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The 2D U.S. Circuit Court of Appeals, with former Supreme Court Justice Sandra Day O’Connor sitting by designation, has ruled that district courts should consider all “case specific” variables it and other courts have identified as relevant to setting a reasonable attorney fees rate. Arbor Hill Concerned Citizens Neighborhood Association v. County of Albany, No. 06-0086-cv. The fee dispute arose out of a suit claiming that Albany County, N.Y.’s 2002 legislative redistricting plan violated Section 2 of the Voting Rights Act of 1965, 42 U.S.C. 1973. In calculating the attorney fees due to Los Angeles-based Gibson, Dunn & Crutcher, which represented the plaintiffs, Judge Norman Mordue of the U.S. District Court for the Northern District of New York applied the so-called forum rule, according to which the hourly rate follows the prevailing market rate in the district. Mordue rejected a claim that Gibson Dunn be compensated at the hourly rate it usually charges in New York’s Southern District, saying it was “undisputed that plaintiffs did not even attempt to contact attorneys or law firms in the Northern District.” Mordue awarded lead counsel $210 per hour, the maximum in the Northern District. The 2d Circuit affirmed. Writing on behalf of the court, Judge John M. Walker pointed out the confusion over the application of the lodestar method for setting fees (the attorney’s hourly rate times the number of hours worked with an adjustment made by the judge to determine a reasonable fee), and the application of 12 factors outlined by the 5th Circuit in Johnson v. Ga. Highway Express Inc., 488 F.2d 714 (1974). Among those factors is the time and labor required; the novelty and difficulty of the questions raised; the attorney’s customary rate; the experience, reputation and ability of the attorney; and the “undesirability” of the case. “In theory,” Walker said, “a district court that adopted the lodestar method was expected to consider fewer variables than a district court utilizing the Johnson method. In practice, however, both considered substantially the same set of variables � just at a different point in the fee-calculation process.” The result “is that district courts must engage in an equitable inquiry of varying methodology while making a pretense of mathematical precision.” What the district courts in the 2d Circuit “produce is in effect not a lodestar as originally conceived, but rather a ‘presumptively reasonable fee,’ ” he said. “ The focus of the district courts is no longer on calculating a reasonable fee, but rather on setting a reasonable hourly rate, taking account of all case-specific variables.” The reasonable hourly rate “is the rate a paying client would be willing to pay,” Walker said. And to make that determination, he said, a judge should “consider, among others, the Johnson factors; it should also bear in mind that a reasonable, paying client wishes to spend the minimum necessary to litigate the case effectively,” and that a client might be able to negotiate with their lawyers, whose reputation would be enhanced by taking the case. “The district court should then use that reasonable hourly rate to calculate what can properly be termed the ‘presumptively reasonable fee,’ ” he said. A district court may use an out-of-district hourly rate in calculating the presumptively reasonable fee if it is clear that a reasonable, paying client would have paid those higher rates. “We presume,” Walker said, “that a reasonable, paying client would in most cases hire counsel from within his district, or at least counsel whose rates are consistent with those charged locally.” Though the 2d Circuit agreed with the plaintiffs that Mordue may have applied the forum rule “too strictly,” it found no error in the award “even when evaluated under the analysis we use.”

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