By Mike Scarcella

July 21 (Reuters) - A U.S. judge in Texas rejected a request for $46 million in legal fees for lawyers who defended IBM in a billion-dollar contract battle, awarding them $29 million instead after criticizing some of their hourly rates and staffing choices.

In his ruling, U.S. District Judge Andrew Hanen in Houston on Saturday said it was "unreasonable" for lawyers at Quinn Emanuel and Yetter Coleman to bill for 80,000 hours in IBM's successful contract dispute litigation with BMC Software.

BMC’s 2017 lawsuit accused IBM of unlawfully replacing BMC's mainframe software at AT&T with its own. A judge in 2022 said IBM broke an agreement with BMC and owed it $1.6 billion in damages, but an appeals court last year overturned the decision.

BMC on Monday declined to comment. Quinn Emanuel and Yetter Coleman had no immediate comment, and IBM did not immediately respond to a request for comment.

BMC objected to the fee request, citing what it called "unreasonable and non-customary hours, rates, and staffing inefficiencies, primarily from Quinn in New York."

Hanen said IBM was the prevailing party and entitled to take home fees, though BMC has disputed that IBM was the victor. IBM has denied any wrongdoing.

IBM’s lawyers in a filing said “highly skilled and reputable counsel” were necessary to defend IBM in the high-stakes lawsuit. Quinn Emanuel said it has long held the status as a preferred outside counsel to IBM.

The judge criticized Quinn Emanuel’s “block billing,” where in some instances multiple legal tasks were included in a single billing entry, obscuring costs for each action.

Hanen also faulted Quinn for charging New York rates for the Houston case, and for what he called “inefficient staffing” and duplication. In one instance, Quinn Emanuel billed IBM nearly 700 hours in a five-day span for a preliminary injunction hearing, the judge said.

Hanen rejected the firms’ $708,338 fee request for their work on the fee filing itself.

“The amount sought offends any notion of reasonableness and reflects poorly on the profession,” Hanen wrote. “The billing records demonstrate why this request is so outrageous.” The judge capped the fees tied to the fee application at $200,000.

The case is BMC Software Inc v. International Business Machines Corp, U.S. District Court for the Southern District of Texas, No. 4:17-cv-02254.

For BMC: Sean Gorman and Christopher Dodson of White & Case

For IBM: Richard Werder Jr and Rachel Epstein of Quinn Emanuel, and R. Paul Yetter and Timothy McConn of Yetter Coleman

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(Reporting by Mike Scarcella)