The New York Law Journal by Tony Mauro - October 15, 2009
WASHINGTON, D.C. - The nine justices of the U.S. Supreme Court are all lawyers, but most showed little empathy for their fellow attorneys yesterday as they debated whether legal fee awards can be enhanced for superior performance or exceptional results under a federal fee-shifting statute. The justices heard arguments in Perdue v. Kenny A., 08-970, brought by the state of Georgia to challenge a $4.5 million fee enhancement it was ordered to pay by a district court judge to reward lawyers who succeeded in reforming the state foster care system in a long-running class action. The enhancement would be on top of a $6 million "lodestar" award based on prevailing fees and hours billed. Lawyers for Children's Rights Inc. of New York and a private Atlanta firm worked on the case. Civil rights groups from across the political spectrum are watching the dispute, asserting that the prospect of enhanced fees is necessary to attract quality representation in the lengthy and complex litigation they pursue (NYLJ, Oct. 14). But during yesterday's hour-long argument, several justices seemed more worried about high legal fees than in encouraging quality lawyers to do public-minded work. "Seven hundred thousand dollars for a lawyer. Wow!" said Justice Stephen Breyer, referring to the amount one lawyer could make for a year's work on the Georgia litigation. "How do we explain this to the average person?" Justice Breyer said that "very high is enough" when it comes to lawyer fees. "You don't need very, very, very, high." Justice Samuel Alito Jr. said he was "very troubled" by the notion of a judge taking "$4-plus million from the taxpayers of Georgia" and giving it as a bonus to the lawyers in the case for good performance.
Chief Justice Roberts acknowledged, "Maybe we have a different perspective. You think the lawyers are responsible for a good result, and I think the judges are." Mr. Clement's friendly retort: "And maybe your perspective's changed, your honor," a reference to the fact that, before becoming a judge, the chief justice was a highly paid appellate advocate for Hogan & Hartson in Washington. Chief Justice Roberts had the last word, countering, "Maybe your perspective has changed too, Mr. Clement. …Your argument is that, you know, for $495 an hour you really can't get a good lawyer?" The chief justice is paid $223,500 a year (associate justices are paid $213,900). When King & Spalding hired Mr. Clement last year, his pay package reportedly was $5 million. Asked afterward how much he is being paid for his representation in the Georgia case, Mr. Clement declined to give a specific figure but said the payment will be "just what you would expect given our position: a special fee arrangement with a potential enhancement for exceptional results." Mark Cohen of Troutman Sanders in Atlanta, representing the state of Georgia, argued that, under law, superior performance cannot be the basis for departing from the lodestar amount. One reason, he said, is that quality performance is already factored into the basic amount paid, so an enhancement amounts to "double-counting."
Justice Sonia Sotomayor wondered whether the enhancement could be made by, for example, bumping a $200-an-hour associate who performs well up to $500 an hour when the lodestar amount is calculated. Mr. Cohen said no, because that associate would be charging other clients $200 hourly no matter how good he was. Justice Sotomayor countered that "law firms get bonuses from clients all the time." In his rebuttal, Mr. Cohen also responded to a crack made by Mr. Clement earlier. Chief Justice Roberts had noted that some lawyers argue at the high court for free to enhance their reputations, so that paying them prevailing rates might amount to overcompensation. "Sometimes you get what you pay for" when clients get free representation, Mr. Clement replied. Mr. Cohen told the justices, "I am getting paid half my hourly rate in this case," but said he is doing so because of his professional responsibility to represent his client "zealously within the bounds of the law." If the Court allows the fee enhancement to stand in the Georgia case, Mr. Cohen argued, applications for similar enhancements in other cases "are going to come out the wazoo, and district courts are going to be deciding things arbitrarily and on different bases." Tony Mauro covers the U.S. Supreme Court for ALM, the Law Journal's parent. He can be reached at email@example.com.
Justices Weigh $4.5 Million Bonus Awarded Lawyers in Ga. Litigation
Judge Was Impressed by Attorneys' Work on Foster-Care Case
The Washington Post by Robert Barnes - October 15, 2009
The Supreme Court spends a sizable portion of its time dealing with lawyers gone bad: the ones who miss critical filing deadlines, put up halfhearted defenses of clients facing death row, give bad advice with disastrous results. On Wednesday, the court was faced with what to do about lawyers who do good. And also, extremely well. The justices focused on a group of lawyers from a children's rights group and a private law firm who won a transformation of the state of Georgia's dysfunctional foster-care system. Their work on behalf of 3,000 children so impressed the federal judge who presided over the case that he awarded them a bonus of $4.5 million -- on top of the $6 million in legal fees he told the state to pay. It made for an animated debate on the skyrocketing cost of legal work, exorbitant salaries for lawyers, whether judges should grade the lawyers who come before them and whether Congress intended some sort of bonus for lawyers who take on uncertain and sometimes unpopular civil rights cases. Federal law allows those who prevail in such cases to recover their fees, and the judge in the case calculated those fees by multiplying what he thought were the reasonably expected billable hours by the prevailing hourly rate in Atlanta for such work, ranging from $215 an hour for the most junior associate to up to $495 for the most experienced partner.
But U.S. District Judge Marvin H. Shoob went further in awarding the bonus. He said the lawyers from the group Children's Rights and Atlanta's Bondurant, Mixson & Elmore law firm displayed a "higher degree of skill, commitment, dedication and professionalism" than he had seen during his time on the bench, and that in "58 years as a practicing attorney and federal judge, the court is unaware of any other case in which a plaintiff class has achieved such a favorable result on such a comprehensive scale." The state of Georgia balked at paying the multimillion-dollar bonus, and said neither federal law nor Supreme Court precedent allowed such "enhancements." Although the winning lawyers in the case are supported at the court by an array of liberal and conservative public interest groups and represented by Paul D. Clement, President George W. Bush's former solicitor general, the reaction of the justices seemed to divide into ideological camps. Justice Sonia Sotomayor said there must be incentives for private lawyers to take a chance on representing the underprivileged and those pressing claims that their constitutional rights have been violated. "If the market doesn't give them attorneys to start with, because there are so many risks involved in this process, and it sets a reduced fee because of those risks, how do you attract competent counsel?" she asked. Mark H. Cohen, representing Georgia, said judges already take into account the lawyers' performance when calculating the base payment for the work. He acknowledged that such enhancements are rare but warned that if the court agrees with this one, "requests are going to come out the wazoo, and district courts are going to be deciding things arbitrarily and on different bases."
On the other side, Justice Samuel A. Alito Jr. said that while he takes the district judge at his word about the lawyers' exemplary performance, he was troubled that a judge "in effect takes $4-plus million from the taxpayers of Georgia" and awards it to a special interest group. "It seems totally standardless, and I see no way of policing it, and I see a great danger that trial judges are going to use this as a way of favoring their favorite nonprofit foundation or their favorite cause or their favorite attorneys, because they think they generally do good work," Alito said. But Clement said the court already allows judges discretion in adjusting payments downward, and without an incentive to be rewarded for extraordinary work, it would make no sense for private lawyers to take on civil rights cases, in which payment might not come for years. "You are basically guaranteeing that . . . the maximum you can make in a civil rights case is the minimum you can make in any other kind of case," Clement said. Justice Stephen G. Breyer said he was unsure how he thought the case should come out, but he did a quick finger-in-the-air calculation and said he thought the public would be shocked by what the award would mean when translated as an annual salary for the lawyers involved. "But $700,000 a year for a lawyer. Wow," Breyer said. "And that's what this judge said." The subject of a lawyer's worth was also part of an interesting exchange between Chief Justice John G. Roberts Jr., who made more than $1 million a year as an appellate specialist before joining the federal bench, and Clement, who recently left public service for a reported multimillion-dollar package at a Washington firm. Roberts questioned whether the outcome of a case was so dependent on the lawyer involved, rather than what is "dictated or commanded or required under the law." "Maybe we have a different perspective," Roberts said. "You think the lawyers are responsible for a good result and I think the judges are." "And maybe your perspective's changed, your honor," Clement replied. Moments later, Alito added, "Maybe your perspective has changed too, Mr. Clement." The case is Perdue v. Kenny A.