Justices Frown on Bonuses for Public Interest Lawyers

      In the world of high finance, top executives can walk away with seven- and eight-figure bonuses even after flushing their firms down the toilet. (Think, Bear Stearns; Lehman) But under a new Supreme Court decision, public interest lawyers who succeed in hard-fought federal civil rights suits are exceedingly unlikely to see any bonuses in the fee awards permitted under the law.
      The Supreme Court’s 5-4 decision last week in Perdue v. Kenny A. [April 21] threw out a $10.5 million fee award for a group of public interest and private attorneys for work over an eight-year period in a suit that succeeded in overhauling Georgia’s dangerous and dysfunctional foster care system. Lawyers in the case still stand to get at least $6 million for the nearly 30,000 hours spent investigating and litigating the suit. But the ruling represents a setback for lawyers who take on difficult institutional reform litigation with no assurance of eventual reimbursement and ultimately prevail, but only in the face of years of dogged resistance from government lawyers.
      In Kenny A., lawyers from the New York City-based group Children’s Rights teamed with attorneys from the Atlanta firm Bondurant, Mixson & Elmore in filing suit in 2002 on behalf of a class of 3,000 abused or neglected children in Georgia’s foster care system. Three years later, the suit resulted in a mediated consent decree requiring extensive reforms in foster care in two metropolitan Atlanta counties, Fulton and DeKalb.
      With the decree signed, the plaintiffs’ lawyers applied for attorneys’ fees, as permitted under federal civil rights laws. They asked for $14 million. Half of the amount was based on hours billed at prevailing rates in the Atlanta area. The other half was an enhancement based on superior work and results.
      Lawyers for the state, who had fought the case with every possible pretrial motion and dilatory tactic, objected to the proposed fee. After scrutinizing the fee application, Senior U.S. District Court Judge Marvin Shoob trimmed the basic amount to $6 million, but added a 75 percent enhancement based on, among other factors, the “extraordinary results” achieved. Shoob added that the lawyers had shown “a higher degree of skill commitment, dedication, and professionalism” than he had seen in attorneys in any previous case in his 27 years on the bench.
      That was not enough for the Supreme Court’s conservatives, who decided that Shoob had gone overboard in approving a 75 percent enhancement. For the majority, Justice Samuel A. Alito Jr. sneered at the fee award as a “windfall” for the lawyers.
      The decision marked the Court’s most extended discussion of when, if ever, a fee award can be increased because of exceptional performance or difficulties. In 2002, the Court endorsed an approach to fee awards developed in lower federal courts known as the “lodestar method.” That approach calls on federal judges to apply the prevailing rates for legal services in the area — the “lodestar” — to the billable hours documented by the successful lawyers. In passing, the Court indicated that enhancements might be permitted in extraordinary circumstances.
      The good news for public interest lawyers in the new case is that the Court reaffirmed its in-passing comment. The bad news is that the five-justice majority declared “a strong presumption” that the lodestar amount is sufficient. Lawyers seeking an enhancement, Alito explained, must identify and prove with specificity the factors showing the lodestar fee to be inadequate. Justices Anthony M. Kennedy and Clarence Thomas added brief concurrences to underscore that enhancements would be permitted — in Kennedy’s words — “only in the rarest circumstances.”
      Writing for the four liberal dissenters, Justice Stephen G. Breyer detailed both the difficulties in the case and the importance of the result in arguing for upholding the fee award. Evidence in the case filled 20 large boxes, Breyer said, and the record covered 18,000 pages. The suit documented unsanitary and unsafe conditions in foster care shelters and inadequate medical and mental health services. Children were at risk of assault or sexual abuse by other children or even by staff.
      The state’s Office of the Child Advocate had complained about the problems, but to no avail until the civil rights suit, Breyer noted. “If this is not an exceptional case,” he concluded, “what is?”
      In his opinion, Alito noted that attorneys’ fees in civil rights cases against government agencies are often paid for, in effect, by state and local taxpayers. The money used to pay the fees, he complained, “is money that cannot be used for programs that provide vital public services.” Tellingly, Alito expressed no concern about the money that the state spent litigating the case, including $2.4 million on outside counsel.
      Marcia Robinson Lowry, executive director of Children’s Rights, voiced confidence afterward that the lawyers will be able to justify an enhanced fee when the case returns to lower federal courts. Perhaps. But Carl Tobias, a professor at the University of Richmond Law School, aptly observed that the ruling makes any bonuses in civil rights cases far less likely in the future. “The whole mood and tone of the opinion,” Tobias told the Atlanta Journal-Constitution, “is that it’s going to have to be an extraordinary situation.”