Published in the California Alliance of Paralegal Associations (CAPA) newsletter, Spring 2009
Not too long ago, in the U.S., the notion that paralegal fees could be included in attorney’s fees awards was considered pure folly. However, in the past two decades, the landscape has shifted, and in many jurisdictions, paralegal fees are routinely awarded along with attorney’s fees. This article traces the evolution of attorney and paralegal fee recovery, and offers some practical guidelines for paralegals to assist in preparing a successful paralegal fees award petition.
But before we can get to paralegal fee recovery, some background concerning the history of the concept of fee awards is in order.
In England, the land that inspired our legal system, up until the 13th century, no person was entitled to recover any costs of suit. In 1394, the Lord Chancellor, the official then responsible for the efficient functioning and independence of the courts in England, was given the power to award damages if the allegations by a plaintiff were unfounded.
In the early 1600s, England then extended the right of defendants to recover costs through various statutes which provided that defendants were in general allowed to recover costs. A 1797 English case, Tyte v Globe, established that costs could be recovered by a successful claimant, even though there was no express provision to that effect in a statute.
Later, in the early 19th Century, a legal reform movement began in England to allow a successful litigant to recover his full costs from his opponent. As a result, a series of Acts of Parliament led to laws allowing prevailing parties to collect costs from their vanquished opponents.
Today, attorney’s fees awards are a fact of life in England, Canada and many of the nations of Europe.
By contrast, in the U.S., such awards are the exception, rather than the rule. Generally, here, under the so-called “American rule,” each party in a lawsuit bears his own costs and fees, unless a statute or contractual provision provides otherwise.
The reason for this distinction has been summed up thusly:
“In support of the American rule, it has been argued that since litigation is at best uncertain one should not be penalized for merely defending or prosecuting a lawsuit, and that the poor might be unjustly discouraged from instituting actions to vindicate their rights if the penalty for losing included the fees of their opponents' counsel.”
Fleischmann Distilling Corp. v. Maier Brewing Co. (1967) 386 U.S. 714, 718.
It appears that the origin of the “American Rule” can be traced to Arcambel v. Wiseman (1796) 3 U.S. 3 Dall. 306, a case in which a lower court had awarded $1,600 in attorney’s fees.
In that case the high court said of the practice of awarding such fees:
We do not think that this charge ought to be allowed. The general practice of the United States is in opposition to it, and even if that practice were not strictly correct in principle, it is entitled to the respect of the Court, till it is changed or modified, by statute.
This rule was confirmed by the U.S. Supreme Court in Alyeska Pipeline Serv. Co. v. Wilderness Society (1975) 421 U.S. 240.
But, gradually, a number of statutes have been implemented that allowed for the awarding of attorney’s fees in certain types of cases. At the federal level, for example, there is the Civil Rights Attorney’s Fees Awards Act of 1976 (42 U.S.C. §1988), which allowed courts to award reasonable attorney’s fees to the prevailing party in litigation brought to enforce private civil rights and the Equal Access to Justice Act (5 U.S.C. §504.)
Attorney’s fees are also generally allowed at the federal level for class actions, actions involving violations of the Freedom of Information Act, copyright and patent cases, antitrust actions, lemon law cases, and suits against the federal government where the position of the government was not “substantially justified.”
However, whether paralegal fees were considered part of attorney’s fees varied from state to state. For example, as early as 1986, Arizona found paralegal services to be compensable in attorney’s fee awards. (Continental Townhouses East Unit One Association v. Brockbank (1986) 152 Ariz. 537, 544 [733 P.2d 1120, 1127.) In other states, courts have not objected to the concept of awarding paralegal fees, but they have noted that laws as currently written do not allow for such awards. (See Hines v. Hines (1997) 129 Idaho 847 [934 P.2d 20.]; and F.D.I.C. v. Singh (D. Me. 1993) 148 F.R.D. 6.)
The seminal national case establishing that paralegal fees were recoverable as part of attorney’s fees was Missouri v. Jenkins (1989) 491 U.S. 274, a case dealing with fee awards under the Civil Rights Attorney's Fees Awards Act of 1976 (42 U.S.C. 1988.) The high court stated that this statute “cannot… have been meant to compensate only work performed personally by members of the bar,” and that attorney fees must take into account the work not only of attorneys, but also the work of paralegals. Not only that, but the court held that a reasonable attorney's fee under a §1988 action is one calculated on the basis of prevailing market rates, which can be above the actual salary paid to the paralegal.
Jenkins was an important case for the paralegal profession because had the ruling gone the other way, the effect would surely have been such that attorneys would have had little incentive to use paralegals. The decision made it easier for courts in other states to reach the conclusion that their state’s attorney’s fees statutes were intended to include paralegal fees. The case also cleared up a lot of confusion in the courts below where contrary decisions had held that paralegal fees could not be considered a part of attorney’s fees. Since then, thousands of cases dealing with the award of paralegal fees have been decided in state and federal courts across the U.S.
In the wake of Missouri v. Jenkins, several states have enacted statutes that include paralegal fees as part of attorney’s fee awards. As of 2004, Alaska, California, Florida, New Jersey, Illinois, Indiana, Michigan, New York, Oklahoma and Ohio were among the states where statutes or court rules permitted the award of paralegal fees.
In a line of federal cases, paralegal fees were denied because the paralegal did not meet the educational requirements of Bus. & Prof. Code, sec. 6450. See Sanford v. GRMI, Inc. dba Red Lobster, 04-1535 (E.D. Cal. Nov. 11, 2005), White v. GMRI, Inc. dba Red Lobster, 04-0620 (E.D. Cal. Jan. 19, 2006) and Martinez v. G. Maroni Co., dba Church's Chicken #948, S06-1399 (E.D. Cal. May 1, 2007. Implicit in these cases is the notion that, in attorney's fees cases, paralegal fee recovery is permissible as part of those fees.
In June of 2008, the U.S. Supreme Court issued another important decision dealing with paralegal fee recovery that further solidified the concept of paralegal fee recovery first discussed by the high court in Missouri v. Jenkin, supra. In Richlin Security Service Co. v. Chertoff (2008) 553 U.S. ___; 128 S. Ct. ___; 170 L. Ed. 2d 960.), the court held that in cases litigated against the government under the Equal Access to Justice Act, a prevailing party may recover paralegal fees from the government at prevailing market rates. Both Jenkins and Richlin also make it clear that paralegal fees can be awarded at market rates, which is the marked up rate charged to the client, rather than at the rate that the paralegal earns from his or her employer.
California courts have also gotten on board the paralegal fee recovery bandwagon. In Guinn v. Dotson (1994) 23 Cal.App.4th 262, a case involving an action by property owners against a civil engineer, a city, and contractors, the trial court, in awarding attorney fees to the engineer erred in failing to include reasonable fees for paralegals employed by the engineer's attorneys.
The appellate court said that an award of attorney fees that did not compensate for paralegal service time would not fully compensate the attorney. Therefore, “attorney fees” as used in Code Civ. Proc., § 411.35(h), would include as a compensable element reasonable paralegal fees billed to the engineer.
Several federal statutes providing for the award of attorney’s fees have been amended to provide for the award of paralegal fees. These include federal bankruptcy laws, the Employee Retirement Act of 1974, the Sherman Antitrust Act and the Surface Mining Control and Reclamation Act, to name a few.
Despite the fact that paralegal fee recovery is not a new concept, many paralegals and attorneys do not know that paralegal fees are a recoverable litigation expense. Next, I shall try to demystify the process.
As you probably know, in California, attorney’s fees and paralegal fee awards are usually only authorized when there is a statutory or contractual (Civ. Code §1717(a)) provision providing for such an award. The first step is to determine whether the matter is subject to the recovery of attorney’s fees either through contract provisions or through a statute. Obviously, if the litigation involves a contract, a review of the contract would reveal whether it contained an attorney’s fees clause. Determining whether a statute permits an attorney’s fees award is a little more daunting, but not impossible.
There are too many attorney’s fee statutes to go into here, but the website, California Attorney’s Fees, has collected a list of many of the California statutes that permit attorney’s fees awards. Here’s a link. The site also links to summaries of case law on a couple dozen categories of legal issues for which California permits attorney’s fees awards. Here’s a link. In addition, because case law has and continues to shape paralegal fee recovery, on its website, CAPA has a put together a nice collection of summaries of California and federal cases involving paralegal fee recovery. Here’s a link.
One you and your supervising attorney have determined that attorney’s and paralegal’s fees are recoverable in your case, you as a paralegal can assist the attorney in preparing a fee petition that also seeks recovery of paralegal fees.
Here is a link to a sample memorandum of points and authorities in support of an attorney’s fees/paralegal fees award petition, as well as sample paralegal and attorney declarations. This example can be used as a guide in preparing any attorney’s fees/paralegal fees recovery motion.
You will note that the memorandum begins by outlining the applicable law that authorizes attorney’s fees in the particular case. This is followed up by explaining the case law on paralegal fee recovery. In a separate document, a paralegal declaration is included.
The paralegal declaration may be the most important part of the fee petition. In preparing the declaration, I have tried to keep in mind six keys to successful paralegal fee recovery. If you pay attention to these keys in preparing your fee petition, your chances of success will be much higher.
Here is a brief discussion of each of the six keys:
- Make sure the services performed by the paralegal are legal in nature.
- Submit a memorandum outlining the work performed by the paralegal on the case.
- The attorney should also submit an affidavit or declaration with the request for paralegal fees attesting to the fact that the work was legally substantive in nature (not clerical) and that the paralegal's work was reasonable and necessary.
- Substantive tasks consist of tasks and services which otherwise would be performed by an attorney.
Here’s an example of why this key is vital: In a Texas bankruptcy court case, In re Speeds Billiards & Games. Inc., Debtor (E.D. Tex. 1993) 149 Bankr. 434, counsel did not indicate what constituted staff time, whether it was paralegal time or secretarial. Thus, the court held that any doubt must be resolved in favor of a finding that such a request constitutes normal attorney overhead which must be absorbed in counsel's hourly rate.
- Make sure the performance of the services was supervised by an attorney.
- The attorney should adequately supervise the paralegal’s work and should also submit an affidavit or declaration that the paralegal's work was in fact supervised by an attorney. An attorney declaration accompanying the fee petition is quite helpful in this regard. A sample attorney declaration is linked to above.
- For example, in McCullough v. City of Oakland (1996) 46 Cal.App.4th 1, paralegal fees were denied because attorneys had failed to submit any declaration or documentation for the time spent, leaving the court with no choice but to exclude these fees from the award.
- Make sure the qualifications of the paralegal were specified in the request for fees in sufficient detail to demonstrate the person is qualified by virtue of education, training or work experience to perform substantive legal work.
- Proof of the paralegal’s qualifications to perform legally substantive work should be submitted.
- This could include a copy of the paralegal’s resume and paralegal degree or certificate showing his or her education, work experience and other qualifications.
- I like to use a paralegal declaration to establish this aspect. There’s a link to a sample paralegal declaration above.
- Make sure the nature of the services performed were specified in the request for fees in such a way that the court can determine if the services performed were legal rather than clerical.
- This can be accomplished if the paralegal keeps accurate and detailed time records that reflect exact and accurate time increments for specific tasks.
- Keep original hand-written time sheets, even if they have been converted to computerized time-tracking programs. Print out hard copies of time records, sign and date them. Retain all time sheets until the case is finished and the time for filing appeal has expired or all appeals are exhausted.
- Make sure the amount of time expended by the paralegal is se forth in the request and is reasonable.
- The attorney should also submit an affidavit or declaration with the request for paralegal fees attesting to the fact that the paralegal's work was reasonable and necessary.
- Make sure the amount charged reflects reasonable community standards (market rate) for charges by that category of personnel.
- The market rate refers to the fact that an amount charged should reflect reasonable community standards for charges by that category of personnel.
- The courts may look at salaries in the community and the experience level of the person performing the work. You can help the court by submitting paralegal salary surveys for your area.
- Submitting the paralegal’s resume and salary surveys helps educate the courts and document your charges.
Paralegal fee recovery does not have to be difficult. As paralegals, we can help educate the attorneys with whom we work on how to comply with the applicable requirements and greatly increase their chances of recovering these fees.
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