LawyersUSA

Paralegal fees awarded to a prevailing party under the Equal Access to Justice Act are calculated according to prevailing market rates, not the lower calculation of "reasonable cost," the U.S. Supreme Court has ruled.

The case involves a successful claim filed by employees of a government contractor who were underpaid as a result of a misclassification of their status. The Department of Transportation Board on Contract Appeals awarded the employees $1.5 million in back pay, payroll taxes and workers' compensation premiums, and the decision was affirmed by the Federal Circuit.

The employees then sought reimbursement of attorney fees, expenses and costs under the Equal Access to Justice Act (EAJA), which are available to a litigant the Board determines to be the prevailing party.

But instead of the $50 to $95 per hour sought by the employees for paralegal services charged to them based on prevailing market rates, the Board awarded roughly $35 per hour for the work.

The Board considered the amount a "reasonable cost" to the law firm representing the employees. A Federal Circuit panel affirmed the award.

But the Supreme Court reversed, holding in a unanimous decision that a prevailing party that satisfies the EAJA's other requirements may recover its paralegal fees from the Government at prevailing market rates.

In an opinion written by Justice Samuel Alito, Jr., the Court looked to a prior decision interpreting a similar provision in the Civil Rights Attorney's Fees Awards Act of 1976, where the Court held that paralegal fees are encompassed in the term "attorney's fees" and should therefore be valued according to market rates.

"[W]e take it as 'self-evident' that when Congress instructed agencies to award 'attorney … fees' to certain parties prevailing against the Government, that term was intended to embrace paralegal fees as well," Alito wrote. "Since [the Act] generally provides for recovery of attorney fees at 'prevailing market rates,' it follows that fees for paralegal services must be recoverable at prevailing market rates as well."

U.S. Supreme Court. Richlin Security Service Co. v. Chertoff, No. 06–1717. June 2, 2008. Lawyers USA No. 99310036. Click here for the full text of this opinion.