Monday, December 6, 2010

A word to the wise on attorneys' fees

The Second Circuit has ruled that attorneys' fees applications should normally be denied in their entirety if the lawyer does not submit contemporaneous time records in support of the request. This ruling re-examines the Second Circuit's seminal attorneys' fees decision, New York State Association for Retarded Children v. Carey, 711 F.2d 1136 (2d Cir. 1983).

The case is Scott v. City of New York, decided on December 1. Any civil rights lawyer who makes a living on attorneys' fees should read this decision. And if they have not already done so, these lawyers must get into the habit of keeping detailed time records on their fee-shifting cases to prevent a potentially catastrophic result: zero attorneys' fees after hundreds of hours of litigation.

This issue arises because the lawyer for New York City police officers, who successfully sued New York City for overtime violations, sought over $2 million in attorneys' fees. He submitted a 96-page attachment to the fee motion reflecting more than 2,000 hours of work. But these were not contemporaneous records. The lawyer acknowledged that "the entries were prepared instead 'by my office working with outside paralegal assistance under my general supervision'" and that "the paralegals based the entries on 'an extensive database of incoming emails maintain by my law firm in a computer folder.'" In other words, the time records in support of the fee application were prepared after the case ended, not contemporaneously. The time entries were also riddled with errors and mistakes.

Based on the Carey precedent, the City argued that counsel should not get any attorneys' fees. Carey does support that argument, stating that "contemporaneous time records are a prerequisite for attorney's fees in this Circuit." Describing contemporaneous time records as a "mandatory requirement," the Court of Appeals in Carey said that "any attorney ... who applies for court-ordered compensation in this Circuit for work done after the date of this opinion must document the application with contemporaneous time records."

The problem is that, later in the opinion, Carey also stated that "all applications for attorneys' fees ... should normally be disallowed unless accompanied by contemporaneous time records indicating, for each attorney, the date, the hours expended, and the nature of the work done." (Emphasis supplied). This "normally" qualifier suggests that an attorney might sometimes get away with not submitting contemporaneous time records.

In this case, Judge Scheindlin excused plaintiffs' lawyer's failure to submit contemporaneous time records, deciding to give him the "benefit of the doubt" and awarding him $515,000 in fees. That's not good enough for the Second Circuit (Miner, Katzmann and Hall), which remands the case to the district court to better explain itself. The Court of Appeals seems prepared to find that the district court abused its discretion in awarding attorneys' fees. In revisiting Carey, the Second Circuit says now that "Carey establishes a strict rule from which attorneys may deviate only in the rarest of cases." What's a rare case excusing non-contemporaneous fees? Don't ask. Here's what the Second Circuit says:

While we can imagine rare circumstances where an award of fees might be warranted even in the total absence of contemporaneous records — such as where the records were consumed by fire or rendered irretrievable by a computer malfunction before counsel had an opportunity to prepare his application — the circumstances justifying such an exception would have to be found by the awarding court and laid out in sufficient detail to permit review of the justification on appeal.

So it's possible that counsel may get nothing after attaining an excellent result for his clients after years of litigation. A brutal result, to be sure, but not completely out of left field. While Carey foreshadowed this decision, I am sure district courts have made it a practice of giving prevailing lawyers some fees even without contemporaneous time records, by estimating how many hours a reasonable lawyer might have expended on a particular case, and then docking the lawyer a percentage reduction for bad record-keeping. After all, the lawyer must have done some work on the successful case. That model is now behind us. Word to the wise: keep good records and do not take anything for granted.

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