MEMORANDUM AND ORDER

JAMES C. FRANCIS IV, UNITED STATES MAGISTRATE JUDGE.

The underlying litigation here involves a bitter dispute between an Assistant District Attorney and counsel for a criminal defendant in a state prosecution. The rancor is compounded by a disagreement between the defendants in this action and their professional liability insurer over costs of the defense. The defendants and third-party plaintiffs, Ernest Codelia, P.C., William Tauber, Peter Shipman, and Ernest Codelia (referred to collectively as the "Codelia Defendants"), seek judgment requiring their insurer, third-party defendant Chicago Insurance Company ("CIC"), to reimburse them for all defense costs incurred to date and to pay for such expenses in the future. The parties consented to refer the fee application to me for final disposition pursuant to 28 U.S.C. § 636(c)(1).

Background

A. The Underlying Litigation

Robin Cowan is an Assistant District Attorney in the Bronx. In 1998, she was prosecuting Angel Lopez for murder in proceedings in which Mr. Lopez was represented by William Tauber. Just prior to commencement of the Lopez trial, Ms. Cowan received in the mail at her home an empty envelope with Mr. Tauber's return address but not his name. Ms. Cowan's address is not publicly available; Mr. Tauber had obtained it from the New York State Department of Motor Vehicles (the "DMV"). According to Mr. Tauber, he sent Ms. Cowan the envelope in order to ascertain whether she lives in New York City, as is required of Assistant District Attorneys who practice in the five boroughs. See N Y Public Officers Law § 3. If the envelope had been returned as undeliverable, indicating that Ms. Cowan did not live at the New York City address, Mr. Tauber intended to use this information as a basis for seeking dismissal of the indictment.

When she first received the empty envelope, Ms. Cowan believed it to be a message that the murder suspect knew where she lived. However, when she determined that the Codelia Defendants had sent it, she concluded that they intended to frighten her as punishment for her vigorous cross-examinination of Mr. Tauber during a pretrial hearing in the Lopez case.

Ms. Cowan then initiated proceedings against the Codelia Defendants on three fronts. First, she commenced the instant action alleging that they had violated the Drivers' Privacy Protection Act (the "DPPA"), codified at 18 U.S.C. § 2721-25, by improperly obtaining information from her motor vehicle records as well as from the records of her father, Cary L. Cowan. She also included in her complaint a pendant state claim of outrageous conduct causing emotional distress. Each defendant counterclaimed, alleging defamation and intentional infliction of emotional distress. Second, Ms. Cowan filed a parallel action in New York State Supreme Court asserting state law causes of action against each of the defendants. Third, Ms. Cowan's complaint concerning Mr. Tauber's conduct was referred to the Disciplinary Committee of the Appellate Division, First Department. Following a hearing, a referee recommended that disciplinary charges be dismissed, and a hearing panel ultimately adopted that recommendation.

B. The Third-Party Claim

When the federal action was commenced, the Codelia Defendants demanded that CIC defend and indemnify them under the professional liability policy that CIC had issued to Ernest Codelia, P.C. CIC declined on the grounds: (1) that the complaint alleged intentional conduct, while the policy covered only negligence, (2) that public policy bars indemnification of intentional or criminal acts, and (3) that the insurance policy did not provide indemnification for exemplary or punitive damages. Accordingly, the Codelia Defendants initiated the third-party action against CIC.

The parties then filed motions for summary judgment. CIC sought a declaration that it was not obligated to defend or indemnify the Codelia Defendants. The defendants, in turn, sought a declaration that CIC was required to defend them in the underlying action. In a decision dated November 10, 1999, the Honorable John G. Koeltl, U.S.D.J., found that the plaintiff's claim that the Codelia Defendants acted recklessly was arguably within the terms of the policy. Cowan v. Ernest Codelia, P.C., No. 98 Civ. 5548, 1999 WL 1029729 (S.D.N.Y. Nov. 10, 1999), at *7-8. He further determined that public policy would not prevent CIC from providing a defense since it was disputed whether the Codelia Defendants had intentionally caused injury. Id. at *9. Finally the Codelia Defendants conceded that CIC was not obligated to indemnify them for punitive damages. Id. at *9-10. Accordingly, Judge Koeltl granted the Codelia Defendants' motion for summary judgment declaring that CIC had a duty to defend and denied CIC's motion. Id. at *10.

C. The Fee Motion

Throughout this litigation, the Codelia Defendants have been represented in the underlying federal suit, in the third-party action, and in the state court action by Roberto Lebron, Esq. and the firm of Roberto Lebron Associates. They now seek judgment awarding them the attorneys' fees and costs they have incurred to date and requiring CIC to appoint independent counsel to represent them to the conclusion of the underlying action. Initially, the Codelia Defendants sought an award of $209,748.00 for work done through December 20, 1999. (Statement Pursuant to Local Rule 56.1 dated Feb. 8, 2000, ¶ 11). Thereafter, they submitted a supplemental application for an additional $66,787.50 for the period of December 21, 1999 to August 17, 2000, (Tr. 171-72; TPD Exh. AAAA). In addition, Mr. Lebron submitted four letters attaching subsequent time sheets. (Letters of Roberto Lebron dated Aug. 28, 2000, Sept. 29, 2000, Oct. 25, 2000, and Dec. 19, 2000).

CIC opposes the fee application on several grounds. First, it contends that the Codelia Defendants are not entitled to recover fees for time expended prosecuting the third-party claims against CIC itself. Second, CIC argues that the Codelia Defendants may not be reimbursed for the expense of pursuing their counterclaims against Robin Cowan. Third, the insurer maintains that its obligation to defend terminated when the Codelia Defendants unreasonably refused to accept a settlement negotiated by CIC with the plaintiffs. Fourth, CIC argues that defendants William Tauber and Ernest Codelia may not be awarded fees for time they spent litigating this action pro se. Finally, CIC contends that with respect to those portions of the fee request not categorically excluded, the amounts requested should be reduced because the attorney time spent was excessive and the rates charged were unreasonable.

After the parties agreed to refer the third-party action to me for final disposition, an evidentiary hearing was conducted. A supplemenal hearing was held on December 1, 2000 to allow the parties to present evidence concerning the circumstances of settlement negotiations and the decision by the Codelia Defendants to reject the resolution recommended by CIC.

Discussion

A. Fees for the Third-Party Action

The Codelia Defendants' demand for costs incurred in prosecution of the third-party action against CIC fails on both procedural and substantive grounds. Under New York law, an insured may not generally recover the expense of initiating litigation to establish the obligations of its insurer.

It is the rule in New York that such a recovery may not be had in an affirmative action brought by an assured to settle its rights, but only when he has been cast in a defensive posture by the legal steps an insurer takes in an effort to free itself from its policy obligations.

Mighty Midgets, Inc. v. Centennial Insurance Co., 47 N.Y.2d 12, 21, 416 N.Y.S.2d 559, 563 (1979) (citations omitted); see also U.S. Underwriters Insurance Co. v. Weatherization, Inc., 21 F. Supp.2d 318, 328 (S.D.N.Y. 1998) (citing cases). It seems anomalous for the entitlement to fees to turn on the fortuity of whether a party to an insurance contract is cast as the plaintiff or defendant. Nevertheless, courts reason that this rule is justified because it creates the narrowest possible exception to the principle that parties generally bear their own costs in litigation. See id.; Commercial Union Insurance Co. v. International Flavors Fragrances, Inc., 639 F. Supp. 1401, 1403 (S.D.N.Y. 1986); Mighty Midgets, 47 N.Y.2d at 21-22; 416 N.Y.S.2d at 564. Here, of course, the Codelia Defendants brought the third-party action and so are not entitled to the costs of prosecuting it.

In any event, an insured cannot recover the expenses of litigating a denial of coverage claim unless the insurer acted in bad faith. This is a difficult standard to meet.

[A]n insured cannot recover his legal expenses in a controversy with a carrier over coverage, even though the carrier loses the controversy and is held responsible for the risk. It would require more than an arguable difference of opinion between carrier and insured over coverage to impose an extra-contractual liability for legal expenses in a controversy of this kind. It would require a showing of such bad faith in denying coverage that no reasonable carrier would, under the given facts, be expected to assert it.

Sukup v. State of New York, 19 N.Y.2d 519, 522, 281 N.Y.S.2d 28, 31 (1967) (citations omitted). Indeed,

[p]roof of an insurer's bad faith requires an extraordinary showing of disingenuous or dishonest failure to carry out a contract. Bad faith is said to exist where the wrong complained of is morally culpable, or is actuated by evil and reprehensible motives. These requirements cannot possibly be met where the insurance carrier has an arguable case for denying coverage.

Dawn Frosted Meats, Inc. v. Insurance Co. of North America, 99 A.D.2d 448, 448, 470 N.Y.S.2d 624, 625 (1st Dep't 1984) (internal quotations and citations omitted); see also Zurich Insurance Co. v. Texasgulf, Inc., 233 A.D.2d 180, 181, 649 N.Y.S.2d 153, 154 (1st Dep't 1996).

The Codelia Defendants have failed to demonstrate that CIC acted in bad faith in this case. They complain that CIC disclaimed coverage on the very day it received a copy of the complaint in the underlying action and that it later refused to change its decision despite receiving further information. (Affirmation in Reply of Roberto Lebron dated April 3, 2000 ("Lebron Reply Aff.") ¶¶ 10-12). Neither argument is convincing. The speed of CIC's disclaimer alone is not evidence of bad faith; it may just as well demonstrate the efficiency of CIC's claim review process. Nor does CIC's intransigence show evil motive. The information provided to CIC by the Codelia Defendants — such as the report of the Disciplinary Committee referee exonerating Mr. Tauber — may have cast doubt on the merit of Ms. Cowan's claims, but it did not conclusively establish the Codelia Defendants' right to coverage.

Finally, the exhaustive nature of Judge Koeltl's opinion demonstrates that CIC's position was not wholly meritless. Although Judge Koeltl ultimately ruled against the insurer, he dealt with each of CIC's arguments with a degree of attention that would have been unnecessary if those contentions had been frivolous. Indeed, this is a unique case. It does not involve the type of legal malpractice claim that one would expect to be covered under an attorney's professional liability policy. Rather, it concerns a lawyer going outside the judicial process to seek damaging information about an opposing attorney. Judge Koeltl found that such conduct, at least if characterized as reckless, may be covered by the policy at issue. This, however, was not a foregone conclusion, and CIC did not act in bad faith in denying coverage. Therefore, no fees will be awarded for time spent prosecuting the third-party action.

B. Fees for Counterclaims

Certain hours appearing in the Codelia Defendants' fee application relate to the litigation of their counterclaims against Ms. Cowan. These defendants concede that they are not entitled to reimbursement of such expenses from CIC. (Lebron Reply Aff. ¶ 6). Accordingly, no fees shall be awarded for services performed in connection with the counterclaims, such as amending the answer to assert counterclaims or defending against motions to dismiss them.

C. Refusal to Settle

The policy at issue in this case reads in part as follows:

If the Insured refuses to consent to any settlement recommended by the Company and elects to contest the Claim or continue any legal proceedings in connection with such Claim, then the Company shall be relieved of any further duty to defend the Claim, and the liability of the Company for Damages and Claim Expenses shall not exceed the amount for which the Claim could have been settled, as well as the Claim Expenses incurred by the Company, or with the Company's consent, up to the date of such refusal.

(TPP Exh. 14, at 1 of 10, ¶ I). CIC argues that based on that provision, any entitlement the Codelia Defendants might have to expenses incurred after March 23, 2000 is capped by the value of a settlement that they rejected at that time. Specifically, on March 23, counsel for CIC sent a letter to Mr. Lebron that read in pertinent part as follows:

As you know, the plaintiffs have been willing to settle their claims against the insureds in both the federal and state actions for a total of $50,000 and to allow the insureds to proceed with their counterclaims. CIC has recommended that such settlement be accepted. However, the insureds have refused to consent thereto.

. . .

Accordingly, . . . CIC will have no responsibility for indemnity and/or claim expenses totaling in excess of $45,000 (the amount of the proposed $50,000 settlement less the insureds' deductible of $5,000) incurred after the date of this letter.

(TPP Exh. 33). The Codelia Defendants object to the imposition of any such cap on the ground that it is inconsistent with Judge Koeltl's finding that CIC owed them a duty of defense. This contention is frivolous. Judge Koeltl's decision preceded the proposed settlement and therefore did not address the issue of whether the Codelia Defendants' ongoing entitlement to the costs of defense might be jeopardized by a subsequent refusal to settle.

The Codelia Defendants also argue that the purported settlement is no bar to further reimbursement because the plaintiffs did not agree to any resolution and because the Office of the New York City Corporation Counsel, which defended Ms. Cowan on the counterclaims, did not participate in the negotiations. Indeed, if there were no meeting of the minds among the plaintiffs, CIC, and any other necessary party to a settlement, then any failure to cooperate by the Codelia Defendants would be immaterial. See New York City Housing Authority v. Housing Authority Risk Retention Group, Inc., 203 F.3d 145, 152 (2d Cir. 2000). Accordingly, a supplementary hearing was held to establish a record concerning the settlement process that the parties engaged in. The testimony at that hearing revealed that while CIC made good faith efforts to reach a compromise with the plaintiffs, the Codelia Defendants repeatedly thwarted any ultimate settlement. James F. Creighton, an attorney with the firm of Steinberg Cavaliere, LLP, negotiated on behalf of CIC with Richard Berne, counsel for the plaintiffs. (S.Tr. 3-4, 54-55). They reached an agreement pursuant to which the plaintiffs would accept $50,000 in exchange for a dismissal of all claims against the Codelia Defendants. (S.Tr. 4, 55). However, in the process of negotiating the details of a formal stipulation of settlement, the Codelia Defendants raised a series of objectionss that ultimately doomed any final resolution. First, they demanded that their counterclaims survive the settlement, notwithstanding the dismissal of all of the plaintiffs' claims. (S.Tr. 47-48). The plaintiffs acquiesced after consulting the assistant corporation counsel who represented them on the counterclaims. (S.Tr. 48-49). CIC also indicated that it had no objection. (S.Tr. 49).

Next, the Codelia Defendants insisted that any agreement include a paragraph stating that they did not admit to any wrongdoing. (S.Tr. 49-50, 65; TPP Exh. 28). Again, CIC and the plaintiffs assented. (S.Tr. 49-50, 65).

The settlement ultimately foundered, however, on the Codelia Defendants' demand that any agreement be subject to absolute confidentiality. The purported reason for this requirement was their concern that the fact of settlement would somehow be construed as an admission on their part. (TPP Exh. 28). In particular, Mr. Tauber argued that if such an inference were made, he could be considered to have testified falsely before the Disciplinary Committee. (TPP Exh. 28). Counsel for the plaintiffs agreed that they would not use the fact of settlement offensively in any proceeding. (S.Tr. 50). The Codelia Defendants, however, took the position that the settlement could not even be presented to a court as a defense to claims they might bring against the plaintiffs. (S.Tr. 50). At that point the negotiations terminated.

In order to disclaim liability on the basis of its insured's failure to cooperate, a carrier must demonstrate:

(1) that it acted diligently in seeking to bring about the insured's cooperation (2) that the efforts employed by the insurer were reasonably calculated to obtain the insured's cooperation, and (3) that the attitude of the insured, after his cooperation was sought, was one of willful and avowed obstruction.

Pawtucket Mutual Insurance Co. v. Soler, 184 A.D.2d 498, 499, 584 N.Y.S.2d 192, 193 (2d Dep't 1992) (citing Thrasher v. United States Liability Insurance Co., 19 N.Y.2d 159, 168-69, 278 N.Y.S.2d 793, 800 (1967)); see also New York City Housing Authority, 203 F.3d at 151. With respect to the first two elements, CIC took steps reasonably calculated to secure the Codelia Defendants' cooperation in achieving a settlement. CIC was prepared to pay the funds necessary to satisfy the plaintiffs. Further, Mr. Creighton acted as an honest broker attempting to iron out disagreements over the language of the draft stipulations.

By contrast, the Codelia Defendants willfully obstructed any resolution. To be sure, a party may decline to settle for any reason or no reason at all. However, when the Codelia Defendants raised phantom objections to a settlement that their insurer was prepared to fund, they became responsible for future defense costs pursuant to the terms of their policy with CIC.

The reasons proffered by the Codelia Defendants for scuttling the settlement are illusory. For example, there is no legal basis for Mr. Tauber's purported concern that a settlement in which there is no admission of liability could support any claim that the testimony he gave before the Disciplinary Committee was false. The bad faith with which the Codelia Defendants acted in undermining the settlement is further illustrated by their belated argument that there could be no agreement without the involvement of the Corporation Counsel's office. The Codelia Defendants never raised this concern during the negotiation process itself. More importantly, it is a red herring: since the settlement would not have affected the counterclaims in any way, the approval of the assistant corporation counsel was wholly unnecessary. CIC has thus sustained its burden of demonstrating that the Codelia Defendants failed to cooperate in the settlement process and effectively rejected a settlement proposal that the plaintiffs had agreed to. Therefore, under the terms of the policy, defense costs incurred after March 23, 2000 are limited to $45,000, which represents the $50,000 settlement amount minus the $5,000 deductible.

D. Fees for Pro Se Attorney

William Tauber and Ernest Codelia performed some of the legal services for which the Codelia Defendants seek reimbursement, raising the question of whether fees may be awarded to an attorney appearing pro se. There is scant authority in New York concerning this issue, but what caselaw there is supports such an award. For example, in McMahon v. Schwartz, 109 Misc.2d 80, 83-86, 438 N.Y.S.2d 215, 217-19 (Civ.Ct. Bronx Co. 1981), and Parker 72nd Associates v. Isaacs, 109 Misc.2d 57, 60, 436 N.Y.S.2d 542, 545 (Civ.Ct. N.Y. Co. 1981), courts awarded fees to attorneys who represented themselves in landlord-tenant actions where the leases and Section 234 of the Real Property Law provided for the shifting of costs. Similarly, in Gray v. Richardson, 251 A.D.2d 268, 268, 675 N.Y.S.2d 57, 57 (1st Dep't 1998), the Appellate Division, First Department relied on Parker 72nd Associates in affirming an award of fees to a pro se attorney under an indemnification agreement contained in corporate by-laws and authorized by Delaware's General Corporation Law.

In Parker 72nd Associates, the court identified some of the policies underlying the award of fees to pro se attorneys. From the attorney's perspective, he incurrs opportunity costs when he devotes to his own defense professional time that would otherwise be expended on his clients. Were he not representing himself, the attorney would have to pay for someone else's professional services. Moreover, from the point of view of the adversary, it should make no difference whether fees are paid to the attorney pro se or to another attorney he hires. Parker 72nd Associates, 109 Misc.2d at 59, 436 N.Y.S.2d at 544-45. These considerations are fully applicable here. CIC was obligated to fund the defense of claims brought against the Codelia Defendants, and as long as one or more of these defendants provided competent services at reasonable rates, they are entitled to compensation. Moreover, CIC could have limited its contractual obligation by including in the insurance policy it drafted a term that excludes pro se services from reimbursable defense costs. It did not do so, and it is therefore liable to pay for such services in this case.

E. Lodestar Analysis

Under New York law, courts generally employ the "lodestar" method of calculating reasonable attorneys' fees. See F.H. Krear Co. v. Nineteen Named Trustees, 810 F.2d 1250, 1263 (2d Cir. 1987); Friar v. Vanguard Holding Corp., 125 A.D.2d 444, 447, 509 N.Y.S.2d 374, 377 (2d Dep't 1986); Rahmey v. Blum, 95 A.D.2d 294, 300-06, 466 N.Y.S.2d 350, 356-60 (2d Dep't 1983). To derive the lodestar figure, the court multiplies the hours reasonably spent by counsel by a reasonable hourly rate. See Cruz v. Local Union No. 3 of the International Brotherhood of Electrical Workers, 34 F.3d 1148, 1159 (2d Cir. 1994); F.H. Krear, 810 F.2d at 1263. While there is a strong presumption that this amount represents a reasonable fee, it may be adjusted upward or downward based on other considerations. See Quaratino v. Tiffany Co., 166 F.3d 422, 425 (2d Cir. 1999).

1. Reasonable Hours

a. Excessive Billing

"In determining the number of hours reasonably expended for the purpose of calculating the lodestar, the district court should exclude excessive, redundant or otherwise unnecessary hours[.]" Id. (citation omitted). In this case, testimony at the evidentiary hearing revealed that the hours billed by counsel for the Codelia Defendants were grossly inflated. First, Mr. Lebron billed excessive amounts of time on simple tasks. For example, on September 4, 1998, he charged one and one-half hours of time for reviewing a notice of a court conference and the accompanying one-page cover letter. (Tr. 58-59; TPP Exh. H). Similarly, Mr. Lebron billed three hours for preparing three identical letters consisting of a single page of substantive text. (Tr. 59-61; TPD Exh. I). He spent one and one-quarter hours reviewing a form scheduling order issued by Judge Koeltl. (Tr. 61-62; TPD Exh. J). He charged another hour for drafting a three-sentence letter to the Court. (Tr. 62-63; TPD Exh. K). Still another hour was devoted to reading a one-page order and transmittal letter. (Tr. 63-64; TPD Exh. L). On October 20, 1998, Mr. Lebron billed three-quarters of an hour for writing a letter to Judge Koeltl consisting of a single sentence. (Tr. 74; TPD Exh. O). On that same day he charged four hours for drafting a letter to the Court of slightly more than one page. (Tr. 75-76; TPD Exh. P). On October 28, he billed one and one-quarter hours for disseminating notice of a conference. (Tr. 77-78; TPD Exh. Q). These examples are only illustrative; the record is replete with further instances in which Mr. Lebron billed for far more time than could be reasonably expended on the task at issue. The time records of the attorneys who performed services pro se also include evidence of excessive billing. For example, Mr. Codelia charged two hours for drafting a one-page letter to CIC. (Tr. 54-55; Exh. E). Similarly, Mr. Tauber billed one and one-half hours for preparing a two-page demand letter to CIC (Tr. 234-35; TPD Exh. ZZZ); three hours for a one-sentence notice of appeal (Tr. 228; TPD Exh. CCC); and two and one-half hours for completing a one-page pre-argument statement form. (Tr. 229; TPD Exh. DDD).

The excessiveness of counsel's charges is compounded by their billing practices. Each attorney recorded time in increments no smaller than one-quarter hour. Consequently, even the briefest phone call or review of the most succinct letter resulted in billing of one-quarter hour, or $62.50 at Mr. Lebron's requested rate of $250 per hour. The use of such large billing increments is inappropriate. See Oxford Venture Fund Limited Partnership v. CIT Group/Equipment Financing, Inc., No. 89 Civ. 1836, 1990 WL 176102, at *2 (S.D.N.Y. Nov. 5, 1990).

In light of this widespread overbilling, an across-the-board reduction in compensable hours is warranted. See Luciano v. Olsten Corp., 109 F.3d 111, 117 (2d Cir. 1997); Pascuiti v. New York Yankees, 108 F. Supp.2d 258, 267-68 (S.D.N.Y. 2000). Accordingly, otherwise reimbursable hours shall be reduced by fifty percent to account for excessive charges.

b. Duplication of Effort

Apart from inflated billing by the individual attorneys, the time records reveal duplication of effort. For instance, Mr. Lebron "delegated" to Mr. Tauber the task of doing computer-assisted legal research. Mr. Tauber charged $200 per hour for performing this function, after which Mr. Lebron charged $250 per hour to further analyze the caselaw that Mr. Tauber had located. (Tr. 45-46). This was not an efficient allocation of effort, and the compensable hours will be reduced accordingly. In each instance where Mr. Tauber performed on-line research or the two attorneys reviewed the results, each shall be compensated for one-half the hours logged.

c. Clerical Tasks

Mr. Lebron and Mr. Tauber also charged for a variety of tasks that are clerical in nature such as supervising the packaging and mailing of documents or acting as messenger. (Tr. 66, 72-73). While such services are necessary, they should be compensated only at rates appropriate for a clerk, not at rates charged by an attorney. Accordingly, the Codelia Defendants will be reimbursed $50 per hour for clerical work. See Pascuiti, 108 F. Supp.2d at 267 (applying $50/hour rate); Lawson v. City of New York, No. 99 Civ. 10393, 2000 WL 1617014, at *2-3 (S.D.N.Y. Oct. 27, 2000) (same).

d. Travel Time

Counsel billed for time traveling to meetings and to the courthouse. (Tr. 69). Again, although such time is compensable, it is not generally reimbursed at the full rate normally charged by attorneys. See In re Agent Orange Product Liability Litigation, 818 F.2d 226, 238 (2d Cir. 1987). There is now a widespread consensus in this circuit that travel time should be compensated at fifty percent of the reasonable rate for an attorney's substantive work. See L.I. Head Start Child Development Services, Inc. v. Kearse, 96 F. Supp.2d 209, 215 (E.D.N.Y. 2000); Sowemimo v. D.A.O.R. Security, Inc., No. 97 Civ. 1083, 2000 WL 890229, *6 (S.D.N.Y. June 30, 2000); Cordius Trust v. Kummerfeld, No. 99 Civ. 3200, 2000 WL 264316, at *2 (S.D.N.Y. March 8, 2000). That standard will be adhered to here.

2. Reasonable Rates

Where an insurer wrongly refuses to provide its insured with a defense, the insured is entitled to engage counsel. The insurer is then obligated to provide for payment of those attorneys "at normal insurance defense fee rates." Vanguard Insurance Co. v. Guagenti, 157 Misc.2d 900, 903, 599 N.Y.S.2d 215, 217 (Sup.Ct. Nassau Co. 1993).

In this case, CIC argues that it should not be required to reimburse the Codelia Defendants at a rate greater than $180 per hour. That is the maximum rate that CIC pays to Wilson, Elser, Moskowitz, Edelman Dicker, LLP ("Wilson, Elser"), a prominent insurance defense firm. (Tr. 10-11). Indeed, CIC appointed Wilson, Elser as defense counsel in this action following Judge Koeltl's decision, but the Codelia Defendants rejected the arrangement on the ground that the firm would have a conflict because of its close relationship to CIC.

While Wilson, Elser's rates are some evidence of reasonable compensation, they are not dispositive. First, there is no indication that the rates of this single firm are representative of most insurance defense firms in this district. Second, the rates that Wilson, Elser charges to CIC are undoubtedly discounted in light of the volume of business that CIC provides to the firm.

The Codelia Defendants seek compensation for Mr. Lebron at the rate of $250 per hour. This rate is consistent with Mr. Lebron's credentials: although a sole practitioner, he has been an active civil litigator for many years. This rate is also in line with compensation provided for insurance defense in other cases. For example, in Preferred Mutual Insurance Co. v. Ryan, 179 A.D.2d 902, 903 578 N.Y.S.2d 710, 711 (3d Dep't 1992), the court approved compensation at $225 per hour for insurance defense work performed in Albany. Given the generally higher rates in New York City and the effect of inflation since Ryan was decided, $250 per hour is a reasonable rate for Mr. Lebron's time in this case.

Mr. Tauber also apparently seeks reimbursement at the rate of $250 per hour for the time spent both representing himself pro se and providing research services to Mr. Lebron. However, under the arrangement with Mr. Lebron, he was to be paid at the rate of $200 per hour. (Tr. 210, 224). Moreover, Mr. Tauber gave no information regarding his experience other than the year of his admission to practice. (Tr. 209). It is not even clear whether his practice has been predominantly civil or criminal. Finally, an attorney representing himself need not be compensated at his firm's full billing rate "because that rate necessarily includes elements other than the value of the time of the litigating attorney." Parker 72nd Associates, 109 Misc.2d at 61, 436 N.Y.S.2d at 545. Under these circumstances, Mr. Tauber shall be compensated at no more than $200 per hour. For the same reasons, Mr. Codelia's time shall also be reimbursed at the $200 rate.

3. Additional Factors

There are no additional factors present in this case that would warrant deviating from the lodestar analysis. The Codelia Defendants imply that the complexity of the case and the risk involved would justify an enhancement of the lodestar figure. (Memorandum of Law dated Aug. 21, 2000, at 7-8). But this case involved a straightforward defense against statutory and common law claims. To the extent that the claims are novel, the additional time required is already reflected in the hours logged by counsel. Furthermore, Mr. Lebron incurred no business risk in taking the case: he was retained for an hourly fee, not on a contingency basis. Thus, the appropriate compensation shall be determined simply as the product of the allowable hours multiplied by the appropriate rate.

F. Costs

Finally, the Codelia Defendants seek reimbursement of their out-of-pocket costs. Certainly, they are entitled to repayment of the amounts spent on deposition and hearing transcripts. However, they also seek an award of $4,200 for services purportedly rendered by Dr. Jeffrey Brown, a psychiatrist engaged to conduct an examination of the plaintiff. (Letter of Roberto Lebron dated Oct. 25, 2000). The Codelia Defendants have not supplied any invoice from Dr. Brown. Moreover, the examination he was to conduct was cancelled when Ms. Cowan agreed to withdraw her claims of psychological injury. Thus, in the absence of any evidence of what services Dr. Brown might have provided in connection with this case, that expense will not be reimbursed.

Conclusion

As discussed above, the Codelia Defendants' application for an award of fees and costs incurred in the defense of this litigation is granted in part and denied in part. It is now necessary to determine the amount of an award consistent with the principles outlined in this decision. Therefore, by January 31, 2001, CIC shall provide a line-by-line analysis of the Codelia Defendants' time records that:

(1) allows no compensation for work done on the third-party claims against CIC, including work relating to the instant motion;

(2) allows no compensation for work done in connection with counterclaims against the plaintiffs, including amendment of the answer to assert such counterclaims and defense of motions to dismiss the counterclaims;

(3) limits any compensation for work performed after March 23, 2000 to $45,000;

(4) provides compensation for work performed by William Tauber pro se;

(5) accounts for duplication of effort by Mr. Tauber and Mr.

Lebron by crediting only one-half of their respective hours for their joint review of cases and for Mr. Tauber's on-line research; (6) compensates counsel for clerical tasks at $50 per hour; (7) compensates counsel for travel at one-half of their otherwise allowable rates; (8) reduces the total award thus arrived at by fifty percent to account for widespread overbilling; and (9) reimburses all expenses except the services of Dr. Jeffrey Brown. The Codelia Defendants shall then provide any responses to CIC's analysis by February 14, 2001. As the record is closed, the parties are not to proffer additional evidence, nor will they be allowed to reargue the legal issues determined here; their only task is to apply the rules set forth above to the time and expense documents previously submitted.

SO ORDERED.