2d Cir. clarifies pro bono fees, again
Keywords
The original opinion had raised concern that a lawyer’s choice to take a case pro bono or at a lower-than-usual rate could be considered to his detriment in an attorney fee award. The amended opinion appears to go some way to assuaging those concerns.
The suit was brought by voters and organizations to challenge a county redistricting plan. They prevailed, but complained on appeal that the district court had applied too strict a standard in considering whether to use an out-of-district standard rate in calculating attorney fees. 493 F.3d 110 (2d Cir. Jul. 12, 2007). The panel criticized the district court’s opinion, but affirmed the award. It held:
While the district court should generally use the prevailing hourly rate in the district where it sits to calculate what has been called the “lodestar”-what we think is more aptly termed the “presumptively reasonable fee”-the district court may adjust this base hourly rate to account for a plaintiff's reasonable decision to retain out-of-district counsel, just as it may adjust the base hourly rate to account for other case-specific variables.
Saying that the circuit’s “fee-setting jurisprudence has become needlessly confused,” it continued that the district court should start by considering “what a reasonable, paying client would be willing to pay, not just in deciding whether to use an out-of-district hourly rate in its fee calculation.”
The passage that caused confusion and concern came in the panel’s description of the factors affecting this “presumptively reasonable rate”:
including, but not limited to, the complexity and difficulty of the case, the available expertise and capacity of the client's other counsel (if any), the resources required to prosecute the case effectively (taking account of the resources being marshaled on the other side but not endorsing scorched earth tactics), the timing demands of the case, whether the attorney had an interest (independent of that of his client) in achieving the ends of the litigation or initiated the representation himself, whether the attorney was initially acting pro bono (such that a client might be aware that the attorney expected low or non-existent remuneration), and other returns (such as reputation, etc.) the attorney expected from the representation. (Emphasis added.)
This prompted a motion for rehearing and for rehearing en banc, with numerous amici adding their concerns. Responding to the motion for rehearing, the court added a footnote to the opinion that stated:
Our decision today in no way suggests that attorneys from non-profit organizations or attorneys from private law firms engaged in pro bono work are excluded from the usual approach to determining attorneys' fees….
Now comes a second amended opinion that (like the first) says nothing about the en banc petition, but greatly expands the footnote:
…The reasonableness of a fee award does not depend on whether the attorney works at a private law firm or a public interest organization, see Blum v. Stenson, 465 U.S. 886, 894 (1984) (“Congress did not intend the calculation of fee awards to vary depending on whether plaintiff was represented by private counsel or by a nonprofit legal services organization.”), nor is the award necessarily limited because the attorney has agreed to undertake the case for a reduced fee compared to the customary market rate, see Reiter v. MTA N.Y. City Transit Auth., 457 F.3d 224, 233 (2d Cir. 2006). Nevertheless, the nature of representation and type of work involved in a case are critical ingredients in determining the “reasonable” hourly rate. See, e.g., Blum, 465 U.S. at 895 n.11 (“[R]equested rates [must be] in line with those prevailing in the community for similar services . . . .” (emphasis added)); see also Cohen v. W. Haven Bd. of Police Comm’rs, 638 F.2d 496, 506 (2d Cir. 1980) (“The fees that would be charged for similar work by attorneys of like skill in the area [is] the starting point for determination of a reasonable fee award.”); Pastre v. Weber, 800 F. Supp. 1120, 1125 (S.D.N.Y. 1991) (finding force in the “argument that [defendant] should not be required to pay for legal services at the rate Hughes Hubbard would charge to [its corporate clients] . . . but should . . . compensate plaintiff only for what would have been charged by a competent attorney specializing in civil rights litigation”). These factors may justify compensating an attorney at a rate lower than his or her customary rate for a different type of practice, regardless of whether the attorney has agreed to take the case on a pro bono or reduced-fee basis.
The footnote concludes:
All we are holding is that in calculating the reasonable hourly rate for particular legal services, a district court should consider all relevant circumstances in concluding what a reasonable client would expect to pay. Thus, attorneys – regardless of whether they are pursuing litigation on behalf of a paying client or a non-paying client – should receive out-of- district fees only if a reasonable, paying client would have retained out-of-district counsel.
The practical effect of the Second Circuit’s formulation, as further clarified by the expanded footnote, remains to be seen. An interesting summary of the fee discussion in this case and the reaction to it is up at Law.com.