Second Circuit Strikes a Blow to the Good Hearted Solo and Small Firm
I'm beginning to sound like a dismal broken record this past week talking about the woes facing solos when it comes to getting awarded fees for prevailing in cases, but for some reason there just is more bad news out there for the good-hearted, benevolent solo and it comes in the form of a recent Second Circut decision called Arbor Hill Concerned Citizens Neighborhood Association v. County of Albany. Thanks to Mark Bennett of Bennett and Bennett in Texas, we get access to most of the full story which was originally printed by subscription only in The Times Select. (Note: the impact of this decision on solos/small firms is profound. However, it was Big Law whose fees were slashed in this particular decision. Yet, it is the ruling which will resonate most with solos and small firms.)
In this terrible decision we learn that if you take on a pro bono matter and are victorious, meaning the loser pays your fees, it doesn't matter the fees you submit based upon the work you've done. It becomes a question of what is the fair market value of your fees.
[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).
And one commenter ( I'd give him credit although I can't find where I read it) said in effect...'what is the fair market value of a guaranteed win....certainly considerably more than the fair market value of an unknown ending.' So, how does this decision make logical sense? What is especially galling is if the attorney can show he did not take it on for moral reasons but strictly monetary ones, she will get her full fees.
The reason I am especially concerned about this decision is because last year in Illinois, yes, home of the ABA, a new and very disturbing rule was passed that every attorney must disclose at time of annual registration the number of hours she has given pro bono (even if you didn't do any pro bono so you can indicate zero), or in the alternative, given money to recognized organizations that practice pro bono. Failure to disclose this information may result in suspension of one's license.
So, we have two new rules: One mandating disclosure of pro bono activities with the presumed goal to increase one's pro bono committment and another which significantly reduces or stops payment of fees based upon the motivations of the attorney performing the services...even when victorious. Am I being paranoid? Big Law wins all around. What about the solo? It's not pretty.
Ironically, I had written a column on the subject of the Illinois requirement for the Connecticut Law Tribune last June but it will first be printed one year later, next Monday. That column will be posted here on Tuesday. Once you have read both the recent decision and Mike Bennett's analysis and then my post on the Illinois law, I'd like to know if you agree, disagree or on the fence with my concerns.