10th Circuit Upholds $114,663 Fee Award in AI Billing Appeal

The U.S. Court of Appeals for the 10th Circuit on Friday, Oct. 30, upheld a $114,663.11 fee award after Flux Drive argued that its opponents’ law firm had billed excessively while using artificial intelligence.

No. 25-1308 concerned the dismissal of claims against the Rong Defendants for lack of personal jurisdiction.

Flux Drive Inc. was the plaintiff. The defendants were represented by Brownstein Hyatt Farber Schreck. The district court awarded the defendants $114,663.11 in fees after reviewing the firm’s billing records.

On appeal, Flux Drive argued that the firm’s use of AI had made the charges excessive. The appeals court found that Flux Drive had not shown AI use resulted in excessive billing. Judge Carolyn McHugh wrote the opinion for a panel that included Judges Matheson and Federico.

The opinion recognized that artificial intelligence can increase efficiency in legal work. Although legal technology may save time, Flux Drive did not show that the hours billed were unreasonable. The court upheld the fee award in this case.

The fee dispute arose from a lawsuit alleging that defendants misappropriated proprietary technology. The district court dismissed the claims against the Illinois-based Rong Defendants because it lacked personal jurisdiction over them.