Boies’ Billing Limits Nike’s Pay for Helping Prosecute Avenatti

Nike will receive significantly less pay for helping the U.S. prosecute attorney Michael Avenatti for extortion than requested, in part because its outside counsel, Boies Schiller Flexner LLP, used “block billing,” a federal court said Monday.

The athletic apparel maker qualified under the Mandatory Victims Restitution Act to receive repayment for some—but not all—of the expenses it incurred in connection with the federal government’s 2019 investigation into Avenatti’s activities and his trial, the U.S. District Court for the Southern District of New York said.

The court awarded Nike $259,800.50 in restitution, as opposed to the nearly $900,000 it sought.

Avenatti represented a coach who allegedly could expose corruption in the company’s amateur youth basketball program. He allegedly threatened to go public with the allegations unless the company paid him millions of dollars.

The company’s lawyers contacted a U.S. attorney’s office and cooperated in the government’s investigation and prosecution. A jury convicted Avenatti, and the court sentenced him to 30 months in prison and three years of supervised release.

Nike was a “victim” entitled to restitution under the MVRA, the court said. The attorneys’ fees it incurred in helping the government “were a direct and foreseeable result of [his] offenses,” it said.

But Nike’s restitution award is limited to attorneys’ fees incurred in connection with services the government “invited, required, requested, or otherwise induced,” the court said.

This includes fees for meeting with prosecutors, preparing Nike witnesses for trial, and representing Nike in connection with sentencing and restitution, it said.

Nike, however, isn’t entitled to restitution for Boies Schiller’s work in analyzing court filings, engaging in motion practice, and attending hearings and the trial, the court said. There is no proof, for example, that government attorneys asked for Boies Schiller’s help in responding to Avenatti’s motion to dismiss, it said in the opinion by Judge Paul G. Gardephe.

Boies Schiller’s practice of “block billing"—or billing for multiple tasks without breaking down how much time was spent on each one—interfered with the court’s ability to determine how much time the firm spent on things related to recoverable expenses and those related to nonrecoverable expenses, the court said. The court refused to try to break the expenses down.

Avenatti famously represented adult film actress Stormy Daniels in lawsuits against President Donald Trump.

King & Spalding LLP, Boies, Mayer Brown LLP, and Walden Macht & Haran LLP represent Nike. The U.S. Attorney’s Office for the Southern District of New York represents the government.

Jose M. Quinon PA; Scott A. Srebnick of Miami; Benjamin Silverman of New York; Black, Srebnick, Kornspan & Stumpf PA; and Perry Guha LLP represent Avenatti.

The case is United States v. Avenatti, S.D.N.Y., No. 19-cr-373, 2/14/22.