Font Size: 
Government Loses High Court Case on Paralegal Costs
The National Law Journal
June 11, 2008
image: PhotoDisc Photography
A small security business, the victor in a long, expensive battle with the federal government over back wages, has won a U.S. Supreme Court ruling that "prevailing parties" under a fee shifting law can recover paralegal fees from the government at the market rate for those services.
In Richlin Security Service Co. v. Chertoff, No. 06-1717, the justices unanimously rejected all of the government's arguments that the Equal Access to Justice Act limited recovery of paralegal fees to the attorney's cost -- which was lower than the billed rate.
"It's important that clients, particularly those who take most advantage of EAJA -- Social Security claimants, veterans, disability claimants and small businesses -- be able to recover paralegal fees because those clients heavily use paralegals in many cases," said Richlin's high court counsel, Brian Wolfman, director of Public Citizen Litigation Group.
"The results the government was seeking would have made litigation of social security cases, veterans' benefits claims and small business cases, more expensive, which is exactly the opposite of what Congress was trying to achieve under EAJA," he added.
Congress enacted EAJA in 1948 after finding that individuals, small businesses and nonprofit organizations "may be deterred from seeking review of, or defending against, unreasonable governmental action" because of the expense involved.
The statute permits an eligible prevailing party to recover "fees and other expenses incurred by that party in connection with" a proceeding before an administrative agency. "Fees and other expenses" are defined in the statute, but the text is silent on paralegal fees.
Although the statute requires attorney fees to be calculated based on prevailing market rates, Congress imposed a cap -- initially $75 per hour, now $125 per hour -- with adjustments for inflation.
$52,000 IN FEES
Richlin sought about $52,000 in paralegal fees after winning a $1.5 million claim for back wages for Richlin employees who provided security services at Los Angeles International Airport under a contract with the then-Immigration and Naturalization Service.
The U.S. Court of Appeals for the Federal Circuit, ruling against Richlin, had held that the term "fees" embraced only the fees of attorneys, experts and agents. The government pressed that argument as well in the Supreme Court.
The government contended that because a section of EAJA explaining how to calculate fee awards only refers to attorneys, agents and expert witnesses, the omission of paralegals meant that Congress intended their services to be treated as "other expenses" recoverable at "reasonable cost."
In his opinion, Alito said the government's "fractured interpretation" of the statute was unpersuasive. He noted that one could just as easily conclude that the omission of paralegal fees from the law's litany of items recoverable at "reasonable cost," such as any study, analysis or engineering report, implies that paralegal fees are recoverable at market rates.
"Surely paralegals are more analogous to attorneys, experts and agents than to studies, analyses, reports, tests, and projects," he wrote.
LOOKING BACK TO '89
Besides finding textual support for market rates, the court also relied heavily on an earlier decision, Missouri v. Jenkins, 491 U.S. 274 (1989) in which it examined whether paralegal fees were recoverable under the Civil Rights Attorney's Fees Awards Act of 1976. Jenkins held that the term "attorney's fees" in that law cannot have been meant to compensate only work performed personally by members of the bar.
"Under the reasoning of Jenkins, we take it as 'self-evident' that when Congress instructed agencies to award 'attorney's fees' to certain parties prevailing against the government, that term was intended to embrace paralegal fees as well," wrote Alito. And, since EAJA generally provides for recovery of attorney's fees at prevailing market rates, he added, "It follows that fees for paralegal services must be recoverable at prevailing market rates as well."
Richlin was supported in the high court by several organizations, including the National Association of Legal Assistants, Paralyzed Veterans of America and the National Organization of Social Security Claimants' Representatives.
