Supreme Court Dispatches

The $5 Million Man

Paul Clement schools the high court on why some attorneys are worth every last penny.

The court wrestles with a case of attorney compensation

It’s easy to forget that all nine Supreme Court justices are, at bottom, just recovering attorneys with long experience and strong opinions about lawyers, judges, the legal system, money, and trials. And that’s why a simple little argument about attorneys’ fees tells us a lot about how the justices think about the business of doing justice.

Perdue v. Kenny A. sounds more complicated than it is. About 100 different federal laws provide for fee shifting. They let the winner of a civil rights case recover attorney’s fees as an incentive for lawyers to take these tricky cases. In 2002, a suit was filed in Georgia on behalf of the 3,000 abused and neglected children in the foster-care system. The issues were resolved through mediation and a consent decree, with the plaintiffs winning on everything they’d asked for, save for their attorney’s fees, which remained in dispute. The district court judge found a base-line—or what’s known as a “lodestar”—fee of $6 million, which he then adjusted up to $10.5 million dollars. He said that in his 27 years on the bench, he had never seen more brilliant lawyering. The 11th Circuit Court of Appeals upheld the hefty increase. The state of Georgia appealed.

The question for the court today is whether, under the relevant civil rights statute, a judge can bump up an attorney’s fee award based on the quality of the lawyers’ performance. The court has left the door open for a fee bump under extraordinary circumstances but has remained somewhat blurry on what such circumstances might look like.

Mark Cohen represents the state, and he opens by telling the court that the purpose of the statute is “to attract competent counsel without providing a windfall.” The statute we’re talking about (42 USC Section 1988(b), if you must know) lets trial-court judges award the prevailing party “reasonable attorney’s fees,” and Supreme Court cases say that courts must come up with a base-line, “lodestar” figure by multiplying billable hours by a reasonable hourly rate. Cohen thinks the district court turned that lodestar into a supernova when he tacked on about $4.5 million for lawyerly fabulousness.

Justice Sonia Sotomayor asks why courts shouldn’t be able to recognize “extraordinary circumstances” when, say, “a second-year associate whose billing rate for two years of experience is $200 … did the quality and kind of work of someone far superior in years in skill and experience?” Shouldn’t the judge be allowed to reward such prowess with higher attorney’s fees?

Justice Antonin Scalia asks whether a law firm could reasonably do the same thing in billing its clients. Could the firm just say, “We’re going to kick it up another $10,000 because this—this second-year associate, boy, he’s a whiz, and he performed like a senior partner. So we are billing him at the $500 rate, instead of the $200!” When Cohen says a firm couldn’t do that, Sotomayor interrupts him: “That’s not true. Law firms get bonuses from clients all the time.”

Pratik Shah is an assistant to the solicitor general, and he is on Georgia’s side in this case. When Scalia asks him whether there is ever a situation in which a judge can crank up the lodestar amount, Shah can only think of one: If an attorney “takes on a particularly unpopular client or cause that causes some harm to his practice or income.” Chief Justice John Roberts responds loftily that “it’s one of the outstanding traditions of the bar that lawyers are expected to do that in the normal course, and it’s not a special circumstance.”

He adds philosophically: “And how do you tell whether a client is popular or unpopular? … I suppose one of the more unpopular clients these days is a Wall Street banker. But you wouldn’t suggest that law firms charge more when they represent them?”

Shah replies that he means unpopular in the sense that “all my clients will leave my firm if I take on this case.” To which Scalia retorts: “You think that is what we had in mind, huh? When we said they are ‘extraordinary circumstances’? I think it’s very imaginative, but I never would have thought of it …”

Justice Ruth Bader Ginsburg asks whether judges have the discretion to reduce a lodestar award for a rotten performance, saying, “You have the hourly rate, the number of hours, and the judge then says, even though they prevailed, the lawyer wasn’t prepared, and I am not going to give the hourly rate?” Justice Anthony Kennedy giggles through that question and adds his own: “And what about a very, very popular cause, and [the lawyer] wins, and they are beating his door down? Can we reduce it for that?”

Shah says no. But Scalia reminds him “what is sauce for the goose is sauce for the gander. … If you get rewarded for unpopularity, you ought to be get penalized for popularity.”

Sotomayor notes that “one of the purposes of Congress was to ensure that litigants could attract competent counsel, correct?” She continues: “If the market doesn’t give them attorneys to start with because there are so many risks involved in this process, how do you attract counsel that is better than the norm in that field to pursue … cases that Congress has determined are worthy of being pursued?”

Shah replies that “no reasonable attorney making a … determination whether to take on a representation would rely on the speculative and remote possibility that the district judge is going to have found this to be one of the best cases he has ever seen.”

Paul Clement, who used to argue before the high court as President Bush’s solicitor general, reappears on behalf of the plaintiffs’ lawyers. Clement reportedly got a cool $5 million when he became head of King & Spalding’s appellate practice, and since I would pay at least $2 million just to hear Clement argue a case, or read his telephone bill, I’m thinking they got their money’s worth.

Justice Samuel Alito tells Clement he rather likes the mechanical lodestar calculation because “sometimes there is a great advantage in doing things mechanically—it provides an element of fairness. … Here the district judge in effect takes four-plus million dollars from the taxpayers of Georgia and—and awards it above the lodestar calculation to these attorneys. … But it seems totally standard-less, and I see no way of policing it.”

Scalia adds: “It’s certainly not in the tradition of the bench to comment upon the performance of lawyers. I can’t tell you how often I would like to give a separate grade for the lawyer who won a case. You know, one grade for the case and the other for the lawyer. But we don’t do that.”

But Roberts out-lofties him again: “I don’t understand the concept of extraordinary success or results obtained. The results that are obtained are presumably the results that are dictated or command or required under the law,” as opposed to the quality of the lawyering.

Clement smiles a bit as he begs to differ: “I’m not sure that comports with my experience. I have seen lawyers come into this court and concede a point in oral argument, and I have seen that prominently featured in this court’s opinion. So it does seem to me that sometimes the quality of the performance and the results obtained do depend on the lawyer’s performance.”

Roberts hates that idea: “Well, but what does a judge say when you have achieved extraordinary results. That if you weren’t there, I would have made a mistake on the law?” Roberts goes even more meta: “Maybe we have a different perspective. You think the lawyers are responsible for a good result, and I think the judges are.” Everyone laughs.

Clement comes back: “And maybe your perspective’s changed, your honor.” (Roberts was once a monster appellate litigator.) Everyone laughs harder.

Justice Stephen Breyer adds that he is bothered by the optics here as well. According to his back-of-the-napkin math, the Georgia taxpayer paid these lawyers close to $700,000 per year and “that’s more money than 99 percent of the taxpayers hope to see in their lives. … OK, pay them $400,000. … But $700,000 a year for a lawyer. Wow.”

Clement seems to be rushing his argument toward the end, and I worry, briefly, that he’s short-handing his points and racing to conclude before the red light goes on. But I should know better. He’s just setting up his three-pointer for the court. And it’s about perfect: “If you accept the petitioner’s position that the lodestar is a ceiling, and not subject to adjustment then what you are telling lawyers is that the maximum amount they can make in a civil rights case is the minimum amount they can make in a different case. … You are also telling them something else, which is that there are multiple ways for district courts to cut down on the lodestar amount, either because you spent too much time on this or we didn’t like your travel expenditures. And so there are multiple ways for those hours to be cut down.” Why would any lawyer take on a civil rights case if the meter only runs backward?

That was the whole point of the statute, and that is all Paul Clement really needs to say. Sometimes, high-quality lawyers can make all the difference in the world. Clement is Exhibit A.