A small security business that waged a long and successful court battle with the federal government over back wages is asking the U.S. Supreme Court to hold that a federal law, enacted nearly 30 years ago, allows reimbursement of paralegal expenses at market rates and not at a law firm's cost.
Congress enacted the Equal Access to Justice Act (EAJA) to level somewhat the playing field for small businesses and individuals litigating against the federal government. It allows them, if successful, to be reimbursed for attorney fees and other expenses. But the law is silent on how to treat paralegal services.
"For big law firms, EAJA fees don't make any difference to them," said Brian Wolfman of Public Citizen Litigation Group, high court counsel to Richlin Security Service, the firm seeking reimbursement. But paralegals are used heavily by smaller firms in the hundreds of Social Security, veterans and contract cases filed predominantly in the U.S. Court of Appeals for the Federal Circuit and in other circuits as well, he said.
On Wednesday, Wolfman will argue that the Federal Circuit was wrong on law and logic when it held -- contrary to court interpretations of similar fee-shifting statutes -- that paralegal services are not embraced by the statute's phrase "attorney fees," but fall into the category of "other expenses," reimbursable at actual cost. Richlin Security Service v. Chertoff.
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.
Congress created the reimbursement scheme in the EAJA 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.
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.
Wolfman relies on the Supreme Court's decision in Missouri v. Jenkins, 491 U.S. 285 (1995), which interpreted another fee-shifting statute, 42 U.S.C. 1988. Jenkins, Wolfman argues, held that paralegal services are "attorney's fees" under Section 1988 because that term logically includes charges not only for the work of members of the bar, but also for other law firm personnel whose services contribute to the lawyer's work product. Jenkins also said, he argues, that paralegal services are compensable at market rates if they are billed separately in the relevant legal community, and that separate paralegal billing encourages efficient delivery of legal services.
The high court, Wolfman added, has applied the principle of statutory construction -- that is, statutes with same or similar terms should be given the same meaning statute to statute -- with special force in the fee-shifting context, and it should be applied to the EAJA.
The government adopts the Federal Circuit's analysis, arguing that despite the Jenkins decision, the EAJA's structure, language and purpose are different. "In common parlance, 'attorney fees' do not mean 'paralegal' expenses," the U.S. solicitor general argues in his brief. "The EAJA's broader category of 'other expenses' naturally captures costs that are associated with an attorney's representation of a party, but are not themselves 'attorney fees.'"
The government also echoes the Federal Circuit's logic that because of the EAJA's cap, compensating paralegal expenses as "attorney fees" would result in EAJA awards for paralegal time that are disproportionately high relative to the fees that can be recovered for ordinary attorney work.
There is "scant evidence" that situation would happen anywhere in the country, said Amy Howe of Washington's Howe & Russell, who filed an amicus brief supporting Richlin on behalf of the National Association of Legal Assistants, Paralyzed Veterans of America and the National Organization of Social Security Claimants' Representatives.
The Federal Circuit's holding and the government's argument are "inconsistent with the realities of modern law practice," she added, noting that firms today widely bill paralegal services separately.
A decision is expected by July.