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The 2nd U.S. Circuit Court of Appeals has made a second attempt to clear up confusion about the awarding of fees in civil rights cases created by a 2007 decision. Almost a year ago, the court alarmed civil rights attorneys by suggesting that one factor in setting fee awards could be the attorney’s willingness to work pro bono or take a lower rate to “promote the lawyer’s own reputational or societal goals.” A panel of Judges Dennis Jacobs, John M. Walker Jr. and retired U.S. Supreme Court Justice Sandra Day O’Connor, sitting by designation, on Thursday issued their second amended opinion in Arbor Hill Concerned Citizens Neighborhood Assoc. v. County of Albany, 06-0086-cv. In the latest opinion, the circuit added a new footnote that, in the view of David Udell, director of the Justice Program at the Brennan Center for Justice at New York University School of Law, “is a giant step toward normalizing the 2nd Circuit’s attorneys fees jurisprudence.” The court said in its first opinion a year ago that, in setting fees, district judges should consider all “case specific” variables relevant to setting a reasonable rate and the “reasonable hourly rate is the rate that a paying client would be willing to pay.” In the April 2007 ruling, Mitchell A. Karlan of Gibson Dunn & Crutcher was appealing a decision by Northern District of New York Judge Norman Mordue to apply the forum rule and use the prevailing hourly rate for the district, not New York City, to compensate Gibson Dunn for its successful Voting Rights Act challenge to Albany County’s 2002 legislative redistricting plan. Mordue awarded Gibson Dunn, lead counsel in the case, the maximum rate for the Northern District, $210 per hour, a lower rate than Gibson Dunn could collect in New York City. Also representing the plaintiffs before Mordue were Albany’s DerOhannesian & DerOhannesian and the nonprofit Lawyer’s Committee for Civil Rights Under Law. In the April 2007 ruling, the circuit upheld Mordue’s fee award but Walker said that the circuit’s “fee-setting jurisprudence has become needlessly confused � it has become untethered from the free market it was meant to approximate.” In an attempt to clarify the forum rule, Walker said last year, “While the district court should generally use the prevailing hourly rate in the district where it sits to calculate what has been called the ‘lodestar’ � what we think is more aptly termed the ‘presumptively reasonable fee’ � the district court may adjust this base hourly rate to account for a plaintiff’s reasonable decision to retain out-of-district counsel.” Gibson Dunn responded by seeking a rehearing by the panel or rehearing en banc. A team of attorneys led by Joshua Block of Jenner & Block and Udell filed a brief for 29 public interest organizations, legal service organizations and civil rights law firms as amici curiae. The circuit panel denied rehearing in an amended opinion that added a footnote giving civil rights lawyers some hope but also added to the confusion. The footnote read, “Our decision today in no way suggests that attorneys from nonprofit organizations or attorneys with private law firms engaged in pro bono are excluded from the usual approach to determining attorneys fees.” FURTHER CLARIFICATION Apparently, however, the footnote was not enough, and on Thursday, the circuit issued its second amended opinion, this time with a lengthy footnote that built on the above quote and explicitly affirmed past case law on the issue. In last week’s amended ruling, Walker cited the U.S. Supreme Court in Blum v. Stenson, 465 U.S. 886 (1984), for the proposition that, “The reasonableness of a fee award does not depend on whether the attorney works at a private law firm or a public interest organization.” Walker then added some of the circuit’s own case law, “[N]or is the award necessarily limited because the attorney has agreed to undertake the case for a reduced fee compared to the customary market rate, see Reiter v. MTA N.Y. City Transit Auth., 457 F.3d 224 (2d Cir. 2006).” Block said Friday that “the key” to the latest amended ruling was the circuit’s decision to cite Blumand Reiter, because “it gives more assurances that the 2nd Circuit is adhering to its previous case law. That’s a significant improvement.” Reiter, Block said, “was a case where an attorney had actually agreed to charge clients a lower rate because it was a civil rights case, but when it came down to collecting fees under the civil rights statutes, even though the attorney had agreed to reduce rates, he could still be compensated at a market rate.” In its footnote last week, Walker, citing Blum, said, “Nevertheless, the nature of the representation and type of work involved in a case are critical ingredients in determining the ‘reasonable hourly rate.’” And Walker cited other cases emphasizing that fees charged for similar work by attorneys of like skill in the area are the “starting point” for fixing a reasonable fee award. “These factors may justify compensating an attorney at a rate lower than his or her customary rate for a different type of practice, regardless of whether the attorney has agreed to take the case on a pro bono or reduced-fee basis,” Walker said. “All we are holding is that in calculating the reasonable hourly rate for particular legal services, a district court should consider all relevant circumstances in concluding what a reasonable client would expect to pay.” He continued, “Thus, attorneys � regardless of whether they are pursuing litigation on behalf of a paying client or a non-paying client � should receive out-of-district fees only if a reasonable, paying client would have retained out-of-district counsel.” Udell said the amended opinion should make a big difference. “The court briefly embraced the crazy notion that fees should be discounted when the lawyers actually care about the case,” Udell said. “This decision makes clear that lawyers shouldn’t be penalized for pursuing the good.” Marjorie Press Lindblom of Kirkland & Ellis, one of the attorneys who submitted an amicus brief for the New York City Bar Association and the New York County Lawyers’ Association, said the latest opinion is “a big improvement over the original opinion and the last footnote, but there is still going to be some confusion created with what is in the body of the opinion and what the footnote says and it’s the footnote that gets it right.” Lindblom noted that the circuit has made no mention of the motion to rehear the case en banc. She said the circuit should withdraw the opinion and have the case reheard by the entire circuit. This story originally appeared in theNew York Law Journal, a publication of ALM. �

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