February 2015 • Volume 103 • Number 2 • Page 32
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Maximizing Your Recovery in Fee-Shifting Cases
Many federal and state actions provide for attorney fee-shifting, making a range of cases attractive that otherwise would not be. Here are tips for maximizing your recovery in fee-shifting cases.
Have you ever had a prospective client present a case with great facts that you would enjoy litigating, a case that really yearns for justice and looks like a winner? The client can pay a small amount each month but cannot pay by the hour. Should you take the case?
The answer might well be "yes." More than 200 federal actions provide attorney fee-shifting for clients who prevail in court.1 Illinois adds scores more. (See sidebar for more about identifying fee-shifting cases.) These statutes also provide great bargaining leverage to recover fees in settlement. They provide flexibility to the practitioner to take cases at reduced fees or no upfront fees at all.
This article gives an overview of the fee-recovery process in these cases from beginning (the client engagement letter) to end (the hearing on fees), offering pointers to help you earn the highest fee to which you are entitled.
Address fee shifting in your legal services agreement
Unsurprisingly, like other cases the vast majority of fee-shifting cases settle, including the issue of attorney fees. And the law provides a presumption of fee-shifting for the prevailing plaintiff's attorney: "prevailing plaintiffs [should] obtain an award of attorney fees almost as a matter of course."2 This enables settlement with attorney fees included.
Accordingly, your legal services agreement ("LSA") with your client should mandate payment of your fees and costs in full from the fee-shifting defendant upon settlement, unless you approve a lesser amount. As for settlement discussions, the LSA should inform the client that two claims will be negotiated: the client's claim for damages and money paid to you plus fees and costs.
The LSA should also include what might be called anti-"divide and conquer" language, anticipating that the client may be more interested in obtaining damages than payment of your fees. Often, the defendant in a fee-shifting case will seek to divide your client's loyalty from you by offering reasonable damages or injunctive relief but insisting, "We won't pay any fees!"
The LSA should provide that no settlement will be taken for less than 100 percent payment of attorney fees and costs unless you approve. Some lawyers include language providing that a client who settles for anything less than full payment of attorney fees and costs up to the date of settlement will be responsible for payment of the remainder.
Include in the LSA your fee-shifting hourly rate, and also an explanation that given the high cost of litigation, your fees may (and likely will) exceed the client's damages - perhaps by quite a bit. Most clients are shocked at how expensive litigation can be, particularly when your hourly rate is adjusted to address the risk of loss and nonpayment. It is vital that the client agree in advance to your fee-shifting hourly rate. It also is helpful to specify in the LSA that your hourly rate may be increased at your discretion during the case.
Significantly, the law allows the LSA terms to be market driven, designed to ensure that the plaintiff is able to secure competent counsel to undertake a fee-shifting case. This reality gives you flexibility in setting the terms of compensation. For example, in addition to fee-shifting after prevailing, the plaintiff's attorney may require a sum of money up front, and may take a contingency percentage (e.g., one-third of damages recovered) as well.3
Include fee recovery in your complaint
Be sure to plead your claim for attorney fees somewhere in the allegations or "wherefore" clause of your complaint. As in any litigation, the object in a fee-shifting case is to advocate the client's interests zealously in order to win. The ethical mandate for zealous advocacy encourages the plaintiff's attorney to plead secondary and novel claims in addition to the strongest to maximize the client's chances of victory without contravening Rules 11 and 137.
Consistent with this, even claims that do not contribute to a plaintiff's ultimate success are typically eligible for compensation,4 as long as they are related factually or legally to prevailing claims. In Hensley v. Eckerhart, the United States Supreme Court stated as follows:
Many civil rights cases will present only a single claim. In other cases the plaintiff's claims for relief will involve a common core of facts or will be based on related legal theories. Much of counsel's time will be devoted generally to the litigation as a whole, making it difficult to divide the hours expended on a claim-by-claim basis. Such a lawsuit cannot be viewed as a series of discrete claims. Instead the district court should focus on the significance of the overall relief obtained by the plaintiff in relation to the hours reasonably expended on the litigation.5
Likewise, a plaintiff who ultimately prevails on a claim will be entitled to all attorney fees reasonably expended in pursuing that claim, even though the plaintiff may have suffered some adverse rulings along the way, such as losing on summary judgment in the trial court before prevailing on appeal.6
Keep good time records
To maximize recovery of attorney (and paralegal/legal assistant7) fees after prevailing, your must follow good timekeeping practices throughout the litigation. Keep time records contemporaneously with the delivery of professional services.8 Avoid "block billing" or "clumping."9
Clerical and administrative tasks are part of overhead and may not be shifted, including, for example, "time spent filing motions, faxing or photocopying."10 On the other hand, "computer assisted legal research…is recoverable as part of an attorney fee award."11 Time should be kept in tenths (six minute) and not quarter hour (15 minute) intervals.12
Other timekeeping principles support fee recovery as well. For example, as you prepare your time records, over-describe rather than under-describe each service, and make clear who provided the service. The more detail you give in your fee records, the less likely it is that opposing counsel will challenge or the judge will disallow them, even if you think the context makes a shorter description clear.
For example, "Draft agreed, routine motion for leave to amend complaint 0.4" is preferred to "Draft motion 0.4." Similarly, avoid abbreviations, and the verb describing your activity should be included. So, "Appear in court for status hearing 1.0" is preferred to "Court 1.0" or "Ct. stat. hrg. 1.0."
Do your best to eliminate typos and poor grammar. This suggests to the court and opposing counsel that you care about presenting a quality product.
Another point to consider at the outset of the case: having a lot of .1 hr. entries in your time records creates the picture of an attorney who underbills, whose time records can be trusted, and who deserves a good award of fees. Most judges know that only the simplest of tasks can be completed in .1 hr., but be sure to mention it in argument, with illustrations.
You'll recover fees only if your client is the 'prevailing party'
A plaintiff will be deemed a prevailing party for fee-shifting if he or she recovers a judgment on the merits, enters into a consent decree with the defendant, or settles a case with the settlement agreement made enforceable by court order. In a 2001 watershed case that defines what a "prevailing party" is and is not for fee-shifting purposes, the U.S. Supreme Court handed down Buckhannon v. West Virginia Department of Health and narrowly interpreted the phrase:
We have only awarded attorney's fees where the plaintiff has received a judgment on the merits, or obtained a court-ordered consent decree - we have not awarded attorney's fees where the plaintiff has secured the reversal of a directed verdict, or acquired a judicial pronouncement that the defendant has violated the Constitution unaccompanied by "judicial relief." Never have we awarded attorney's fees for a nonjudicial "alteration of actual circumstances."13
Subsequently the courts have interpreted Buckhannon broadly. In Melton v. Frigidaire, the Illinois Appellate Court noted as follows:
The Seventh Circuit held Buckhannon applied to the fee-shifting provision of the IDEA because "prevailing party" is a legal term of art that is interpreted consistently across fee-shifting statutes.…"In most of the post-Buckhannon cases in which courts have found settling plaintiffs to be prevailing parties in the absence of a consent decree, the district court had given 'judicial sanction' in some capacity, most commonly by the incorporation of the parties' agreement into a court order and/or the retention of jurisdiction to enforce its terms."14
In sum, if the money in settlement is not to be paid upon executing the settlement agreement, be certain in negotiations to have the settlement agreement made enforceable by the court.
The lodestar calculation: reasonable hourly rate x hours reasonably expended
The fee-shifting process starts with calculation of the "lodestar." According to the Supreme Court, "[t]he most useful starting point for determining the amount of a reasonable fee is the number of hours reasonably expended on the litigation multiplied by a reasonable hourly rate. This calculation provides an objective basis on which to make an initial estimate of the value of a lawyer's services."15 In virtually all courts for virtually all causes of action, the term lodestar describes this product of the number of hours reasonably expended times the reasonable hourly rate.
The prevailing attorney's reasonable hourly rate in fee-shifting litigation will be higher than the same attorney's reasonable hourly rate in cash-paying litigation, to compensate for the risk of loss, as the Illinois Supreme Court has noted:
No one expects a lawyer to give services at bargain rates in a civil matter on behalf of a client who is not impecunious. No one expects a lawyer whose compensation is contingent upon his success to charge, when successful, as little as he would charge a client who in advance had agreed to pay for his services regardless of success.16
Likewise, the Illinois Rules of Professional Conduct provide that in determining a reasonable fee courts may consider "whether the fee is fixed or contingent."17 Federal courts too may consider the contingent nature of the fee in calculating the lodestar, although contingency for risk of loss may not be considered in enhancing the lodestar (a rare, later stage of the fee-shifting process) because that would be double counting the risk of loss.18
Filing the fee-petition and getting compensation for "fees on fees"
Once your client prevails, the case shifts to preparation and filing of your fee-petition, supporting declaration(s), and other documents helpful in recovering fees. In Illinois courts the fee-petition, like other post-trial motions, must be filed within 30 days after the final order.19
In federal court the rule is different. The Federal Rules of Civil Procedure require that the fee-petition "be filed no later than 14 days after the entry of judgment."20 However, this deadline is modified in some federal courts by local rules. For example, in the Northern District of Illinois, Local Rule 54.3 mandates a detailed set of procedures to take place prior to filing the fee-petition, which extends the due date well beyond 14 days.
The attorney time you expend recovering fees, sometimes called "fees on fees," is compensable:
We now assert explicitly what Hairston implies: prevailing plaintiffs under the Act are properly entitled to fee awards for time spent litigating their claim to fees. As the First Circuit remarked in Lund, 587 F.2d at 77, "(i)t would be inconsistent with the purpose of the Fees Act to dilute a fees award by refusing to compensate the attorney for the time reasonably spent in establishing and negotiating his rightful claim to the fee."21
Illinois state and federal courts include for compensation not only fees on fees but all post-judgment attorney time expended, including appeals.22
Should you request an evidentiary hearing on your fee petition?
Once your client prevails on the merits, the main precondition to recovery of fees has been cleared. Then, depending on the level of success achieved in the underlying case, chances are good that you will be compensated for your attorney time going forward, if not in full then at least for most. The objective after prevailing is simple: maximize your fee recovery.
Be wary of requesting evidentiary hearings on fees because they trigger discovery requests and cause delay, sometimes for many months. Sometimes the defendant will request an evidentiary hearing. Then you have the choice to oppose or agree to the request. In state court the judge has discretion to allow or deny a request for an evidentiary hearing, and courts are not required to take evidence before awarding fees.23
In federal court the test is more nuanced. "A district court does not abuse its discretion by denying evidentiary hearings that would only address arguments and materials already presented to the court in the parties' briefings."24 But the seventh circuit has held "that a district court must afford plaintiffs an opportunity to respond when the court raises concerns about the fee petition that are based upon its independent scrutiny of the record or when the court establishes reasons sua sponte for reducing the fee award."25
One potential benefit of a hearing: if you do end up testifying, you might find that you are better able to clear up questions in the judge's mind about specific time entries or time-keeping methods than in oral argument.
Congress and the General Assembly create new fee-shifting statutes regularly, and fee-shifting has become common in many courtrooms. These laws enable Illinois attorneys to add new cases and practice areas which they enjoy, which, when selected with care, are profitable, and which serve the public interest.
Andy Norman <email@example.com> is a Chicago litigation attorney who for much of his 35 years in practice has earned a living from attorney fee-shifting cases.
The following resources list and discuss federal and state fee-shifting provisions.
Awards of Attorneys' Fees by Federal Courts and Federal Agencies
A 2008 version of this resource, prepared by Henry Cohen under the auspices of the Congressional Research Service, is available for free at http://www.fas.org/sgp/crs/misc/94-970.pdf. A paperback version published in April 2013 by Nova Science Publishers is for sale on Amazon, where the book is described this way in part: "Most Supreme Court decisions involving attorneys' fees have interpreted civil rights statutes, and this book focuses on these statutes. It also discusses awards of costs other than attorneys' fees in federal courts, how courts compute the amount of attorneys' fees to be awarded, statutory limitations on attorneys' fees, and other subjects."
Awards of Attorney's Fees in the Federal Courts
This 2012 article in the St. John's Law Review by Peter N. Cubita, Jeffrey S. Lichtman, and Daniel D. Rubino is available at http://scholarship.law.stjohns.edu/cgi/viewcontent.cgi?article=2273&context=lawreview
Guide to Illinois Statutes for Attorneys' Fees
The 2014 version of this Illinois State Bar Association publication was edited by ISBA Assistant Director of Publications Timothy A. Slating. It identifies hundreds of statutory provisions "that authorize the court to order one party to pay the attorney fees of another party." It is for sale on the ISBA website ($37.50 for members, $52.50 for nonmembers) at http://www.isba.org/store/books/2014attorneysfees.
- See Henry Cohen, Cong. Research Serv., Awards of Attorneys' Fees by Federal Courts and Federal Agencies (2008), http://www.fas.org/sgp/crs/misc/94-970.pdf.
- Bittner v. Sadoff & Rudoy Industries, 728 F.2d 820, 829 (7th Cir. 1984) (stating that "prevailing plaintiffs [should] obtain an award of attorney's fees almost as a matter of course" in order to "encourage them to exercise their legal rights").
- Pickett v. Sheridan Health Care Center, 664 F.3d 632, 641 (7th Cir. 2011).
- Jaffee v. Redmond, 142 F.3d 409, 416-17 (7th Cir. 1998) ("A lawyer who figures out the likeliest outcome in his favor, and aims only for that, is likely to fall short. The good lawyer aims higher, and is not improvident to do so.").
- Hensley v. Eckerhart, 461 U.S. 424, 435 (1983) (emphasis added).
- Cabrales v. County of Los Angeles, 935 F.2d 1050, 1052-53 (9th Cir. 1991).
- Paralegal/legal assistant time is recoverable along with attorney time. See, e.g., Missouri v. Jenkins, 491 U.S. 274, 284-89 (1989).
- Dutchak v. International Brotherhood of Teamsters, 1989 WL 135197 (N.D. Ill. 1989).
- See Kaiser v. MEPC American Properties, Inc., 164 Ill. App. 3d 978, 988 (1st Dist. 1987). The terms "block billing" or "clumping" refer to listing all the services performed by an attorney in a given day aggregated into a single hourly total for the day, instead of breaking down the time allotted to each service during a given day. This practice is frowned upon because it makes it more difficult to determine a reasonable fee, and often will lead a court to reduce the fee award.
- Firestine v. Parkview Health System, 374 F. Supp. 2d 658, 667 (N.D. Ind. 2005).
- Shaukat v. Wireless 4 U Inc., 2009 U.S. Dist. LEXIS 10664, 6 (N.D. Ill. 2009).
- LaSalvia v. City of Evanston, 2012 U.S. Dist. LEXIS 89434, 11 (N.D. Ill. 2012).
- Buckhannon v. West Virginia Department of Health, 532 U.S. 598, 605-06 (2001) (citations omitted).
- Melton v. Frigidaire, 346 Ill. App. 3d 331, 337-38 (2d Dist. 2004) (quoting Sonii v. General Electric, 2003 WL 21541039 (N.D. Ill.)).
- Hensley v. Eckerhart, 461 U.S. 424, 433 (1983).
- Fiorito v. Jones, 72 Ill. 2d 73, 90 (1978).
- Ill. Rs Prof'l Conduct R. 1.5(a)(8).
- City of Burlington v. Dague, 505 U.S. 557, 562-63 (1992).
- Herlehy v. Bistersky, 407 Ill. App. 3d 878, 899-901 (1st Dist. 2010).
- Fed. R. Civ. P. 54(d).
- Bond v. Stanton, 630 F.2d 1231, 1235 (7th Cir. 1980).
- See, e.g., McNiff v. Mazda Motor of America, Inc., 384 Ill. App. 3d 401, 408 (4th Dist. 2008).
- Sandholm v. Kuecker, 405 Ill. App. 3d 835, 871 (2d Dist. 2010).
- Pickett v. Sheridan Health Care Center, 664 F.3d 632, 652 (7th Cir. 2011).