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There is no congressional policy giving attorneys direct and exclusive interest in statutory fee awards, according to a Pennsylvania Supreme Court opinion issued Tuesday. Because such a policy does not exist, a trial court should not have stopped plaintiff Adrienne Stair from pursuing her claim against the Northampton County, Pa., law firm of Turtzo Spry Sbrocchi Faul & Labarre for failing to honor their contingent fee agreement. The unanimous opinion in Stair v. Turtzo, written by Justice Thomas Saylor, affirmed the superior court’s ruling that the parties were not precluded from dividing statutory fees as they would with any other recovery. Stair retained the firm to represent her in a gender discrimination case against her employer. According to the parties’ fee agreement, Turtzo Spry would receive 33 percent of any “recovery.” Turtzo Spry ultimately filed a Title VII Civil Rights Act action in federal court. The action resulted in Stair receiving injunctive relief; the employer prevailed on monetary damages. Stair requested legal fees under Title VII. The federal court awarded Stair $74,040 in legal fees, but the order did not state that the money should go directly to Stair. The award was tendered to Turtzo Spry, which claimed an interest in the entire award. Stair claimed that the firm’s retention of the award violated the fee agreement and that the award constituted “recovery.” She filed an action in the Monroe County Common Pleas Court for the remaining 67 percent of the award. The trial court granted Turtzo Spry’s preliminary objections, finding that Stair failed to state a viable cause of action. The superior court reversed in a memorandum opinion, concluding the fee agreement was ambiguous enough not to dismiss Stair’s complaint. CONGRESSIONAL POLICY In front of the high court, Turtzo Spry argued the fee agreement was not relevant to the question of whether it was entitled to receive the statutory fee award. The firm used Congress as the basis of its argument, saying it is congressional policy to ensure compensation to attorneys in civil rights cases, which in turn ensures that civil rights plaintiffs receive representation. Stair countered that statutory fee awards vest in the plaintiff and that federal policy does not address the allocation of attorney funds tendered to the client. Beginning his academic analysis, Saylor said in the mid-1980s, a fair number of courts went beyond contractual agreements, using broad language to confirm attorneys’ interest in statutory fee awards. Stair argued that the U.S. Supreme Court overruled that reasoning in several decisions. Saylor noted three decisions that discussed the issue. In Evans v. Jeff D. from 1986, the Court noted that Section 1988 of the Civil Rights Attorneys’ Fees Award Act says the “prevailing party” is eligible for a fee award. The court defined the prevailing party as the plaintiff. But in the 1989 case Blanchard v. Bergeron, the Court acknowledged that under Section 1988, statutory fees are not limited to fees paid to a plaintiff’s attorney pursuant to a contingent fee agreement. “If a contingent-fee agreement were to govern as a strict limitation on the award of attorney’s fees, an undesirable emphasis might be placed on the importance of the recovery of damages in civil rights litigation,” the Court said. Finally, in 1990, the court handed down Venegas v. Mitchell. “There, the Court determined that a fee award pursuant to Section 1988 does not operate as a mandatory ceiling for attorney compensation; rather, attorneys may collect fees in excess of the award, for example, where a contingency fee agreement yields greater compensation,” Saylor said. “In so holding, the Court reiterated the policy of fee shifting … but discerned nothing in Section 1988 or its legislative history that would regulate what plaintiffs may promise to pay their attorneys.” The Venegas Court rejected the argument that Blanchard advocated recognizing an attorney’s interest in fee awards, reiterating that a Section 1988 award belongs to the client, not the attorney. Saylor said the central theme was that Congress intended Section 1988 awards to go to the plaintiff. Said Saylor, “The United States Supreme Court’s strong emphasis upon Congress’ decision to vest eligibility for the fee award in the plaintiff provides substantial support for Stair’s position that at least insofar as congressional policy is concerned, the award belongs to the plaintiff, subject to the plaintiff’s obligations under state law, for example, the law of contract as it pertains to the parties’ fee agreement.” Persuaded by the focus, Saylor said, many courts have fee agreements that are the only vehicle by which attorneys may receive an interest in statutory fees. THE SHOW MUST GO ON Saylor concluded that while the U.S. Supreme Court cases do not directly resolve the issues in Stair’s case, they do make it clear that she has a cause of action. “In summary, we recognize that the holdings in Evans and Venegas do not directly answer the question of interest in statutory fee recovery as between the lawyer and client — that a civil rights plaintiff may waive eligibility for fees ( Evans), or promise to pay more than the statutory fee award ( Venegas), does not directly determine the nature of the plaintiff’s interest vis-a-vis his attorneys once such fees have accrued,” Saylor said. “However, the reasoning applied in such decisions undermines Turtzo Spry’s position that a clear congressional policy requires that civil rights attorneys must always receive the direct and entire benefit of statutory fees awards in individual cases.” The opinion did seem to intimate that the court might have reached a different conclusion were it not held to current U.S. Supreme Court case law. “While, left to our own devices, our own interpretation of congressional purpose might have been considerably different, see Blanchard, it is appropriate to defer to the United States Supreme Court concerning the direction of prevailing federal policy,” Saylor said. Saylor concluded by emphasizing what the Court did not decide. “Although we have determined that federal policy does not bar Stair’s claim, we do not here foreclose the possibility that the design of the federal fee-shifting scheme in issue may be relevant to the ultimate resolution of this case upon further consideration of the complaint as well as responsive defenses and claims that may be asserted by Turtzo Spry,” he said. Saylor also noted the Court gave no opinion as to how “recovery” should be defined — although he said most courts have found that the term clearly excludes a statutory fee award — or how attorneys should go about collecting statutory fees awarded to their clients.

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