• April 17, 2015

Minnesota Litigator - Stacks_of_moneyMinnesota Litigator covered the protracted and hard-fought battle of Ellen Ewald vs. the Royal Norwegian at some length, which culminated in U.S. District Court Judge Susan R. Nelson’s (D. Minn.) 191-page findings of fact and conclusions of law by Judge Nelson and a win for Plaintiff Ewald.

The Equal Pay Act provides for an award of “a reasonable attorneys’ fee” to a victorious plaintiff. In Plaintiff Ewald’s case, Judge Nelson found $1,773,719.05 in attorney’s fees to have been reasonable (plus $209,973.61 in costs, plus $114,267.31). For lawyers who seek awards of attorneys’ fees, Judge Nelson’s order should be required reading. Note that plaintiff’s counsel marked down her bills repeatedly in light of circumstances, such as the replacement of the lead paralegal on the case (because the previous paralegal left for a job in the public sector). Congratulations to Engelemeier & Umanah!

Here’s a related question: if a statute provides for an award of “a reasonable attorneys’ fee,” should a lawyer be able to recover the cost of computer research as well? As “costs”? Or as a part of “reasonable attorneys’ fees”?

Before you answer, consider some points:

(1) “Computer research” is a misnomer. It is legal research assisted by access to immense and expensive computerized databases. In other words, so-called “computer research” is core legal work. Computerized legal research cannot be done (that is, cannot be done well) without legal training;

(2) if you assume (and you should assume) that lawyers save a lot of attorney-time by use of “computer research” as opposed to going to libraries and poring over dusty volumes, then rules that refuse to compensate lawyers for their out-of-pocket costs for computer research, whether as “costs” or as part of a “reasonable attorney fee,” create a perverse incentive for inefficiency.

The prevailing view among other circuits is to permit awards to reimburse counsel for the reasonable costs of online legal research. However, while the Eighth Circuit has permitted the cost of computer legal research in negotiated settlement cases, the Eighth Circuit has not extended this cost to general fee shifting cases. “The Eighth Circuit has held that computer-based legal research must be factored into the attorneys’ hourly rate, hence the cost of the computer time may not be added to the fee award” (see footnote 1 in the attached opinion).

With all respect, that argument “begs the question:” why must computer-based legal research be factored into attorneys’ hourly rate? In fact, it really cannot be. Attorneys’ hourly rates are normally set by the market. Moreover, different law firms have different agreements with computerized legal research providers and some bill clients under a separate line item for computerized legal research costs, rather than imposing the cost across the board on all paying clients.

Furthermore, award for actual costs of on-line legal research does not result in unfair double billing as some have argued. As mentioned above, electronic research services save money by making legal research more efficient.  So, the cost of online research is set off by a greater reduction in billable hours (by a huge amount). So held U.S. District Court Judge Joseph F. Bataillon (D. Neb.) last week in Bernbeck v. Gale and Judge Bataillon continued:

[There is] a circuit split concerning whether expenses for computer-based legal research are compensable as ‘reasonable attorney’s fees.’ The Eighth Circuit has held that ‘computer-based legal research must be factored into the attorneys’ hourly rate, hence the cost of the computer time may not be added to the fee award.’… No other circuit has endorsed this view, and many have expressly held that computerized research costs can, in appropriate circumstances, be recovered in addition to the hourly rates of attorneys. … We believe that the growing circuit consensus reflects the Supreme Court’s treatment of litigation expenses under attorney’s fee statutes. Neither tradition nor statutory usage distinguishes computer-based legal research costs from attorney’s fees. …We therefore hold that reasonable charges for computerized research may be recovered as ‘attorney’s fees’… if separate billing for such expenses is “the prevailing practice in the local community.”

I agree with Judge Bataillon and disagree with the U.S. Court of Appeals for the Eighth Circuit. If lawyers are not awarded the costs of electronic legal research, in my view they are being unfairly under-compensated without any valid policy basis.

Leave a Reply

Your email address will not be published.