Arbor Hill Concerned Citizens Neighborhood Asn v. County of Albany, No. 06-0086 (2d Cir. 2007)

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The court issued a subsequent related opinion or order on July 12, 2007.
The court issued a subsequent related opinion or order on April 10, 2008.

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06-0086 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 UNITED STATES COURT OF APPEALS FOR THE SECOND CIRCUIT August Term 2006 (Argued: October 11, 2006 Decided: April 24, 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 34 the Northern District of New York (Norman A. Mordue, Judge) 35 granting in part and denying in part plaintiffs-appellants 36 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 2 3 4 5 6 7 8 9 10 11 12 13 14 AFFIRMED. 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. JOHN M. WALKER, JR., Circuit Judge: In this appeal from the district court s disposition of 15 their motion for an award of attorney s fees, plaintiffs- 16 appellants ( plaintiffs ), who prevailed in a suit brought under 17 the Voting Rights Act of 1965 ( VRA ), seek a recalculation of 18 the amount that they may recoup. 19 as the lodestar - to which their attorneys are presumptively 20 entitled is the product of hours worked and an hourly rate. 21 Plaintiffs argue that the district court applied an unnecessarily 22 strict forum rule : 23 them to show extraordinary special circumstances before it would 24 use in its lodestar calculation an hourly rate greater than the 25 hourly rate charged by attorneys in the district where the 26 district court sits. 27 The fee - historically known The district court, they contend, required We agree that the district court may have applied the forum 28 rule in too unyielding a fashion. 29 proper application in this circuit: 30 should generally use the prevailing hourly rate in the district -2- We therefore clarify its While the district court 1 where it sits to calculate what has been called the lodestar - 2 what we think is more aptly termed the presumptively reasonable 3 fee -- the district court may adjust this base hourly rate to 4 account for a plaintiff s reasonable decision to retain out-of- 5 district counsel, just as it may adjust the base hourly rate to 6 account for other case-specific variables. 7 Moreover, this dispute concerning the forum rule is but a 8 symptom of a more serious illness: Our fee-setting jurisprudence 9 has become needlessly confused -- it has come untethered from the 10 free market it is meant to approximate. We therefore suggest 11 that the district court consider, in setting the reasonable 12 hourly rate it uses to calculate the lodestar, what a 13 reasonable, paying client would be willing to pay, not just in 14 deciding whether to use an out-of-district hourly rate in its fee 15 calculation. 16 Act, pursuant to which fees can be recovered from the other side, 17 has little incentive to negotiate a rate structure with his 18 attorney prior to the litigation; the district court must act 19 later to ensure that the attorney does not recoup fees that the 20 market would not otherwise bear. 21 (unfortunately) bears the burden of disciplining the market, 22 stepping into the shoes of the reasonable, paying client, who 23 wishes to pay the least amount necessary to litigate the case 24 effectively. A plaintiff bringing suit under the Voting Rights Indeed, the district court -3- 1 Bearing these background principles in mind, the district 2 court should, in determining what a reasonable, paying client 3 would be willing to pay, consider factors including, but not 4 limited to, the complexity and difficulty of the case, the 5 available expertise and capacity of the client s other counsel 6 (if any), the resources required to prosecute the case 7 effectively (taking account of the resources being marshaled on 8 the other side but not endorsing scorched earth tactics), the 9 timing demands of the case, whether the attorney had an interest 10 (independent of that of his client) in achieving the ends of the 11 litigation or initiated the representation himself, whether the 12 attorney was initially acting pro bono (such that a client might 13 be aware that the attorney expected low or non-existent 14 remuneration), and other returns (such as reputation, etc.) the 15 attorney expected from the representation. 16 Although we clarify the application of the forum rule, we 17 affirm the judgment of the district court in this case. It is 18 clear that the district court would adhere to its fee award were 19 we to vacate the district court s judgment and remand for 20 reconsideration. 21 resident of Albany would have made a greater effort to retain an 22 attorney practicing in the Northern District of New York, whether 23 in Syracuse, Binghamton, Utica, or Kingston, than did plaintiffs. 24 The rates charged by attorneys practicing in the Southern Indeed, we believe that a reasonable, paying -4- 1 District of New York would simply have been too high for a 2 thrifty, hypothetical client -- at least in comparison to the 3 rates charged by local attorneys, with which he would have been 4 familiar. 5 BACKGROUND 6 On April 22, 2003, plaintiffs filed a complaint against 7 Albany County and its Board of Elections ( Albany defendants ) 8 alleging that Albany County s 2002 legislative redistricting plan 9 violated § 2 of the Voting Rights Act of 1965. See 42 U.S.C. § 10 1973. On August 22, 2003, the District Court for the Northern 11 District of New York (Mordue, Judge) enjoined Albany County from 12 conducting its scheduled November 2003 election pending adoption 13 by the Albany County Legislature of a revised redistricting plan. 14 Further proceedings below culminated in the district court s 15 rejection of plaintiffs request that it order Albany County to 16 hold a special election to take the place of the enjoined 17 November 2003 election; plaintiffs then appealed to this court. 18 On January 28, 2004, we vacated the district court s judgment and 19 ordered the County to hold the special election on March 2, 2004. 20 See Arbor Hill Concerned Citizens Neighborhood Ass n v. County of 21 Albany, 357 F.3d 260 (2d Cir. 2004) ( Arbor Hill I ). 22 Plaintiffs then moved in this court for an award of 23 attorney s fees under 42 U.S.C. § 1973l(e). 24 acknowledged the merit of the motion in principle, we remanded -5- While we 1 for a determination of the appropriate fee. 2 Concerned Citizens Neighborhood Ass n v. County of Albany, 369 3 F.3d 91 (2d Cir. 2004) ( Arbor Hill II ). 4 plaintiffs had not demonstrated that special circumstances 5 existed that would justify the use of higher rates than those 6 prevailing in the Northern District of New York in calculating 7 that fee. 8 Orange Prods. Liab. Litig., 818 F.2d 226, 232 (2d Cir. 1987)). 9 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 10 rendered legal services to the plaintiffs: (1) the Albany law 11 firm of DerOhannesian & DerOhannesian ( D&D ), as local counsel; 12 (2) the Washington, D.C.-based non-profit Lawyer s Committee for 13 Civil Rights Under Law ( LCCRUL ), selected for its voting rights 14 expertise; and (3) the Manhattan law firm of Gibson, Dunn & 15 Crutcher ( Gibson Dunn ), chosen because of the firm s practice 16 before the Second Circuit and the firm s muscle, specifically, 17 its ability to quickly prepare the appeal on an abbreviated 18 briefing schedule. 19 Gibson Dunn sought in the district court to recoup 20 attorney s fees calculated on the basis of the hourly rate 21 charged by most attorneys in the Southern District of New York 22 (and the hourly rate usually charged by Gibson Dunn). 23 district court denied Gibson Dunn s request that it adjust the 24 hourly rate it would use to calculate the fees due from that -6- The 1 prevalent in the Northern District of New York. 2 court explained, [i]t is undisputed that plaintiffs did not even 3 attempt to contact attorneys or law firms in the Northern 4 District of New York outside of Albany County insofar as 5 obtaining representation in this matter. 6 plaintiffs[ ] obligation to submit factual support for their 7 claim that there were no [law firms in Syracuse, Binghamton, 8 Utica or Kingston] ready, willing or able to take [their] case, 9 the district court held that plaintiffs had not adequately 10 11 The district Noting that it was justified their request for higher fees. In addition, the district court reduced the fee award 12 proposed by Gibson Dunn in various other respects not relevant to 13 this appeal. 14 challenging only the district court s decision to award Gibson 15 Dunn a fee based on the hourly rate commonly charged in the 16 Northern District. ANALYSIS 17 18 19 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 20 American Rule, under which each party is to bear its own costs 21 of litigation, unmitigated by any fee-shifting exceptions. 22 Alyeska Pipeline Servs. Co. v. Wilderness Soc y, 421 U.S. 240, 23 247 (1975). 24 Attorney s Fees Awards Act, which, like the provision of the VRA See In 1976, however, Congress enacted the Civil Rights -7- 1 at issue in this appeal, provided that prevailing parties could 2 recoup reasonable attorney s fee[s]. 3 cf. 42 U.S.C. § 1973l(e) ( In any action or proceeding to enforce 4 the voting guarantees of the fourteenth or fifteenth amendment, 5 the court, in its discretion, may allow the prevailing party . . 6 . a reasonable attorney s fee . . . . ). See 42 U.S.C. § 1988(b); 7 In the accompanying Senate Report, Congress implicitly 8 endorsed two existing methods of calculating the reasonable fee 9 that were developed in the 1970s by the circuit courts. 10 See Hensley v. Eckerhart, 461 U.S. 424, 429-30 & n.3 (1983). The 11 first, developed by the Third Circuit, was the lodestar method. 12 See Lindy Bros. Builder, Inc. v. Am. Radiator & Standard Sanitary 13 Corp., 487 F.2d 161 (3d Cir. 1973). 14 of the attorney s usual hourly rate and the number of hours 15 worked. 16 the lodestar using the attorney s normal billing rate ); see 17 also City of Burlington v. Dague, 505 U.S. 557, 559 (1992). 18 After determining the lodestar, the district court could adjust 19 it in setting the reasonable fee. 20 U.S. at 433 ( The most useful starting point for determining the 21 amount of a reasonable fee is the number of hours reasonably 22 expended on the litigation multiplied by a reasonable hourly 23 rate. 24 make an initial estimate . . . . ) (emphasis added); Lindy, 487 The lodestar was the product See id. at 167 (directing district courts to calculate See generally Hensley, 461 This calculation provides an objective basis on which to -8- 1 F.2d at 168-69. 2 (1) the lodestar calculation; and (2) adjustment of the lodestar 3 based on case-specific considerations. 4 Thus, the lodestar method involved two steps: The second method, developed by the Fifth Circuit, was for 5 district courts to consider twelve specified factors to establish 6 a reasonable fee. 7 F.2d 714 (5th Cir. 1974),1 abrogated on other grounds by 8 Blanchard v. Bergeron, 489 U.S. 87, 92-93, 96 (1989) (declining 9 to limit fee award to amount stipulated in attorney-client See Johnson v. Ga. Highway Express, Inc., 488 10 agreement). 11 in that it contemplated a one-step inquiry. 12 The Johnson method differed from the lodestar method These two circuits had sought to channel the district 13 court s discretion in different ways. 14 consistent with the law firm practice of accounting for each 15 billable hour. 16 of the court should be into the hours spent by the attorneys . . 17 . . ); see also Gisbrecht v. Barnhart, 535 U.S. 789, 800-01 18 (2002) ( As it became standard accounting practice to record 1 2 3 4 5 6 7 8 9 10 11 12 The lodestar method was See Lindy, 487 F.2d at 167 ( [T]he first inquiry 1 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 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. -9- 1 hours spent on a client s matter, attorneys increasingly realized 2 that billing by hours devoted to a case was administratively 3 convenient . . . . ). 4 reflect the market, the district court retained authority to 5 adjust the lodestar to ensure that the fee ultimately awarded was 6 reasonable. 7 claimed or spent on a case were not the sole basis for 8 determining a fee. 9 depending on market forces, the Johnson method relied on the When the lodestar did not accurately By contrast, under the Johnson method, the hours Johnson, 488 F.2d at 717. Rather than 10 district court s experience and judgment. 11 trial judge s expertise gained from past experience as a lawyer 12 and his observation from the bench of lawyers at work become 13 highly important ); id. at 720 (discussing the necessary 14 balancing process ). 15 attempt to reduce the calculation of a reasonable fee to 16 mathematical precision. ), with Lindy, 487 F.2d at 167. 17 See id. at 718 ( [T]he Compare id. ( By this discussion we do not In theory, therefore, a district court that adopted the 18 lodestar method was expected to consider fewer variables than a 19 district court utilizing the Johnson method. 20 however, both considered substantially the same set of variables 21 - just at a different point in the fee-calculation process. 22 district court using the lodestar method would set the lodestar 23 and then consider whether, in light of variables such as the 24 difficulty of the case, it should adjust the lodestar before -10- In practice, A 1 settling on the reasonable fee it was ultimately inclined to 2 award. 3 1982); Baughman v. Wilson Freight Forwarding Co., 583 F.2d 1208, 4 1217-18 (3d Cir. 1978) (permitting the district court to multiply 5 the lodestar by a contingency factor and accepting, in theory, 6 that obtaining an exceptional result might justify a further 7 upward departure from the lodestar). 8 court employing the Johnson method would consider factors, such 9 as the difficulty of the case, earlier in the fee-calculation See, e.g., Silberman v. Bogle, 683 F.2d 62, 64 (3d Cir. By contrast, a district 10 process by weighing them in setting its tentative reasonable fee, 11 from which there would seldom be a need to depart. 12 re First Colonial Corp. of Am., 544 F.2d 1291, 1299-1300 (5th 13 Cir. 1977) (outlining a process whereby first, the attorney 14 seeking fees would document the hours devoted to the case; 15 second, the district court would consider the Johnson factors and 16 set a reasonable hourly rate; and third, the district court would 17 explain how it balanced the Johnson factors to arrive at the 18 reasonable hourly rate). 19 See, e.g., In The Supreme Court adopted the lodestar method in principle, 20 see Hensley, 461 U.S. at 433; Blum v. Stenson, 465 U.S. 886 21 (1984), without, however, fully abandoning the Johnson method. 22 Rather than using the attorney s own billing rate to calculate 23 the lodestar and then examining the lodestar in light of case- 24 specific variables to ensure that it was in fact a reasonable -11- 1 fee, as the Third Circuit had suggested, the Supreme Court 2 instructed district courts to use a reasonable hourly rate - 3 which it directed that district courts set in light of the 4 Johnson factors - in calculating what it continued to refer to 5 as the lodestar. 6 court also may consider other factors identified in [Johnson] 7 though it should note that many of these factors usually are 8 subsumed within the initial calculation of hours reasonably 9 expended at a reasonable hourly rate. ) (citation omitted) See Hensley, 461 U.S. at 434 n.9 ( The district 10 (emphasis added); Blum, 465 U.S. at 898-900. The Supreme Court 11 collapsed what had once been a two-step inquiry into a single- 12 step inquiry; it shifted district courts focus from the 13 reasonableness of the lodestar to the reasonableness of the 14 hourly rate used in calculating the lodestar, which in turn 15 became the de facto reasonable fee. 16 But the Supreme Court s emphasis on the Third Circuit s 17 economic model, see, e.g., Missouri v. Jenkins, 491 U.S. 274, 283 18 (1989) ( Our cases have repeatedly stressed that attorney s fees 19 . . . are to be based on market rates for the services 20 rendered. ), and its simultaneous invocation of the equitable 21 Johnson factors at an early stage of the fee-calculation process, 22 proved to be in tension, see Blum, 465 U.S. at 895 n.11 ( We 23 recognize, of course, that determining an appropriate market 24 rate for the services of a lawyer is inherently difficult . . . -12- 1 [since m]arket prices . . . are determined by supply and 2 demand. ). 3 to correct for market dysfunction, the Supreme Court now asked 4 district court judges to hypothesize that market on the basis of 5 their experience as lawyers within their districts and on the 6 basis of affidavits provided by the parties. 7 the rates an attorney routinely charges are those that the market 8 will bear; yet the Supreme Court required that the district 9 courts conjure a different, reasonable hourly rate. 10 While the Third Circuit had expected district courts Generally speaking, After Hensley and Blum, circuit courts struggled with the 11 nettlesome interplay between the lodestar method and the Johnson 12 method. 13 192 (5th Cir. 1999) ( To decide an appropriate attorney s fee 14 award, the district court was first required to calculate a 15 lodestar fee depending on the circumstances of the case and the 16 Johnson factors. 17 whether the lodestar amount should be adjusted upward or 18 downward, depending on the . . . Johnson factors. ) (emphasis 19 added), with Murray v. Weinberger, 741 F.2d 1423, 1430 (D.C. Cir. 20 1984)( [T]he reasonable hourly rate which is incorporated into 21 the lodestar figure generally reflects the reputation and ability 22 of the attorney, the attorney s experience, and the level of 23 skill required for the particular case. ), and Bebchick v. Wash. 24 Area Metro. Transit Comm n, 805 F.2d 396, 404 (D.C. Cir. 1986) Compare Rutherford v. Harris County, Tex., 197 F.3d 173, The court was next obligated to consider -13- 1 ( Of course, the actual rate that applicant s counsel can 2 command on the market is itself highly relevant proof of the 3 prevailing community rate. ). 4 And the Supreme Court has not yet fully resolved the 5 relationship between the two methods. In cases decided after 6 Hensley and Blum, it has both (1) suggested that district courts 7 should use the Johnson factors to adjust the lodestar, see, e.g., 8 Blanchard, 489 U.S. at 94 (stating that the district court should 9 arrive at an initial estimate and then adjust this lodestar 10 calculation by other factors ); see also id. ( The Johnson 11 factors may be relevant in adjusting the lodestar amount . . . 12 . ); Pierce v. Underwood, 487 U.S. 552, 582-83 (1988) (Brennan, 13 J., concurring) (suggesting that factors might exist that would 14 justify an enhancement of the lodestar ), and (2) reiterated its 15 holding in Hensley and Blum that many of the Johnson factors 16 are subsumed within the initial calculation. Penn. v. Del. 17 Valley Citizens Council for Clean Air, 478 U.S. 546, 564 (1986). 18 Our court has done little to resolve this confusion. 19 Compare Kassim v. City of Schenectady, 415 F.3d 246, 255-56 (2d 20 Cir. 2005) (affirming the district court s authority to reduce 21 the fee awarded to a prevailing plaintiff below the lodestar by 22 reason of the plaintiff s partial or limited success ) 23 (emphasis added), with Luciano v. Olsten Corp., 109 F.3d 111, 116 24 (2d Cir. 1997) ( The product of the number of reasonable hours -14- 1 times a reasonable hourly rate, however, does not end the 2 inquiry. 3 of the particular case, that may lead the district court to 4 ultimately make an adjustment to the hourly structure. ) 5 (internal citations omitted), and McDonald v. Pension Plan of the 6 NYSA-ILA Pension Trust Fund, 450 F.3d 91, 97 (2d Cir. 2006) 7 (lodestar calculated on the basis of prevailing rate 8 [specifically] for ERISA practitioners in this Circuit ) 9 (emphasis added), and Chambless v. Masters, Mates & Pilots There remain other considerations, based on the facts 10 Pension Plan, 885 F.2d 1053, 1058 (2d Cir. 1989) (suggesting, in 11 determining the lodestar, that smaller firms may be subject to 12 their own prevailing market rate ). 13 The net result of the fee-setting jurisprudence here and in 14 the Supreme Court is that the district courts must engage in an 15 equitable inquiry of varying methodology while making a pretense 16 of mathematical precision. 17 Force, Court Awarded Attorney Fees, 108 F.R.D. 237, 247 (1985) 18 ( The Lindy process creates a sense of mathematical precision 19 that is unwarranted . . . . ). 20 lodestar in the true sense of the word - a star that leads, 21 Webster s Third International Dictionary 1329 (1981). 22 courts use it in the way the term was first used by the Third 23 Circuit - as a base amount that is susceptible of ready 24 adjustment; rather, circuit court deference to the district See Report of the Third Circuit Task The lodestar is no longer a -15- Nor do 1 court s estimate of a reasonable hourly rate is a lodestar 2 only in the sense that it is a guiding jurisprudential principle, 3 see Dague, 505 U.S. at 562 ( The lodestar figure has, as its 4 name suggests, become the guiding light of our fee-shifting 5 jurisprudence. ). 6 produce is in effect not a lodestar as originally conceived, but 7 rather a presumptively reasonable fee. 8 the fee applicant bears the burden of showing that . . . an 9 adjustment is necessary to the determination of a reasonable What the district courts in this circuit See id. (holding that 10 fee ). 11 calculating a reasonable fee, but rather on setting a reasonable 12 hourly rate, taking account of all case-specific variables. 13 The district court s opinion, including the report and 14 recommendation of Magistrate Judge David R. Homer, with which the 15 district court agreed after de novo review, reflects the general 16 confusion surrounding the lodestar calculation. 17 district court appears to envision a two-step lodestar- 18 calculation process; yet elsewhere it seems to contemplate 19 undertaking the calculation in one step. 20 district court emphasizes its role in approximating the workings 21 of the market, but it also suggests some difference between 22 rates . . . paid by private retained clients . . . [and rates] 23 ordered by courts. 24 The focus of the district courts is no longer on In places, the Likewise, at times, the The meaning of the term lodestar has shifted over time, -16- 1 and its value as a metaphor has deteriorated to the point of 2 unhelpfulness. 3 better course - and the one most consistent with attorney s fees 4 jurisprudence - is for the district court, in exercising its 5 considerable discretion, to bear in mind all of the case-specific 6 variables that we and other courts have identified as relevant to 7 the reasonableness of attorney s fees in setting a reasonable 8 hourly rate. 9 client would be willing to pay. This opinion abandons its use.2 We think the The reasonable hourly rate is the rate a paying In determining what rate a 10 paying client would be willing to pay, the district court should 11 consider, among others, the Johnson factors; it should also bear 12 in mind that a reasonable, paying client wishes to spend the 13 minimum necessary to litigate the case effectively. 14 court should also consider that such an individual might be able 15 to negotiate with his or her attorneys, using their desire to 16 obtain the reputational benefits that might accrue from being 17 associated with the case. 18 that reasonable hourly rate to calculate what can properly be 19 termed the presumptively reasonable fee. 20 II. The Forum Rule 21 22 1 2 3 The district The district court should then use We turn now to the particular fee-calculation rule at issue in this case. It was against the muddled legal landscape we have 2 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 just described that the Second Circuit promulgated what we will 2 call the forum rule. 3 courts should use the prevailing [hourly rate] in the community 4 in calculating the lodestar - or what we are now calling the 5 presumptively reasonable fee. 6 community for purposes of this calculation is the district 7 where the district court sits. 8 Corr. Servs., 722 F.2d 23, 25 (2d Cir. 1983). 9 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 10 succumbed to the general confusion surrounding the difference 11 between a lodestar and a reasonable hourly rate. 12 they considered the variation between in-district and out-of- 13 district rates in setting the hourly rate (which they then used 14 to calculate the presumptively reasonable fee); but sometimes, 15 they considered that variation only in deciding whether to adjust 16 the presumptively reasonable fee after they had arrived at it (on 17 the basis of in-district rates). 18 ( [T]he rate prevailing in the appropriate community is only one 19 of many factors bearing on determination of a fee award. ), with 20 Arbor Hill II, 369 F.3d at 96-97 (intimating that a district 21 court should permit plaintiffs to recover more than a fee 22 calculated on the basis of the hourly rate usually charged by 23 attorneys in the forum district only if plaintiffs could show[] 24 . . . that the case required special expertise beyond the Sometimes, Compare Polk, 722 F.2d at 25 -18- 1 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 35 36 37 38 39 40 41 42 43 44 45 competence of [forum district] law firms ).3 3 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 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 ). -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- 12 district attorney was reasonable under the circumstances as they 13 would be reckoned by a client paying the attorney s bill. 14 We believe that the district court s assessment of the 15 reasonableness of a prevailing party s decision to retain out-of- 16 district counsel is best considered in setting the hourly rate - 17 rather than in deciding whether to adjust a presumptively 18 reasonable fee - for three reasons. 19 with the holdings of several sister circuits and with the Supreme 20 Court s focus on reasonable hourly rates rather than reasonable 21 fees. 22 importance of using the market rate in calculating attorney s 23 fees); Rum Creek Coal Sales, Inc. v. Caperton, 31 F.3d 169, 175 24 (4th Cir. 1994) ( In circumstances where it is reasonable to First, our holding comports See, e.g., Blum, 465 U.S. at 895 (emphasizing the -20- 1 retain attorneys from other communities . . . the rates in those 2 communities may also be considered. ); Maceira v. Pagan, 698 F.2d 3 38, 40 (1st Cir. 1982) ( If a local attorney could perform the 4 service, a well-informed private client, paying his own fees, 5 would probably hire local counsel at the local, average rate. ); 6 Chrapliwy v. Uniroyal, Inc., 670 F.2d 760, 769 (7th Cir. 1982) 7 (querying whether the choice of counsel was improvident ). 8 Second, in Pierce v. Underwood, a case interpreting the 9 attorney s fees provision of the Equal Access to Justice Act 10 ( EAJA ), the Supreme Court hinted that in the broad spectrum of 11 litigation, the difficulty of obtaining local counsel competent 12 to prosecute a particular case is little more than [a] routine 13 reason[] why market rates are what they are, 487 U.S. 552, 573 14 (1988) (emphasis added). 15 broad spectrum of litigation from the attorney s fees provision 16 of the EAJA, which stipulates that fees shall be based upon 17 prevailing market rates but shall not be awarded in excess of 18 $125 per hour unless the court determines that . . . the limited 19 availability of qualified attorneys for the proceedings involved 20 justifies a higher fee. 21 Pierce, 487 U.S. at 571-72; see generally Healey v. Rovner, No. 22 06-0525, Slip. Op. at *10 (2d Cir. Apr. 17, 2007). The Supreme Court distinguished that 28 U.S.C. § 2412(d)(2)(A)(ii); see 23 Third and finally, our holding honors the Supreme Court s 24 emphasis on the need to use the approximate market rate for an -21- 1 attorney s services in calculating the presumptively reasonable 2 fee. 3 today are increasingly interconnected. 4 by geography is too simplistic. 5 defined by practice area. 6 Dep t of Educ., 407 F.3d 65, 80 (2d Cir. 2005) ( So long as the 7 law provides for or permits fee awards based on geographic 8 markets for services, a lawyer may be paid at different rates for 9 otherwise indistinguishable services. ). 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 On the other hand, many 10 cases (including many voting rights cases) are intrinsically 11 local, and the relevant legal market may be coextensive with or 12 smaller than the district itself. 13 paying client would do, a district court best approximates the 14 workings of today s market for legal services. 15 Bd. of Trs. of S. Ill. Univ., 317 F.3d 738, 744 (7th Cir. 2003) 16 ( The realities of the legal community today mean that though 17 some attorney probably could have represented [the plaintiff], 18 one factor or another prevented them from taking the case when he 19 needed a lawyer. ). 20 client might consider whether a lawyer is willing to offer his 21 services in whole or in part pro bono, or to promote the lawyer s 22 own reputational or societal goals. 23 hourly rate at which a client who wished to pay no more than 24 necessary would be willing to compensate his attorney, the By asking what a reasonable, See Malthur v. Not incidentally, a reasonable, paying -22- Indeed, by focusing on the 1 district court can enforce market discipline, approximating the 2 negotiation that might ensue were the client actually required to 3 pay the attorney s fees. 4 In occasionally permitting a deviation from forum rates in 5 setting the rate that will yield the presumptively reasonable 6 fee, we have in mind no substantial change in circuit law; where 7 circumstances have warranted it, we have not insisted on strict 8 adherence to the forum rule. In Polk, we approved the use of an 9 out-of-district hourly rate. 722 F.2d at 25 (considering whether 10 [c]ounsel might . . . have expected plaintiff s claim to be 11 adjudicated in the Southern District ). 12 although we emphasized that district courts should generally use 13 the hourly rates employed in the district in which the reviewing 14 court sits in calculating the presumptively reasonable fee, 818 15 F.2d at 232, we again upheld a district court s decision to use 16 different rates.4 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 In Agent Orange, And since Polk and Agent Orange, we have urged 4 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 -23- 1 district courts where appropriate to employ out-of-district rates 2 in calculating the fee due. 3 Educ., 407 F.3d at 81 & n.17 ( [T]here is good reason for a 4 district court not be wed to the rates in its own community. 5 they are lower than those in another district, skilled lawyers 6 from such other district will be dissuaded from taking 7 meritorious cases in the district with lower rates. ). See, e.g., New York City Dep t of 8 In both Polk and Agent Orange, the touchstone of our 9 If analysis was the belief that district courts should award fees 10 just high enough to attract competent counsel, Lewis v. 11 Coughlin, 801 F.2d 570, 576 (2d Cir. 1986). 12 Orange, 818 F.2d at 233 ( Undercompensation could deny counsel 13 their right to fair and just fees; overcompensation would not be 14 consistent with the need to prevent windfalls. );5 cf. Crescent 15 Publ g Group, Inc. v. Playboy Enters., Inc., 246 F.3d 142, 151 16 (2d Cir. 2001) (explaining that an attorney-client agreement may 1 2 1 2 3 4 5 6 7 8 9 See, e.g., Agent court could have properly based the fee award on the higher Minneapolis rates . . . . ). 5 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 ). -24- 1 provide compelling evidence of the prevailing market rate ).6 2 We adhere to this touchstone, but we would not be true to it by 3 insisting on an overly strict application of the forum rule. 4 Rather, to reiterate, a district court should consider the rate a 5 reasonable, paying client would pay, and use that rate to 6 calculate the presumptively reasonable fee. 7 III. The District Court s Decision 8 9 For the foregoing reasons, we agree with plaintiffs that the district court may have applied the forum rule too strictly. 10 They suggest that the district court calculated the presumptively 11 reasonable fee (on the basis of in-district rates) and then 12 queried whether the plaintiffs had shown sufficient cause to 13 rebut the presumption that it was, in fact, the ultimate 14 reasonable fee. 15 However, we find no error in the district court s fee award, 16 even when evaluated under the analysis we use. 17 that a reasonable, paying client would have known that law firms 1 2 3 4 5 6 7 8 9 10 11 12 13 6 We are confident 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 undertaking representation such as that of plaintiffs often 2 obtain considerable non-monetary returns in experience, 3 reputation, or achievement of the attorneys own interests and 4 agendas and would have insisted on paying his attorneys at a 5 rate no higher than that charged by Albany attorneys (and there 6 is no cross-appeal). 7 Moreover, the considerable deference that we owe to a 8 district court s assessment of the Johnson and other factors, see 9 Farbotko, 433 F.3d at 210 ( The district court is in closer 10 proximity to and has greater experience with the relevant 11 community whose prevailing market rate it is determining. ), 12 counsels against remanding this case to the district court for 13 further, likely unnecessary, proceedings. CONCLUSION 14 15 16 For the reasons set forth above, we AFFIRM the judgment of the district court. 17 -26-

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