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Is $1M in Attorney Fees Fair When a Law Firm Works Pro Bono?

This story, NY BigLaw Leader Scores $1 Million Fee in Pro Bono Case, raises some interesting questions about how to assess attorney fees under a reimbursable fee statute, when the plaintiffs are represented pro bono by a large law firm.

As the article reports, a federal judge awarded $957,710 in attorney fees, plus costs and prejudgment interest, to Skadden Arps for its pro bono representation of a group of waiters, busboys and captains who sued their restaurant-employer for unlawfully witholding tips in violation of the Fair Labor Standards Act and the New York Labor Law. As discussed in the court's decision on fees in Heng Chan v. Sung Yue Tung Corp., the fee award exceeded the $699,374 judgment by roughly $300,000.

Believe it or not, the $957,710 attorneys fee award (which Skadden will use to support organizations that help Chinese Americans and low-wage earners) reflects a discount in Skadden's fees. Because Skadden voluntarily reduced its fees (for example, charging $450 an hour for a partner or $300 an hour for a sixth-year associate), the judge found that an additional discount to bring fees consistent with market rates for civil rights cases was not warranted. Another factor considered was that Skadden lawyers claimed that they wrote off 4,100 hours. Finally, the judge said the fees were justified, because it would have been "difficult or impossible for a small firm or non-profit to take on the case."

After reviewing the decision, I find several problems with the judge's reasoning. First, while I don't mean to denigrate the terrific work that Skadden performed in this case, I find it extremely difficult to believe that the firm wrote off 4,100 hours of time -- that's the equivalent of TWO FULL years of associate time. And while the case went on for three years (complaint was filed in August 2003, and the case was tried at the end of 2006), it seems unlikely that it consumed two full years of billable hours. 

Second, in most civil rights litigation, the Laffey Matrix presumptively applies to determine fees in civil rights cases. The Laffey Matrix establishes different levels of fees, beginning at $185 an hour for lawyers with one to three years of experience (under the 04-05 Matrix) and topping out at $390 an hour for lawyers with over 20 years of experience. The table summarizing each attorney's hours in the case (Opinion at 11) shows that Rachel Passaretti, a sixth-year associate, devoted the most time to the case -- 1,380 hours, at a rate of $300 an hour, for a total of $414,180. Under the Laffey Matrix for 2007, adjusted for large cities, she'd have been paid $245 per hour, for a total of $330,000 -- or $80,000 less than under the higher fee. Likewise, Erica Goodstein and Kennth Schwartz, who were also admitted at the same time as Passaretti, according to the opinion, colectively billed 460 hours, for a total of $138,000 -- or $112,000, under Laffey Index rates. As for partner Mark Cheffo, with his 16 years of experience, he would qualify for $375 under the Laffey index and would have billed $161,000 rather than the $194,000 at his $450 rates. 

Moreover, because Skadden was working pro bono, it had no incentive to minimize its costs or limit its time. And indeed, because firms often use pro bono as training, Skadden may have double- or triple-staffed the case where fewer attorneys might have been necessary (in fact, defendants challenged Skadden's bill for three attorneys at trial, rather than just two, the same number that the defense had).

While the judge may be right to conclude that Skadden deserved a higher rate because of the deep discounts offered, on the other side of the coin, it's only fair to ask whether the losing defendants should be forced to foot the bill when a law firm, which originally signed up to work pro bono, subsequently seeks a fee. Yes, defendants should pay in reimbursable fee cases -- the law so requires. But should they have to pay for Cadillac representation when a cheaper model would have worked just as well?

Posted by Carolyn Elefant on May 16, 2007 at 08:16 PM | Permalink | Comments (0)


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