Last month, the federal appeals court in New York gave the civil rights bar a collective heart attack.
It ruled that there are cases in which lawyers may be paid not in dollars but in what it called “non-monetary returns.” Those include, the court said, “experience, reputation or achievement of the attorneys’ own interests and agendas.”That standard is new, and it has teeth. The lawyers involved had won a significant voting rights case, and they sought $445,000. They got $133,000.
In a flurry of legal filings last week, the lawyers, supported by two bar associations and 29 public interest organizations — including the Urban Justice Center, Public Citizen, the Natural Resources Defense Council and several affiliates of the American Civil Liberties Union — begged the court to reconsider.
“It really is a dangerous decision,” said David Udell, a lawyer with the Brennan Center for Justice at New York University, which represents the public interest groups. “What the court does is say that legal work is less valuable when the lawyers’ hearts are in it.”
The case itself was a challenge to the way Albany County in New York reapportioned its voting districts after the 2000 census. It was filed by two organizations representing minorities, including the local branch of the N.A.A.C.P., and three individuals.
In cases brought under the federal Voting Rights Act, the winning side is allowed to recover its legal fees from the losers. That is an exception to the conventional American practice of making each side bear its own legal fees, but it is not particularly unusual. Quite a few laws have similar fee-shifting provisions.
It is hard to be particularly sympathetic to the lawyers in the case, including several from Gibson, Dunn & Crutcher, a fancy corporate firm. They claimed, for instance, that an appeal involving a single, simple issue required almost 300 hours of work by eight lawyers and a $107,000 bill, to be paid by the taxpayers of Albany County.
That kind of money is in line with what big law firms charge their corporate clients. On the other hand, the request was preposterous.
A different panel of the appeals court, the United States Court of Appeals for the Second Circuit, was incredulous when it first saw the fee application in 2004.
“It is difficult to believe that a large amount of time was needed to prepare the brief’s description of the facts and procedural history; and the entire argument section of the brief on this single-issue appeal occupied barely six pages,” the appeals court said in an unsigned opinion. It sent the case back to the lower court with the strong suggestion that it slash the fee application.
It did — but for the usual reasons. Too many lawyers had billed too many hours at jaw-dropping hourly rates, two lower court judges found. The appeal, they said, was worth not $107,000 but $20,000.
So far so good. And in affirming those reductions last month, a three-judge panel of the court properly sought to bring some clarity and order to the question of how to treat fee applications, an area of the law that is without question a mess.
One of the judges on the panel was Sandra Day O’Connor, who has been sitting on quite a few appeals since her retirement from the Supreme Court last year. The solution she and the two other judges arrived at was at once eminently sensible and entirely impractical.
The court asked what a hypothetical, thrifty client would have paid a lawyer to litigate the case — that is, it asked what the market price in an arm’s-length transaction would have been. “Not incidentally,” Judge John M. Walker Jr. wrote for the panel, “a reasonable, paying client might consider whether a lawyer is willing to offer his services in whole or in part pro bono” — free — “or to promote the lawyer’s own reputational or societal goals.”
But there is a reason that client was hypothetical. The fee-shifting laws distort the marketplace in a way that makes it impossible to know what lawyers and clients would otherwise have done.
In an e-mail message, Mitchell A. Karlan, the Gibson, Dunn partner who argued the appeal, said he had taken the case without expecting to be paid — if he lost.
“My agreement with the plaintiffs,” Mr. Karlan continued, “was that I would apply for a fee on their behalf if I won, and that any fee the court awarded I and the other lawyers would keep.”
That is, for better or worse, how real-life pro bono works, and it is the system Congress had in mind in enacting fee-shifting statutes to encourage the private enforcement of civil rights laws.
Gibson, Dunn, which occasionally represents The New York Times Company, does not need the money. The average Gibson, Dunn partner makes $1.75 million a year, according to The American Lawyer.
But the new standard announced last month also applies to small firms and to advocacy groups, and it asks judges to inquire into lawyers’ motives in taking cases to decide how much their work was worth.
Lawyers who can prove they were in it only for the money will get paid in dollars. Others may have to make do with psychic income.
