Arbor Hill Concerned Citizens Neighborhood Asn v. County of Albany, No. 06-0086 (2d Cir. 2007)
Annotate this CaseThis opinion or order relates to an opinion or order originally issued on April 24, 2007.
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06-0086-cv Arbor Hill Concerned Citizens Neighborhood Ass n v. County of Albany 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31 32 33 34 UNITED STATES COURT OF APPEALS FOR THE SECOND CIRCUIT August Term 2006 (Argued: October 11, 2006 Decided: April 24, 2007) (Amended: July 12, 2007) Docket No. 06-0086-cv -----------------------------------------------------x ARBOR HILL CONCERNED CITIZENS NEIGHBORHOOD ASSOCIATION, ALBANY COUNTY BRANCH OF THE NATIONAL ASSOCIATION FOR THE ADVANCEMENT OF COLORED PEOPLE, AARON MAIR, MARYAM MAIR, AND MILDRED CHANG, Plaintiffs-Appellants, -- v. -COUNTY OF ALBANY AND ALBANY COUNTY BOARD OF ELECTIONS, Defendants-Appellees, - and - THE REPUBLICAN CAUCUS OF THE ALBANY COUNTY LEGISLATURE, Intervenors. -----------------------------------------------------x B e f o r e : JACOBS, Chief Judge, WALKER, Circuit Judge, O CONNOR, Associate Justice Retired.* Appeal from an order of the United States District Court for 35 the Northern District of New York (Norman A. Mordue, Judge) 36 granting in part and denying in part plaintiffs-appellants 37 motion for attorney s fees. 1 2 3 * The Honorable Sandra Day O Connor, Associate Justice (Retired) of the United States Supreme Court, sitting by designation. -1- 1 AFFIRMED. 2 3 4 5 6 7 8 9 10 11 12 13 14 15 MITCHELL A. KARLAN (Mark E. Bini and Michelle Craven, on the brief), Gibson, Dunn & Crutcher, LLP, New York, New York, for PlaintiffsAppellants. THOMAS J. O CONNOR, Napierski, Vandenburgh & Napierski, LLP, Albany, New York, for DefendantsAppellees. AMENDED OPINION1 JOHN M. WALKER, JR., Circuit Judge: In this appeal from the district court s disposition of 16 their motion for an award of attorney s fees, plaintiffs- 17 appellants ( plaintiffs ), who prevailed in a suit brought under 18 the Voting Rights Act of 1965 ( VRA ), seek a recalculation of 19 the amount that they may recoup. 20 as the lodestar - to which their attorneys are presumptively 21 entitled is the product of hours worked and an hourly rate. 22 Plaintiffs argue that the district court applied an unnecessarily 23 strict forum rule : 24 them to show extraordinary special circumstances before it would 25 use in its lodestar calculation an hourly rate greater than the 26 hourly rate charged by attorneys in the district where the 27 district court sits. 1 2 3 The fee - historically known The district court, they contend, required 1 After due consideration of Plaintiffs-Appellants petition for rehearing, which is denied, we have sua sponte amended our opinion. -2- 1 We agree that the district court may have applied the forum 2 rule in too unyielding a fashion. 3 proper application in this circuit: 4 should generally use the prevailing hourly rate in the district 5 where it sits to calculate what has been called the lodestar - 6 what we think is more aptly termed the presumptively reasonable 7 fee -- the district court may adjust this base hourly rate to 8 account for a plaintiff s reasonable decision to retain out-of- 9 district counsel, just as it may adjust the base hourly rate to 10 11 We therefore clarify its While the district court account for other case-specific variables. Moreover, this dispute concerning the forum rule is but a 12 symptom of a more serious illness: Our fee-setting jurisprudence 13 has become needlessly confused -- it has come untethered from the 14 free market it is meant to approximate. 15 that the district court consider, in setting the reasonable 16 hourly rate it uses to calculate the lodestar, what a 17 reasonable, paying client would be willing to pay, not just in 18 deciding whether to use an out-of-district hourly rate in its fee 19 calculation. 20 Act, pursuant to which fees can be recovered from the other side, 21 has little incentive to negotiate a rate structure with his 22 attorney prior to the litigation; the district court must act 23 later to ensure that the attorney does not recoup fees that the 24 market would not otherwise bear. We therefore suggest A plaintiff bringing suit under the Voting Rights Indeed, the district court -3- 1 (unfortunately) bears the burden of disciplining the market, 2 stepping into the shoes of the reasonable, paying client, who 3 wishes to pay the least amount necessary to litigate the case 4 effectively. 5 Bearing these background principles in mind, the district 6 court should, in determining what a reasonable, paying client 7 would be willing to pay, consider factors including, but not 8 limited to, the complexity and difficulty of the case, the 9 available expertise and capacity of the client s other counsel 10 (if any), the resources required to prosecute the case 11 effectively (taking account of the resources being marshaled on 12 the other side but not endorsing scorched earth tactics), the 13 timing demands of the case, whether the attorney had an interest 14 (independent of that of his client) in achieving the ends of the 15 litigation or initiated the representation himself, whether the 16 attorney was initially acting pro bono (such that a client might 17 be aware that the attorney expected low or non-existent 18 remuneration), and other returns (such as reputation, etc.) the 19 attorney expected from the representation.2 1 2 3 4 5 6 7 8 9 10 2 Our decision today in no way suggests that attorneys from non-profit organizations or attorneys from private law firms engaged in pro bono work are excluded from the usual approach to determining attorneys fees. We hold only that in calculating the reasonable hourly rate for particular legal services, a district court should consider what a reasonable, paying client would expect to pay. See Pastre v. Weber, 800 F. Supp. 1120, 1125 (S.D.N.Y. 1991) (finding force to the argument that [defendant] should not be required to pay for legal services at the rate Hughes Hubbard would charge to [its corporate clients] . -4- 1 Although we clarify the application of the forum rule, we 2 affirm the judgment of the district court in this case. It is 3 clear that the district court would adhere to its fee award were 4 we to vacate the district court s judgment and remand for 5 reconsideration. 6 resident of Albany would have made a greater effort to retain an 7 attorney practicing in the Northern District of New York, whether 8 in Syracuse, Binghamton, Utica, or Kingston, than did plaintiffs. 9 The rates charged by attorneys practicing in the Southern 10 District of New York would simply have been too high for a 11 thrifty, hypothetical client -- at least in comparison to the 12 rates charged by local attorneys, with which he would have been 13 familiar. Indeed, we believe that a reasonable, paying 14 BACKGROUND 15 On April 22, 2003, plaintiffs filed a complaint against 16 Albany County and its Board of Elections ( Albany defendants ) 17 alleging that Albany County s 2002 legislative redistricting plan 18 violated § 2 of the Voting Rights Act of 1965. 19 1973. 20 District of New York (Mordue, Judge) enjoined Albany County from 1 2 3 4 5 6 7 . . but should . . . compensate plaintiff only for what would have been charged by a competent attorney specializing in civil rights litigation ). 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. See 42 U.S.C. § On August 22, 2003, the District Court for the Northern -5- 1 conducting its scheduled November 2003 election pending adoption 2 by the Albany County Legislature of a revised redistricting plan. 3 Further proceedings below culminated in the district court s 4 rejection of plaintiffs request that it order Albany County to 5 hold a special election to take the place of the enjoined 6 November 2003 election; plaintiffs then appealed to this court. 7 On January 28, 2004, we vacated the district court s judgment and 8 ordered the County to hold the special election on March 2, 2004. 9 See Arbor Hill Concerned Citizens Neighborhood Ass n v. County of 10 11 Albany, 357 F.3d 260 (2d Cir. 2004) ( Arbor Hill I ). Plaintiffs then moved in this court for an award of 12 attorney s fees under 42 U.S.C. § 1973l(e). 13 acknowledged the merit of the motion in principle, we remanded 14 for a determination of the appropriate fee. 15 Concerned Citizens Neighborhood Ass n v. County of Albany, 369 16 F.3d 91 (2d Cir. 2004) ( Arbor Hill II ). 17 plaintiffs had not demonstrated that special circumstances 18 existed that would justify the use of higher rates than those 19 prevailing in the Northern District of New York in calculating 20 that fee. 21 Orange Prods. Liab. Litig., 818 F.2d 226, 232 (2d Cir. 1987)). 22 While we See Arbor Hill We noted that Arbor Hill II, 369 F.3d at 96 (quoting In re Agent During the course of this litigation, three entities have 23 rendered legal services to the plaintiffs: (1) the Albany law 24 firm of DerOhannesian & DerOhannesian ( D&D ), as local counsel; -6- 1 (2) the Washington, D.C.-based non-profit Lawyer s Committee for 2 Civil Rights Under Law ( LCCRUL ), selected for its voting rights 3 expertise; and (3) the Manhattan law firm of Gibson, Dunn & 4 Crutcher ( Gibson Dunn ), chosen because of the firm s practice 5 before the Second Circuit and the firm s muscle, specifically, 6 its ability to quickly prepare the appeal on an abbreviated 7 briefing schedule. 8 9 Gibson Dunn sought in the district court to recoup attorney s fees calculated on the basis of the hourly rate 10 charged by most attorneys in the Southern District of New York 11 (and the hourly rate usually charged by Gibson Dunn). 12 district court denied Gibson Dunn s request that it adjust the 13 hourly rate it would use to calculate the fees due from that 14 prevalent in the Northern District of New York. 15 court explained, [i]t is undisputed that plaintiffs did not even 16 attempt to contact attorneys or law firms in the Northern 17 District of New York outside of Albany County insofar as 18 obtaining representation in this matter. 19 plaintiffs[ ] obligation to submit factual support for their 20 claim that there were no [law firms in Syracuse, Binghamton, 21 Utica or Kingston] ready, willing or able to take [their] case, 22 the district court held that plaintiffs had not adequately 23 justified their request for higher fees. 24 The The district Noting that it was In addition, the district court reduced the fee award -7- 1 proposed by Gibson Dunn in various other respects not relevant to 2 this appeal. 3 challenging only the district court s decision to award Gibson 4 Dunn a fee based on the hourly rate commonly charged in the 5 Northern District. ANALYSIS 6 7 8 9 Plaintiffs then timely appealed the fee award, I. A Brief History of Attorney s Fees Awards Courts in the United States have historically applied the American Rule, under which each party is to bear its own costs 10 of litigation, unmitigated by any fee-shifting exceptions. See 11 Alyeska Pipeline Servs. Co. v. Wilderness Soc y, 421 U.S. 240, 12 247 (1975). 13 Attorney s Fees Awards Act, which, like the provision of the VRA 14 at issue in this appeal, provided that prevailing parties could 15 recoup reasonable attorney s fee[s]. 16 cf. 42 U.S.C. § 1973l(e) ( In any action or proceeding to enforce 17 the voting guarantees of the fourteenth or fifteenth amendment, 18 the court, in its discretion, may allow the prevailing party . . 19 . a reasonable attorney s fee . . . . ). In 1976, however, Congress enacted the Civil Rights See 42 U.S.C. § 1988(b); 20 In the accompanying Senate Report, Congress implicitly 21 endorsed two existing methods of calculating the reasonable fee 22 that were developed in the 1970s by the circuit courts. 23 See Hensley v. Eckerhart, 461 U.S. 424, 429-30 & n.3 (1983). 24 first, developed by the Third Circuit, was the lodestar method. -8- The 1 See Lindy Bros. Builder, Inc. v. Am. Radiator & Standard Sanitary 2 Corp., 487 F.2d 161 (3d Cir. 1973). 3 of the attorney s usual hourly rate and the number of hours 4 worked. 5 the lodestar using the attorney s normal billing rate ); see 6 also City of Burlington v. Dague, 505 U.S. 557, 559 (1992). 7 After determining the lodestar, the district court could adjust 8 it in setting the reasonable fee. 9 U.S. at 433 ( The most useful starting point for determining the The lodestar was the product See id. at 167 (directing district courts to calculate See generally Hensley, 461 10 amount of a reasonable fee is the number of hours reasonably 11 expended on the litigation multiplied by a reasonable hourly 12 rate. 13 make an initial estimate . . . . ) (emphasis added); Lindy, 487 14 F.2d at 168-69. 15 (1) the lodestar calculation; and (2) adjustment of the lodestar 16 based on case-specific considerations. 17 This calculation provides an objective basis on which to Thus, the lodestar method involved two steps: The second method, developed by the Fifth Circuit, was for 18 district courts to consider twelve specified factors to establish 19 a reasonable fee. 20 F.2d 714 (5th Cir. 1974),3 abrogated on other grounds by 1 2 3 4 5 6 7 8 See Johnson v. Ga. Highway Express, Inc., 488 3 The twelve Johnson factors are: (1) the time and labor required; (2) the novelty and difficulty of the questions; (3) the level of skill required to perform the legal service properly; (4) the preclusion of employment by the attorney due to acceptance of the case; (5) the attorney s customary hourly rate; (6) whether the fee is fixed or contingent; (7) the time limitations imposed by the client or the circumstances; (8) the amount involved in the case and the results obtained; (9) the -9- 1 Blanchard v. Bergeron, 489 U.S. 87, 92-93, 96 (1989) (declining 2 to limit fee award to amount stipulated in attorney-client 3 agreement). 4 in that it contemplated a one-step inquiry. 5 The Johnson method differed from the lodestar method These two circuits had sought to channel the district 6 court s discretion in different ways. The lodestar method was 7 consistent with the law firm practice of accounting for each 8 billable hour. 9 of the court should be into the hours spent by the attorneys . . See Lindy, 487 F.2d at 167 ( [T]he first inquiry 10 . . ); see also Gisbrecht v. Barnhart, 535 U.S. 789, 800-01 11 (2002) ( As it became standard accounting practice to record 12 hours spent on a client s matter, attorneys increasingly realized 13 that billing by hours devoted to a case was administratively 14 convenient . . . . ). 15 reflect the market, the district court retained authority to 16 adjust the lodestar to ensure that the fee ultimately awarded was 17 reasonable. 18 claimed or spent on a case were not the sole basis for 19 determining a fee. 20 depending on market forces, the Johnson method relied on the 21 district court s experience and judgment. 22 trial judge s expertise gained from past experience as a lawyer 1 2 3 4 experience, reputation, and ability of the attorneys; (10) the undesirability of the case; (11) the nature and length of the professional relationship with the client; and (12) awards in similar cases. Johnson, 488 F.2d at 717-19. When the lodestar did not accurately By contrast, under the Johnson method, the hours Johnson, 488 F.2d at 717. -10- Rather than See id. at 718 ( [T]he 1 and his observation from the bench of lawyers at work become 2 highly important ); id. at 720 (discussing the necessary 3 balancing process ). 4 attempt to reduce the calculation of a reasonable fee to 5 mathematical precision. ), with Lindy, 487 F.2d at 167. 6 Compare id. ( By this discussion we do not In theory, therefore, a district court that adopted the 7 lodestar method was expected to consider fewer variables than a 8 district court utilizing the Johnson method. 9 however, both considered substantially the same set of variables In practice, 10 - just at a different point in the fee-calculation process. A 11 district court using the lodestar method would set the lodestar 12 and then consider whether, in light of variables such as the 13 difficulty of the case, it should adjust the lodestar before 14 settling on the reasonable fee it was ultimately inclined to 15 award. 16 1982); Baughman v. Wilson Freight Forwarding Co., 583 F.2d 1208, 17 1217-18 (3d Cir. 1978) (permitting the district court to multiply 18 the lodestar by a contingency factor and accepting, in theory, 19 that obtaining an exceptional result might justify a further 20 upward departure from the lodestar). 21 court employing the Johnson method would consider factors, such 22 as the difficulty of the case, earlier in the fee-calculation 23 process by weighing them in setting its tentative reasonable fee, 24 from which there would seldom be a need to depart. See, e.g., Silberman v. Bogle, 683 F.2d 62, 64 (3d Cir. -11- By contrast, a district See, e.g., In 1 re First Colonial Corp. of Am., 544 F.2d 1291, 1299-1300 (5th 2 Cir. 1977) (outlining a process whereby first, the attorney 3 seeking fees would document the hours devoted to the case; 4 second, the district court would consider the Johnson factors and 5 set a reasonable hourly rate; and third, the district court would 6 explain how it balanced the Johnson factors to arrive at the 7 reasonable hourly rate). 8 9 The Supreme Court adopted the lodestar method in principle, see Hensley, 461 U.S. at 433; Blum v. Stenson, 465 U.S. 886 10 (1984), without, however, fully abandoning the Johnson method. 11 Rather than using the attorney s own billing rate to calculate 12 the lodestar and then examining the lodestar in light of case- 13 specific variables to ensure that it was in fact a reasonable 14 fee, as the Third Circuit had suggested, the Supreme Court 15 instructed district courts to use a reasonable hourly rate - 16 which it directed that district courts set in light of the 17 Johnson factors - in calculating what it continued to refer to 18 as the lodestar. 19 court also may consider other factors identified in [Johnson] 20 though it should note that many of these factors usually are 21 subsumed within the initial calculation of hours reasonably 22 expended at a reasonable hourly rate. ) (citation omitted) 23 (emphasis added); Blum, 465 U.S. at 898-900. 24 collapsed what had once been a two-step inquiry into a single- See Hensley, 461 U.S. at 434 n.9 ( The district -12- The Supreme Court 1 step inquiry; it shifted district courts focus from the 2 reasonableness of the lodestar to the reasonableness of the 3 hourly rate used in calculating the lodestar, which in turn 4 became the de facto reasonable fee. 5 But the Supreme Court s emphasis on the Third Circuit s 6 economic model, see, e.g., Missouri v. Jenkins, 491 U.S. 274, 283 7 (1989) ( Our cases have repeatedly stressed that attorney s fees 8 . . . are to be based on market rates for the services 9 rendered. ), and its simultaneous invocation of the equitable 10 Johnson factors at an early stage of the fee-calculation process, 11 proved to be in tension, see Blum, 465 U.S. at 895 n.11 ( We 12 recognize, of course, that determining an appropriate market 13 rate for the services of a lawyer is inherently difficult . . . 14 [since m]arket prices . . . are determined by supply and 15 demand. ). 16 to correct for market dysfunction, the Supreme Court now asked 17 district court judges to hypothesize that market on the basis of 18 their experience as lawyers within their districts and on the 19 basis of affidavits provided by the parties. 20 the rates an attorney routinely charges are those that the market 21 will bear; yet the Supreme Court required that the district 22 courts conjure a different, reasonable hourly rate. 23 24 While the Third Circuit had expected district courts Generally speaking, After Hensley and Blum, circuit courts struggled with the nettlesome interplay between the lodestar method and the Johnson -13- 1 method. Compare Rutherford v. Harris County, Tex., 197 F.3d 173, 2 192 (5th Cir. 1999) ( To decide an appropriate attorney s fee 3 award, the district court was first required to calculate a 4 lodestar fee depending on the circumstances of the case and the 5 Johnson factors. 6 whether the lodestar amount should be adjusted upward or 7 downward, depending on the . . . Johnson factors. ) (emphasis 8 added), with Murray v. Weinberger, 741 F.2d 1423, 1430 (D.C. Cir. 9 1984)( [T]he reasonable hourly rate which is incorporated into The court was next obligated to consider 10 the lodestar figure generally reflects the reputation and ability 11 of the attorney, the attorney s experience, and the level of 12 skill required for the particular case. ), and Bebchick v. Wash. 13 Area Metro. Transit Comm n, 805 F.2d 396, 404 (D.C. Cir. 1986) 14 ( Of course, the actual rate that applicant s counsel can 15 command on the market is itself highly relevant proof of the 16 prevailing community rate. ). 17 And the Supreme Court has not yet fully resolved the 18 relationship between the two methods. 19 Hensley and Blum, it has both (1) suggested that district courts 20 should use the Johnson factors to adjust the lodestar, see, e.g., 21 Blanchard, 489 U.S. at 94 (stating that the district court should 22 arrive at an initial estimate and then adjust this lodestar 23 calculation by other factors ); see also id. ( The Johnson 24 factors may be relevant in adjusting the lodestar amount . . . -14- In cases decided after 1 . ); Pierce v. Underwood, 487 U.S. 552, 582-83 (1988) (Brennan, 2 J., concurring) (suggesting that factors might exist that would 3 justify an enhancement of the lodestar ), and (2) reiterated its 4 holding in Hensley and Blum that many of the Johnson factors 5 are subsumed within the initial calculation. Penn. v. Del. 6 Valley Citizens Council for Clean Air, 478 U.S. 546, 564 (1986). 7 Our court has done little to resolve this confusion. 8 Compare Kassim v. City of Schenectady, 415 F.3d 246, 255-56 (2d 9 Cir. 2005) (affirming the district court s authority to reduce 10 the fee awarded to a prevailing plaintiff below the lodestar by 11 reason of the plaintiff s partial or limited success ) 12 (emphasis added), with Luciano v. Olsten Corp., 109 F.3d 111, 116 13 (2d Cir. 1997) ( The product of the number of reasonable hours 14 times a reasonable hourly rate, however, does not end the 15 inquiry. 16 of the particular case, that may lead the district court to 17 ultimately make an adjustment to the hourly structure. ) 18 (internal citations omitted), and McDonald v. Pension Plan of the 19 NYSA-ILA Pension Trust Fund, 450 F.3d 91, 97 (2d Cir. 2006) 20 (lodestar calculated on the basis of prevailing rate 21 [specifically] for ERISA practitioners in this Circuit ) 22 (emphasis added), and Chambless v. Masters, Mates & Pilots 23 Pension Plan, 885 F.2d 1053, 1058 (2d Cir. 1989) (suggesting, in 24 determining the lodestar, that smaller firms may be subject to There remain other considerations, based on the facts -15- 1 2 their own prevailing market rate ). The net result of the fee-setting jurisprudence here and in 3 the Supreme Court is that the district courts must engage in an 4 equitable inquiry of varying methodology while making a pretense 5 of mathematical precision. 6 Force, Court Awarded Attorney Fees, 108 F.R.D. 237, 247 (1985) 7 ( The Lindy process creates a sense of mathematical precision 8 that is unwarranted . . . . ). 9 lodestar in the true sense of the word - a star that leads, See Report of the Third Circuit Task The lodestar is no longer a 10 Webster s Third International Dictionary 1329 (1981). Nor do 11 courts use it in the way the term was first used by the Third 12 Circuit - as a base amount that is susceptible of ready 13 adjustment; rather, circuit court deference to the district 14 court s estimate of a reasonable hourly rate is a lodestar 15 only in the sense that it is a guiding jurisprudential principle, 16 see Dague, 505 U.S. at 562 ( The lodestar figure has, as its 17 name suggests, become the guiding light of our fee-shifting 18 jurisprudence. ). 19 produce is in effect not a lodestar as originally conceived, but 20 rather a presumptively reasonable fee. 21 the fee applicant bears the burden of showing that . . . an 22 adjustment is necessary to the determination of a reasonable 23 fee ). 24 calculating a reasonable fee, but rather on setting a reasonable What the district courts in this circuit See id. (holding that The focus of the district courts is no longer on -16- 1 hourly rate, taking account of all case-specific variables. 2 The district court s opinion, including the report and 3 recommendation of Magistrate Judge David R. Homer, with which the 4 district court agreed after de novo review, reflects the general 5 confusion surrounding the lodestar calculation. 6 district court appears to envision a two-step lodestar- 7 calculation process; yet elsewhere it seems to contemplate 8 undertaking the calculation in one step. 9 district court emphasizes its role in approximating the workings In places, the Likewise, at times, the 10 of the market, but it also suggests some difference between 11 rates . . . paid by private retained clients . . . [and rates] 12 ordered by courts. 13 The meaning of the term lodestar has shifted over time, 14 and its value as a metaphor has deteriorated to the point of 15 unhelpfulness. 16 better course - and the one most consistent with attorney s fees 17 jurisprudence - is for the district court, in exercising its 18 considerable discretion, to bear in mind all of the case-specific 19 variables that we and other courts have identified as relevant to 20 the reasonableness of attorney s fees in setting a reasonable 21 hourly rate. 22 client would be willing to pay. 1 2 3 This opinion abandons its use.4 We think the The reasonable hourly rate is the rate a paying In determining what rate a 4 While we do not purport to require future panels of this court to abandon the term - it is too well entrenched - this panel believes that it is a term whose time has come. -17- 1 paying client would be willing to pay, the district court should 2 consider, among others, the Johnson factors; it should also bear 3 in mind that a reasonable, paying client wishes to spend the 4 minimum necessary to litigate the case effectively. 5 court should also consider that such an individual might be able 6 to negotiate with his or her attorneys, using their desire to 7 obtain the reputational benefits that might accrue from being 8 associated with the case. 9 that reasonable hourly rate to calculate what can properly be The district The district court should then use 10 termed the presumptively reasonable fee. 11 II. The Forum Rule 12 We turn now to the particular fee-calculation rule at issue 13 in this case. 14 just described that the Second Circuit promulgated what we will 15 call the forum rule. 16 courts should use the prevailing [hourly rate] in the community 17 in calculating the lodestar - or what we are now calling the 18 presumptively reasonable fee. 19 community for purposes of this calculation is the district 20 where the district court sits. 21 Corr. Servs., 722 F.2d 23, 25 (2d Cir. 1983). 22 It was against the muddled legal landscape we have The Supreme Court directed that district After Blum, we explained that the See Polk v. N.Y. State Dep t of However, district courts - and indeed our court - quickly 23 succumbed to the general confusion surrounding the difference 24 between a lodestar and a reasonable hourly rate. -18- Sometimes, 1 they considered the variation between indistrict and out-of- 2 district rates in setting the hourly rate (which they then used 3 to calculate the presumptively reasonable fee); but sometimes, 4 they considered that variation only in deciding whether to adjust 5 the presumptively reasonable fee after they had arrived at it (on 6 the basis of in-district rates). 7 ( [T]he rate prevailing in the appropriate community is only one 8 of many factors bearing on determination of a fee award. ), with 9 Arbor Hill II, 369 F.3d at 96-97 (intimating that a district Compare Polk, 722 F.2d at 25 10 court should permit plaintiffs to recover more than a fee 11 calculated on the basis of the hourly rate usually charged by 12 attorneys in the forum district only if plaintiffs could show[] 13 . . . that the case required special expertise beyond the 14 competence of [forum district] law firms ).5 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 5 Attorneys have had trouble understanding the strict forum rule. For instance, in this case, Michael C. Lynch, counsel to the Albany defendants, explained in an affidavit filed with this court in Arbor Hill II that the relevant community for purposes of . . . [setting the hourly rate] is the Albany, Capital District region in the Northern District of New York. See also Farbotko v. Clinton County of New York, 433 F.3d 204, 209 (2d Cir. 2005) ( [T]he prevailing market rate for attorneys in Syracuse and Albany . . . may not accurately reflect the rate prevailing across the entire Northern District. ). The district court, by contrast, considered the relevant community to be the entire Northern District of New York. Confusion surrounding the forum rule is endemic, and not unique to our circuit. Other circuits, too, have debated whether to consider out-of-district rates in setting the reasonable hourly rate or in setting the reasonable fee (after arriving at a presumptively reasonable fee using in-district rates). Compare Shakopee Mdewakanton Sioux Cmty. v. City of Prior Lake, Minn., 771 F.2d 1153, 1160 (8th Cir. 1985) (noting that the district -19- 1 We now clarify that a district court may use an out-of- 2 district hourly rate - or some rate in between the out-of- 3 district rate sought and the rates charged by local attorneys - 4 in calculating the presumptively reasonable fee if it is clear 5 that a reasonable, paying client would have paid those higher 6 rates. 7 would in most cases hire counsel from within his district, or at 8 least counsel whose rates are consistent with those charged 9 locally. We presume, however, that a reasonable, paying client This presumption may be rebutted -- albeit only in the 10 unusual case -- if the party wishing the district court to use a 11 higher rate demonstrates that his or her retention of an out-of- 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 court should first compute[] the base lodestar figure by multiply[ing] the number of hours reasonably expended times the lawyer s regular hourly rate and only then look also to the ordinary fee for similar work in the community ) (internal quotation marks omitted), with Kan. Pub. Employees Ret. Sys. v. Reimer & Koger Assocs., 165 F.3d 627, 631 (8th Cir. 1999) (readily upholding use of out-of-district rates in calculating the presumptively reasonable fee). And those that have adopted a comparatively strict forum rule have struggled to apply it. See, e.g., Gates v. Deukmejian, 987 F.2d 1392, 1405 n.14 (9th Cir. 1992) (discussing whether to use Sacramento or San Francisco hourly rates); McDonald v. Armontrout, 860 F.2d 1456, 1460 n.6 (8th Cir. 1988) ( We are not at all convinced that central Missouri is the relevant community . . . . [T]he argument for an expansive reading of community is particularly strong in a case such as this, since Jefferson City is the capitol of the state and lawyers from throughout the state have business there. ). Compare Grendel s Den, Inc. v. Larsen, 749 F.2d 945, 955 (1st Cir. 1984) (using county based version of the forum rule), with Cunningham v. City of McKeesport, 753 F.2d 262, 267 (3d Cir. 1985) (location of attorney s home office is the relevant community), and Davis County Solid Waste Mgmt. & Energy Recovery Special Serv. Dist. v. E.P.A., 169 F.3d 755, 759 (D.C. Cir. 1999) (announcing an exception to the forum rule to govern cases where the home market is substantially less costly and the site of the bulk of the legal work ). -20- 1 district attorney was reasonable under the circumstances as they 2 would be reckoned by a client paying the attorney s bill. 3 We believe that the district court s assessment of the 4 reasonableness of a prevailing party s decision to retain out-of- 5 district counsel is best considered in setting the hourly rate - 6 rather than in deciding whether to adjust a presumptively 7 reasonable fee - for three reasons. 8 with the holdings of several sister circuits and with the Supreme 9 Court s focus on reasonable hourly rates rather than reasonable First, our holding comports 10 fees. See, e.g., Blum, 465 U.S. at 895 (emphasizing the 11 importance of using the market rate in calculating attorney s 12 fees); Rum Creek Coal Sales, Inc. v. Caperton, 31 F.3d 169, 175 13 (4th Cir. 1994) ( In circumstances where it is reasonable to 14 retain attorneys from other communities . . . the rates in those 15 communities may also be considered. ); Maceira v. Pagan, 698 F.2d 16 38, 40 (1st Cir. 1982) ( If a local attorney could perform the 17 service, a well-informed private client, paying his own fees, 18 would probably hire local counsel at the local, average rate. ); 19 Chrapliwy v. Uniroyal, Inc., 670 F.2d 760, 769 (7th Cir. 1982) 20 (querying whether the choice of counsel was improvident ). 21 Second, in Pierce v. Underwood, a case interpreting the 22 attorney s fees provision of the Equal Access to Justice Act 23 ( EAJA ), the Supreme Court hinted that in the broad spectrum of 24 litigation, the difficulty of obtaining local counsel competent -21- 1 to prosecute a particular case is little more than [a] routine 2 reason[] why market rates are what they are, 487 U.S. 552, 573 3 (1988) (emphasis added). 4 broad spectrum of litigation from the attorney s fees provision 5 of the EAJA, which stipulates that fees shall be based upon 6 prevailing market rates but shall not be awarded in excess of 7 $125 per hour unless the court determines that . . . the limited 8 availability of qualified attorneys for the proceedings involved 9 justifies a higher fee. The Supreme Court distinguished that 28 U.S.C. § 2412(d)(2)(A)(ii); see 10 Pierce, 487 U.S. at 571-72; see generally Healey v. Rovner, No. 11 06-0525, Slip. Op. at *10 (2d Cir. Apr. 17, 2007). 12 Third and finally, our holding honors the Supreme Court s 13 emphasis on the need to use the approximate market rate for an 14 attorney s services in calculating the presumptively reasonable 15 fee. 16 today are increasingly interconnected. 17 by geography is too simplistic. 18 defined by practice area. 19 Dep t of Educ., 407 F.3d 65, 80 (2d Cir. 2005) ( So long as the 20 law provides for or permits fee awards based on geographic 21 markets for services, a lawyer may be paid at different rates for 22 otherwise indistinguishable services. ). 23 cases (including many voting rights cases) are intrinsically 24 local, and the relevant legal market may be coextensive with or See Jenkins, 491 U.S. at 283. The legal communities of To define markets simply Sometimes, legal markets may be See A.R. ex rel. R.V. v. New York City -22- On the other hand, many 1 smaller than the district itself. By asking what a reasonable, 2 paying client would do, a district court best approximates the 3 workings of today s market for legal services. 4 Bd. of Trs. of S. Ill. Univ., 317 F.3d 738, 744 (7th Cir. 2003) 5 ( The realities of the legal community today mean that though 6 some attorney probably could have represented [the plaintiff], 7 one factor or another prevented them from taking the case when he 8 needed a lawyer. ). 9 client might consider whether a lawyer is willing to offer his See Malthur v. Not incidentally, a reasonable, paying 10 services in whole or in part pro bono, or to promote the lawyer s 11 own reputational or societal goals. 12 hourly rate at which a client who wished to pay no more than 13 necessary would be willing to compensate his attorney, the 14 district court can enforce market discipline, approximating the 15 negotiation that might ensue were the client actually required to 16 pay the attorney s fees. 17 Indeed, by focusing on the In occasionally permitting a deviation from forum rates in 18 setting the rate that will yield the presumptively reasonable 19 fee, we have in mind no substantial change in circuit law; where 20 circumstances have warranted it, we have not insisted on strict 21 adherence to the forum rule. In Polk, we approved the use of an 22 out-of-district hourly rate. 722 F.2d at 25 (considering whether 23 [c]ounsel might . . . have expected plaintiff s claim to be 24 adjudicated in the Southern District ). -23- In Agent Orange, 1 although we emphasized that district courts should generally use 2 the hourly rates employed in the district in which the reviewing 3 court sits in calculating the presumptively reasonable fee, 818 4 F.2d at 232, we again upheld a district court s decision to use 5 different rates.6 6 district courts where appropriate to employ out-of-district rates 7 in calculating the fee due. 8 Educ., 407 F.3d at 81 & n.17 ( [T]here is good reason for a 9 district court not be wed to the rates in its own community. And since Polk and Agent Orange, we have urged See, e.g., New York City Dep t of 10 they are lower than those in another district, skilled lawyers 11 from such other district will be dissuaded from taking 12 If meritorious cases in the district with lower rates. ). 13 In both Polk and Agent Orange, the touchstone of our 14 analysis was the belief that district courts should award fees 15 just high enough to attract competent counsel, Lewis v. 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 6 Of the three cases cited in Agent Orange, two have since been called into question to the extent they purport to require strict application of the forum rule. Compare Chrapliwy, 670 F.2d at 768-69, with People Who Care v. Rockford Bd. of Educ., Sch. Dist. No. 205, 90 F.3d 1307, 1310 (7th Cir. 1996) ( The attorney s actual billing rate for comparable work is presumptively appropriate to use as the market rate. ); compare Avalon Cinema Corp. v. Thompson, 689 F.2d 137, 139-40 (8th Cir. 1982) (en banc), with TCBY Sys., Inc. v. RSP Co., 33 F.3d 925, 931 (8th Cir. 1994) ( [Defendants] argue they should be awarded the Minneapolis rate because they reasonably chose Minneapolis counsel after TCBY sued them. The [defendants] point out that they are Minnesota residents who were forced to litigate the case in Arkansas under the agreement s forum selection clause, and they were unfamiliar with Arkansas counsel . . . . [T]he district court could have properly based the fee award on the higher Minneapolis rates . . . . ). -24- 1 Coughlin, 801 F.2d 570, 576 (2d Cir. 1986). See, e.g., Agent 2 Orange, 818 F.2d at 233 ( Undercompensation could deny counsel 3 their right to fair and just fees; overcompensation would not be 4 consistent with the need to prevent windfalls. );7 cf. Crescent 5 Publ g Group, Inc. v. Playboy Enters., Inc., 246 F.3d 142, 151 6 (2d Cir. 2001) (explaining that an attorney-client agreement may 7 provide compelling evidence of the prevailing market rate ).8 8 We adhere to this touchstone, but we would not be true to it by 9 insisting on an overly strict application of the forum rule. 10 Rather, to reiterate, a district court should consider the rate a 11 reasonable, paying client would pay, and use that rate to 12 calculate the presumptively reasonable fee. 1 2 3 4 5 6 7 8 9 1 2 3 4 5 6 7 8 9 10 11 12 13 7 Indeed, Polk said that the panel was simply applying established law. And when we decided Polk, circuit precedent was clear that district courts had considerable flexibility in setting the relevant legal community for purposes of determining the hourly rate to be used in calculating the presumptively reasonable fee. See, e.g., Cohen v. West Haven Bd. of Police Comm rs, 638 F.2d 496, 506 (2d Cir. 1980) (holding that the district court should have looked to prevailing rates in the area ). 8 Were a strict forum rule the settled law of this circuit, we could not have used a lower hourly rate than the hourly rate prevailing in the district where the district court sat to calculate the presumptively reasonable fee in Crescent Publishing. See also Sands v. Runyon, 28 F.3d 1323, 1333-34 (2d Cir. 1994) (permitting district court to consider retainer agreement in setting hourly rate below prevailing hourly rate in the district); cf. Pinkham v. Camex, Inc., 84 F.3d 292, 294 (8th Cir. 1996). But see Reiter v. MTA New York City Transit Auth., 457 F.3d 224, 233 (2d Cir. 2006) (vacating district court judgment because district court used hourly rate set forth in retainer agreement without considering prevailing Southern District rates). -25- 1 2 III. The District Court s Decision For the foregoing reasons, we agree with plaintiffs that the 3 district court may have applied the forum rule too strictly. 4 They suggest that the district court calculated the presumptively 5 reasonable fee (on the basis of in-district rates) and then 6 queried whether the plaintiffs had shown sufficient cause to 7 rebut the presumption that it was, in fact, the ultimate 8 reasonable fee. 9 However, we find no error in the district court s fee award, 10 even when evaluated under the analysis we use. 11 that a reasonable, paying client would have known that law firms 12 undertaking representation such as that of plaintiffs often 13 obtain considerable non-monetary returns in experience, 14 reputation, or achievement of the attorneys own interests and 15 agendas and would have insisted on paying his attorneys at a 16 rate no higher than that charged by Albany attorneys (and there 17 is no cross-appeal). 18 We are confident Moreover, the considerable deference that we owe to a 19 district court s assessment of the Johnson and other factors, see 20 Farbotko, 433 F.3d at 210 ( The district court is in closer 21 proximity to and has greater experience with the relevant 22 community whose prevailing market rate it is determining. ), 23 counsels against remanding this case to the district court for 24 further, likely unnecessary, proceedings. -26- CONCLUSION 1 2 3 For the reasons set forth above, we AFFIRM the judgment of the district court. -27-
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