Doing the Right Thing? It Could Cost You!

 Posted on May 28,2007 in Uncategorized

The Second Circuit has struck a blow for puritanism (as defined by H.L. Mencken - "the haunting fear that someone, somewhere, may be happy") in Arbor Hill Concerned Citizens Neighborhood Association v. County of Albany. In that case the court considered the standard that should be used for approving lawyers' fees in a civil case in which the statute provided for the loser to pay the loser's fees.

The winner's lawyers, Manhattan's Gibson, Dunn & Crutcher, may have violated the hog rule (pigs get fat, hogs get slaughtered) when they asked for $107,000 in fees for a "single-issue" appeal with six pages of argument (New York Times editorial). The district court slashed their fees, and they appealed.

The Second Circuit held that fees should be "what a reasonable, paying client would be willing to pay." (Since a district court will only be awarding legal fees to the winner, though, shouldn't fees be "what a reasonable, paying client would be willing to pay for assured victory?")

So what should the court consider in determining what a reasonable, paying client would be willing to pay?

[T]he complexity and difficulty of the case, the available expertise and capacity of the client's other counsel (if any), the resources required to prosecute the case effectively (taking account of the resources being marshaled on the other side but not endorsing scorched earth tactics), the timing demands of the case...

With me so far?

... whether the attorney had an interest (independent of that of his client) in achieving the ends of the litigation or initiated the representation himself, whether the attorney was initially acting pro bono (such that a client might be aware that the attorney expected low or non-existent remuneration), and other returns (such as reputation, etc.) the attorney expected from the representation.

So, according to the Second Circuit, a lawyer who has his own interest in achieving the ends of the litigation will be paid less on the market than a hired gun. I have found that the opposite is true - that people are willing to pay me more, not less, because I enjoy what I do and believe that it is right.

In the Arbor Hill case, the plaintiff's lawyers were betting on the come. Their only chance to be paid was to win. So, according to the Second Circuit's logic, they were "initially acting pro bono" and therefore were entitled to less pay, rather than to more pay in compensation for accepting the risk. But getting away from punishing lawyers for gambling, and back to punishing lawyers for doing what they feel is right,

[A] reasonable, paying client might consider whether a lawyer is willing to offer his services in whole or in part pro bono, or to promote the lawyer's own reputational or societal goals. Indeed, by focusing on the hourly rate at which a client who wished to pay no more than necessary would be willing to compensate his attorney, the district court can enforce market discipline, approximating the negotiation that might ensue were the client actually required to pay the attorney's fees.....We are confident that a reasonable, paying client would have known that law firms undertaking representation such as that of plaintiffs often obtain considerable non-monetary returns - in experience, reputation, or achievement of the attorneys' own interests and agendas - and would have insisted on paying his attorneys at a rate no higher than that charged by Albany attorneys (and there is no cross-appeal).

So a lawyer undertaking representation that "promot[es] the lawyer's own societal goals" or "achiev[es the lawyer's] own interests and agendas - in other words, doing good - gets to be paid less than a lawyer who is cynically representing the client for nothing but money.

This case is a reminder that the vast majority of lawyers practice law in quiet desperation, with no personal interest in achieving their clients' ends. The vast majority of lawyers are not practicing law to promote their own societal goals. The vast majority of lawyers are not willing to gamble on the cause. In other words, the vast majority of lawyers aren't doing what they do because it's the right thing to do. Doing the right thing is an aberration that, to the Second Circuit, militates in favor of lower fees. (Doing the right thing, of course, might lead to happiness, which is why I see this opinion's deliberate suppression of fees for lawyers doing the right thing as a blow for puritanism.)

Whether the attorney had an interest in achieving the ends of the litigation should certainly be considered by a court determining what a reasonable paying client would pay. Whether the lawyer is in accord with the client, such that the lawyer's societal goals match the client's goals, also should be considered. So should the fact that the lawyer is willing to bet her own money on the case, so that she doesn't get paid if the client doesn't recover. But the Second Circuit has it backwards: all of these are reasons that reasonable clients, spending their own money, rationally decide to pay lawyers more rather than less. Every day rational clients choose lawyers who are true believers over lawyers who are cynics; every day rational clients with no money sign contracts promising to pay lawyers huge fees if and only if the lawyers can recover money for the clients' injuries.

In fact, I would go farther and say not only that lawyers who aren't practicing to advance their societal goals should be paid less than lawyers who are, but that they should seriously consider not practicing at all. If a client can't find a lawyer who believes in some aspect of the client's fight (I think of Anthony Griffin, who was fired from his job as NAACP's Texas general counsel for standing up for the KKK's right to free speech), then perhaps the client shouldn't be going to court.