such opaque and inflated billing.”
IBM’s legal representation in the matter included powerhouse firms like King & Spalding and Gibson, Dunn & Crutcher, which were responsible for defending IBM against BMC’s billion-dollar claims. However, Judge Miller noted that the lawyers billed for thousands of hours—some of which lacked sufficient detail or appeared duplicative—and included rates exceeding $1,500 per hour for senior partners.
Though IBM argued that the fees reflected the high stakes and complexity of the case, the judge was unconvinced. He emphasized the need for billing transparency, especially when legal fees are being reimbursed under a contract clause.
BMC had contested IBM’s fee request, describing it as “inflated and unsupported.” The court ultimately sided with BMC’s objections, slashing the recoverable amount by over 35%.
Legal analysts say the ruling is part of a growing trend among federal judges to rein in corporate legal fee claims that are deemed excessive or inadequately justified. It also underscores the court’s role in ensuring that fee awards—particularly in contractual or indemnity contexts—adhere to ethical standards.
