Recovery of legal assistant fees in litigation.Skyrocketing litigation An action brought in court to enforce a particular right. The act or process of bringing a lawsuit in and of itself; a judicial contest; any dispute.
When a person begins a civil lawsuit, the person enters into a process called litigation. costs have caused lawyers to think twice about pursuing many cases. More than ever, lawyers have to determine whether taking a case is reasonable in light of the probability of success, the maximum potential award, and the collectibility of damages.
To keep legal costs down, more paralegals, or legal assistants, are being employed. The right to recover the cost or value of their services has emerged as an important legal issue.
Courts that have considered the issue have reached different results--they have either allowed recovery as a separate element of an attorney fee award or denied recovery, finding the cost for paralegal paralegal n. a non-lawyer who performs routine tasks requiring some knowledge of the law and procedures, employed by a law office or who works free-lance as an independent for various lawyers. work should be incorporated in a firm's overhead costs overhead costs
see fixed costs. .
Allowing fee recovery. Most courts have recognized the prevailing practice of billing separately for legal assistant services and have allowed recovery for these charges when reimbursement Reimbursement
Payment made to someone for out-of-pocket expenses has incurred. of costs or attorney fees is permitted.
In Gill Savings Association v. International Supply Co.,(1) a decision regarding the right to recover attorney fees arose from a Texas property statute.(2) The statute provides that the "claimant CLAIMANT. In the courts of admiralty, when the suit is in rem, the cause is entitled in the Dame of the libellant against the thing libelled, as A B v. Ten cases of calico and it preserves that title through the whole progress of the suit. or owner of the lien is entitled to recover all reasonable costs of collection, including attorney's fees attorney's fee n. the payment for legal services. It can take several forms: 1) hourly charge, 2) flat fee for the performance of a particular service (like $250 to write a will), 3) contingent fee (such as one-third of the gross recovery, and nothing if there is no ."(3)
Although the court acknowledged that the "statute uses only the words 'attorney's fees' and does not state 'legal assistants' fees,'" it did "not read the statute to preclude recovery for legal work properly performed by legal assistants."(4) The court looked to reasonableness of the labor and time spent and said that "legal assistant charges are an appropriate component of attorney's fees since an attorney would have to have performed the services if a legal assistant had not been used."(5) The court also noted that "the purpose and objective of our legal system is to provide the most equitable, efficient adjudication The legal process of resolving a dispute. The formal giving or pronouncing of a judgment or decree in a court proceeding; also the judgment or decision given. The entry of a decree by a court in respect to the parties in a case. of litigation at the least expense practicable."(6)
In 1989, in Missouri v. Jenkins Missouri v. Jenkins, 515 U.S. 70 (1995), is a case decided by the United States Supreme Court. On June 12, 1995 the Court, in a 5-4 decision, overturned a District Court ruling that required the state of Missouri to correct de facto , the U.S. Supreme Court resolved the issue of whether legal fees billed for the work of legal assistants could be awarded as costs under 42 U.S.C.A. [sections]1988 and outlined the method for determining the value of the work.(7)
In that case, the prevailing plaintiffs in a school desegregation The attempt to end the practice of separating children of different races into distinct public schools.
Beginning with the landmark Supreme Court case of brown v. board of education, 347 U.S. 483, 74 S. Ct. 686, 98 L. Ed. decision requested attorney fees under the Civil Rights Attorneys' Fees Awards Act of 1976, which allows the award of "a reasonable attorney's fee as part of the costs."(8) The trial court had allowed compensation for work done on the case by paralegals, law clerks law clerk
A person, typically an attorney, employed as an assistant to a judge or another attorney, especially in order to gain legal experience. , and recent law school graduates at market rates for these services, rather than at their cost to the attorneys. The appellate court A court having jurisdiction to review decisions of a trial-level or other lower court.
An unsuccessful party in a lawsuit must file an appeal with an appellate court in order to have the decision reviewed. affirmed.(9) The case was then appealed to the U.S. Supreme Court, which was asked to decide whether market-rate paralegal and law clerk compensation was proper.
The Supreme Court held that market-rate compensation was proper. The Court based its decision on the premise that the term "reasonable attorney's fee" means the work product of an attorney, which includes the work of anyone whose labor contributes to it and must take into account other expenses and profit. The Court rejected the argument that compensation for paralegals at rates above "costs" would yield a "windfall" for the prevailing attorney. It found--
The prevailing "market rate" for attorney time is not independent of the manner in which paralegal time is accounted for. Thus, if the prevailing practice in a given community were to bill paralegal time separately at market rates, fees awarded the attorney at market rates for attorney time would not be fully compensatory if the court refused to compensate hours billed by paralegals or did so only at "costs." Similarly, the fee awarded would be too high if the court accepted separate billing for paralegal hours in a market where that was not the custom.(10)
Justice William Brennan, writing for the majority, emphasized the Court's desire to encourage the use of paralegals rather than attorneys wherever possible. He noted that permitting billing of paralegal hours at market rates "encourages cost-effective delivery of legal services legal services n. the work performed by a lawyer for a client. ."(11)
Many courts have relied on the Jenkins decision as the rationale for allowing recoverability of legal assistant time.
In Vasiliadis v. Belmont National Bank, which involved an employment discrimination matter, the U.S. District Court for the Northern District of Illinois had no difficulty finding a plaintiff was entitled to recover the hourly rates charged for paralegal services.(12) The court also found that a $60-per-hour rate was reasonable.
In Petrozelle v. Secretary of Health and Human Services Noun 1. Secretary of Health and Human Services - the person who holds the secretaryship of the Department of Health and Human Services; "the first Secretary of Health and Human Services was Patricia Roberts Harris who was appointed by Carter" , the U.S. Claims Court stated that "several special masters have found this amount [$65] reasonable considering that the paralegals are well qualified.... [T]he paralegals in this case performed essential tasks that in other cases have been performed by attorneys at high rates. Delegation of these duties to a paralegal support staff saved the program money."(13)
In Roundtree v. Philadelphia Housing Authority, the U.S. District Court for the Eastern District of Pennsylvania reduced the amount charged for an attorney's time to the amount charged for a paralegal's time for telephone calls to the clerk's office; preparation of a summons, cover sheet, and miscellaneous papers for filing; and copying, collating, and filing a motion to compel A motion to compel asks the court to order either the opposing party or a third party to take some action. This sort of motion most commonly deals with discovery disputes, when a party who has propounded discovery to either the opposing party or a third party believes that the discovery responses.(14) The paralegal's time was then included in the court's lodestar lode·star also load·star
1. A star, especially Polaris, that is used as a point of reference.
2. A guiding principle, interest, or ambition. calculation of attorney's fees.
Denying fee recovery. But there are still some courts that do not consider costs related to paralegal work as compensalbe. These courts have found that paralegal costs are no different from other costs of running a law firm.
In Fleet Bank of Maine v. Rivers, the U.S. District Court for the District of Maine The District of Maine was a legal designation for what is now the U.S. state of Maine from American independence until the Missouri Compromise on March 4, 1820, after which it gained its independence from Massachusetts and became the 23rd state in the Union. considered a $50 rate as firm overhead and denied recovery.(15) The court found that much of a paralegal's time is duplicated by supervising attorneys in using the work product and therefore should not be compensated for separately.
Similarly, in In re Rheam of Indiana, the court noted that where the work of paralegals is considered clerical in nature it is noncompensable overhead.(16)
Statutes That Allow Recovery
At least seven federal statutes either expressly permit or have been interpreted to permit an award of paralegal fees to prevailing parties The litigant who successfully brings or defends an action and, as a result, receives a favorable judgment or verdict.
prevailing party n. the winner in a lawsuit. : the Federal Bankruptcy Law,(17) the Employee Retirement Income Security Act The Employee Retirement Income Security Act of 1974 (ERISA), 29 U.S.C.A. § 1001 et seq. (1974), is a federal law that sets minimum standards for most voluntarily established Pension and health plans in private industry to provide protection for individuals enrolled in these plans. of 1974,(18) the Sherman Antitrust Act Sherman Antitrust Act, 1890, first measure passed by the U.S. Congress to prohibit trusts; it was named for Senator John Sherman. Prior to its enactment, various states had passed similar laws, but they were limited to intrastate businesses. and Clayton Act A federal law enacted in 1914 as an amendment to the Sherman Anti-Trust Act (15 U.S.C.A. § 1 et seq. ), prohibiting undue restriction of trade and commerce by designated methods.
The Clayton Act (15 U.S.C.A. § 12 et seq. ,(19) the Surface Mining Control and Reclamation Act of 1977,(20) the Civil Rights Attorneys' Fees Awards Act,(21) and the Equal Access to Justice Act.(22)
The Third Circuit recently opened the door to hourly fee billing by nonlawyers in Chapter 11 bankruptcy cases under the Federal Bankruptcy Code Bankruptcy Code may refer to:
An individual or institution that lends money without obtaining specified assets as collateral. This poses a higher risk to the creditor because they have nothing to fall back on should the borrower default on the loan. A debenture holder is an unsecured creditor. .
Judge Edward Becker, writing for a unanimous panel, rejected the lower courts' description of paralegal services as "purely clerical functions which are not compensable com·pen·sa·ble
Being such as to entitle or warrant compensation: compensable injuries.
Adj. 1. and which constitute normal overhead."(24) Rather, the court remanded the issue to the bankruptcy court bankruptcy court n. the specialized Federal court in which bankruptcy matters under the Federal Bankruptcy Act are conducted. There are several bankruptcy courts in each state, and each one's territory covers several counties. with the instruction that paralegal services are compensable under Section 330 of the Federal Bankruptcy Code if they are regarded as professional in the nonbankruptcy legal market.
The bankruptcy court on remand To send back.
A higher court may remand a case to a lower court so that the lower court will take a certain action ordered by the higher court. A prisoner who is remanded into custody is sent back to prison subsequent to a Preliminary Hearing before a tribunal or magistrate must now define the types of paraprofessional paraprofessional
1. a person who is specially trained in a particular field or occupation to assist a veterinarian.
2. allied animal health professional.
3. pertaining to a paraprofessional. services that are reimbursed in the nonbankruptcy market and determine whether these types of services were performed by the law firm's staff.
Several states also have enacted statutes to provide for the recovery of paralegal fees. One of the newest is an Indiana statute that became effective July 1, 1993.(25) Other states, like Texas, have interpreted statutes as not precluding recovery for legal work properly performed by legal assistants.(26)
The decision whether to include reimbusement for paralegal services in an award of attorney fees is made case by case. However, the criteria that many courts have said must be met before reimbursement will be granted include the following--
* the services performed by the paralegal must be legal rather than clerical in nature;
* the paralegal's work must be supervised by an attorney;
* the paralegal must be qualified through education, training, or work experience to perform substantive legal work;
* the amount of time spent by the paralegal in performing the services must be reasonable; and
* the amount charged must reflect reasonable community standards Community standards are local norms bounding acceptable conduct. Sometimes these standards can itemized in a list that states the community's values and sets guidelines for participation in the community. .
Parties seeking reimbursement should include documentation in their requests showing that all criteria have been met. The most common method of establishing the time spent by paralegals is providing detailed time records.
Services that can be described as secretarial or administrative are often mentioned in court decisions as not recoverable. For example, the U.S. District Court for the District of Hawaii held that time spent doing purely ministerial tasks is not recoverable as a paralegal cost.(27)
Courts have also disallowed attorney and paralegal fees because the petitioner failed to supply a breakdown of the hourly rates of attorneys and their assistants.(28) In Baker v. Chrysler Corp., the U.S. District Court for the Eastern District of Pennsylvania denied paralegal fees because they were not itemized.(29)
Many courts have rules specifying a requirement for a fee affidavit affidavit
Written statement made voluntarily, confirmed by the oath or affirmation of the party making it, and signed before an officer empowered to administer such oaths. and the contents of the fee affidavit. For instance, a New Jersey court rule reads in part:
If the court is requested to consider the rendition of paraprofessional services in making a fee allowance, the affidavit shall include a detailed statement of the time spent and services rendered by paraprofessionals, a summary of the paraprofessionals' qualifications, and the attorney's billing rate for paraprofessional services to clients generally.(30)
Some attorneys believe that whatever they delegate to a paralegal is work for which fees are recoverable. They believe that the mere fact that the attorney delegates the work is enough to support an award of costs for the tasks performed by the paralegal regardless of whether the work is substantive paralegal work, or, as the New Jersey rule puts it, "tasks which are legal in nature."(31) Most attorneys and paralegals are not aware of the volume of case law that distinguishes between substantive paralegal work and ministerial tasks and that has reduced or denied recovery of paralegal fees for work that was not substantive.
Moving in the Right Direction
Recent cases indicate that courts may be moving in the direction of allowing recovery of paralegal fees, especially where federal or state statutes permit or require this. Many courts have recognized the widespread use of legal assistants as promoting economy and efficiency in the administration of justice.
The recent court decisions and statutes discussed in this article provide guidelines to attorneys regarding what costs for paralegal work are likely to be reimbursed to the client. Attorneys who use paralegals wisely and keep accurate records of their work can provide legal services at a cost that will likely be reimbursed to the prevailing party.
(1)759 S.W.2d 697 (Tex. Ct. App. 1988).
(2)TEX. PROP. CODE ANN. [sections]53.156(a) (Vernon 1984).
(4)759 S.W.2d 697, 703.
(5)Id. at 704.
(7)491 U.S. 274 (1989).
(8)42 U.S.C.A [sections]1988 (1986).
(9)838 F.2d 260 (8th Cir. 1988).
(10)491 U.S. 274, 286-87.
(11)Id. at 288 (quoting Cameo Convalescent con·va·les·cent
Relating to convalescence.
A person who is recovering from an illness, an injury, or a surgical operation.
1. pertaining to or characterized by convalescence.
2. Center, Inc. v. Senn, 738 F.2d 836, 846 (7th Cir. 1984)).
(12)No. 89 C 1758, 1990 WL 186221 (N.D. Ill. 1990).
(13)No. 90-2215V, 1992 U.S. Cl. Ct. LEXIS 453, at *5 (Cl. Ct. Sept. 16, 1992).
(14)No. 91-7285, 1992 U.S. Dist. LEXIS 13622, at *4, *5 (E.D. Pa. Sept. 10, 1992).
(15)799 F. Supp. 1248, 1250 n.l (D. Me. 1992).
(16)137 B.R. 151, 163 (Bankr. E.D. Pa. 1992). This case involved an auctioneer's request for fee reimbursement, but the court analogized the facts to a situation where an attorney or paralegal requests compensation for clerical work.
(17)11 U.S.C. [sections]330 (1988).
(18)29 U.S.C. [sections]1452(e) (1988).
(19)15 U.S.C. [sections]15 (1988).
(20)30 U.S.C. [sections]1270(f) (1988).
(21)42 U.S.C.A. [sections]1988.
(22)28 U.S.C. [sections]2412 (1988).
(23)19 F.3d 834 (3d Cir. 1994).
(24)In re Busy Beaver Bldg. Ctrs., Inc., 133 B.R. 753, 758 (Bankr. W.D. Pa. 1991).
(25)INDIANA CODE ANN. [sections]1-1-4-6 (West Supp. 1993).
(26)See Gill Sav. Ass'n, 759 S.W.2d 697.
(27)Stewart v. Sullivan, 810 F. Supp. 1102, 1109 (D. Haw haw, common name for several plants, e.g., the hawthorn and the black haw (see honeysuckle). . 1993).
(28)See, e.g., Bodenhamer Bldg. Corp. v. Architectural Research Corp., 989 F.2d 213, 222 (6th Cir. 1993).
(29)No. 91-7092, 1993 U.S. Dist. LEXIS 727, at *33 (E.D. Pa. Jan. 25, 1993).
(30)N.J. CT. R. 4:42-9(b).