Court of Appeals upholds various reductions in attorneys' fees award

Attorneys' fees are bread and butter of a civil rights lawyer's practice. Many of the cases are taken on contingency, so the lawyer does not get paid until the case settles or prevails at trial. If the plaintiff wins the trial, the parties then litigate the attorneys' fees award, and that often becomes a second litigation as the parties dispute whether (1) the winning attorney deserves compensation for all the time she spent on the case or (2) if counsel should recover any fees at all. This case explores some of those issues. In the end the plaintiff (and her lawyer) loses the arguments. While counsel in this successful case gets some money, he does not get all the money that he wanted.

The case is Lilly v. City of New York, issued on August 14. After plaintiff filed this police misconduct case, the City served a Rule 68 offer which said it would settle the case (and have judgment entered against the City) in the amount of $10,000.01 plus reasonable attorneys' fees incurred to the date of the Rule 68 offer. Plaintiff accepted the offer and moved for attorneys' fees, including fees for the attorneys' fees motion. We call that "fees on fees" as the motion for fees is normally recoverable as part of the attorneys' fees award. After the district court issued its ruling, determining in part that plaintiff's counsel was entitled to fees on fees, everyone appealed.

The Court of Appeals rules as follows:

1. While plaintiff's lawyer wanted $600 to $650 per hour for his work on the case, the district court only awarded him $450, still good money in the Southern District of New York, but not counsel's usual rate. The Second Circuit (Droney, Walker and Leval) says the trial court did not abuse its discretion in reducing the hourly rate for this case because this was not complex matter but, instead, "a simple, garden variety" civil rights case. The Second Circuit upholds this reasoning on authority of Arbor Hill v. County of Albany, 522 F.3d 182 (2d Cir. 2008):

It was entirely appropriate for the district court to consider the complexity of a matter because a reasonable paying client would consider the complexity of his or her case when deciding whether an attorney’s proposed hourly rate is fair, reasonable, and commensurate with the proposed action. The district court’s decision to consider both [attorney] Rothman’s experience and the garden-variety nature of the litigation, which “lasted less than 10 months, required no depositions, and involved no substantial motions or briefings” or appearances before the district court, was consistent with our direction for district courts, “in exercising [their] considerable discretion, to bear in mind all of the case-specific variables that we and other courts have identified as relevant to the reasonableness of attorney’s fees in setting a reasonable hourly rate.”

This may be the first time the Second Circuit has held that the hourly rate may be lowered if the district court thinks the case is a simple one. But what is a "simple case"? Proving a civil rights violation is never really that simple. And should that make a difference in the hourly rate? The Court's reference to a "reasonable paying client" is mostly a hypothetical, as most civil rights plaintiffs cannot pay their way in the first instance. Will this reasoning dissuade lawyers from taking non-complex cases? These are questions that I cannot answer.

2. The Second Circuit further holds that the district did not abuse its discretion in awarding counsel a lower hourly rate for clerical tasks, like sending faxes, printing documents and the like. This argument comes up a lot in fee litigation, but I think this is the first the Second Circuit has squarely addressed it. The Court says non-lawyerly rates are appropriate for non-legal work in the office because the mythical "reasonable paying client" would not agree to pay her lawyer the full rate for ministerial, office tasks. While Lilly's attorney said this reasoning is unfair because he does not have a support staff and has to do everything himself, that does not persuade the Court of Appeals to award a higher rate for these tasks, as these duties are still clerical, not legal.

3. The Rule 68 reasoning is also a case of first impression. Fee litigation is funny because when the defendant vigorously opposes the fee application, plaintiff's attorney can defend the application in reply papers that will complete the motion. That work is compensable under the attorneys' fees statute, as it helps the plaintiff to enforce the judgment and attorneys' fees are an integral part of civil rights litigation. Work expended on the reply papers may be recoverable under the fee-shifting statute, with the end result that plaintiff may recover through the reply papers whatever amounts defendant's counsel was able to otherwise shave down in his opposition to the motion. But that's fee litigation for ya. These motions often get personal as the opposing lawyers launch a war against other, with defendant's counsel claiming the plaintiff's lawyer is over-billing and the plaintiff's lawyer claiming that defendant forgets that it actually lost the case.

In any event, in this case, the time expended on the attorneys' fees motion is not recoverable under the terms of the Rule 68 offer, which limited the attorneys' fees to those incurred at the time the Rule 68 offer was served. So the Court of Appeals takes the Rule 68 offer literally. The Rule 68 offer is really a contract offer, and we interpret contract offers based on their clear terms. The Court of Appeals concludes with some legal advice:

we conclude that when a settlement cuts off a plaintiff’s entitlement to attorney’s fees on a specific date, a district court may not award a party attorney’s fees for work incurred after that cut-off date. This includes fees for work performed preparing a fee application submitted to the district court in the event the parties are unable to agree on the attorney’s fees to be awarded despite a good faith effort to negotiate. If a plaintiff desires fees on fees in the event a fee application to the district court is required, the plaintiff should ensure that the settlement terms do not foreclose the availability of such fees.

“[t]he reasonable hourly rate is the rate a paying client would be willing to pay ... bear[ing] in mind that a reasonable, paying client wishes to spend the minimum necessary to litigate the case effectively.”⁴⁷ It was entirely appropriate for the district court to consider the complexity of a matter because a reasonable paying client would consider the complexity of his or her case when deciding whether an attorney’s proposed hourly rate is fair, reasonable, and commensurate with the proposed action. The district court’s decision to consider both Rothman’s experience and the garden-variety nature of the litigation, which “lasted less than 10 months, required no depositions, and involved no substantial motions or briefings” or appearances before the district court,⁴⁸ was consistent with our direction for district courts, “in exercising [their] considerable discretion, to bear in mind all of the case-specific variables that we and other courts have identified as relevant to the reasonableness of attorney’s fees in setting a reasonable hourly rate.”

Lilly v. City of New York, No. 17-2823(L)-CV, 2019 WL 3806446, at *5 (2d Cir. Aug. 14, 2019)

“[t]he reasonable hourly rate is the rate a paying client would be willing to pay ... bear[ing] in mind that a reasonable, paying client wishes to spend the minimum necessary to litigate the case effectively.”⁴⁷ It was entirely appropriate for the district court to consider the complexity of a matter because a reasonable paying client would consider the complexity of his or her case when deciding whether an attorney’s proposed hourly rate is fair, reasonable, and commensurate with the proposed action. The district court’s decision to consider both Rothman’s experience and the garden-variety nature of the litigation, which “lasted less than 10 months, required no depositions, and involved no substantial motions or briefings” or appearances before the district court,⁴⁸ was consistent with our direction for district courts, “in exercising [their] considerable discretion, to bear in mind all of the case-specific variables that we and other courts have identified as relevant to the reasonableness of attorney’s fees in setting a reasonable hourly rate.”

Lilly v. City of New York, No. 17-2823(L)-CV, 2019 WL 3806446, at *5 (2d Cir. Aug. 14, 2019)

“[t]he reasonable hourly rate is the rate a paying client would be willing to pay ... bear[ing] in mind that a reasonable, paying client wishes to spend the minimum necessary to litigate the case effectively.”⁴⁷ It was entirely appropriate for the district court to consider the complexity of a matter because a reasonable paying client would consider the complexity of his or her case when deciding whether an attorney’s proposed hourly rate is fair, reasonable, and commensurate with the proposed action. The district court’s decision to consider both Rothman’s experience and the garden-variety nature of the litigation, which “lasted less than 10 months, required no depositions, and involved no substantial motions or briefings” or appearances before the district court,⁴⁸ was consistent with our direction for district courts, “in exercising [their] considerable discretion, to bear in mind all of the case-specific variables that we and other courts have identified as relevant to the reasonableness of attorney’s fees in setting a reasonable hourly rate.”

Lilly v. City of New York, No. 17-2823(L)-CV, 2019 WL 3806446, at *5 (2d Cir. Aug. 14, 2019)