U.S. Supreme Court to Hear Paralegal Fees Case

Paralegal fees are once again up for discussion in the U.S. Supreme Court with the Court’s Nov. 12 decision to hear the Richlin v. Chertoff case.  This is an important case for law firms and paralegals in promoting the further utilization of paralegals.

The issue before the Supreme Court in the Richlin case is pretty straightforward:  Under the Equal Access to Justice Act, can a prevailing party be awarded fees for paralegal services at the market rate for such services or should such reimbursement be limited to the actual cost incurred by the attorney?

After prevailing on the merits, Richlin sought an award of attorneys fees and other expenses under the EAJA for time spent over nearly nine years by its lawyers and paralegals. The Board found that the government’s position on the merits was not "substantially justified" and awarded Richlin about $50,000 for work done by its lawyers.

The Board did not, however, award Richlin fees at the $50 to $95 per hour market rates for paralegals charged to Richlin over the course of the proceedings.  The Board searched the Internet for paralegal salary information and decided to award Richlin $35 per hour as a reasonable cost to the law firm awarding approximately $10,600 for about 300 hours of compensable paralegal time.

This practice discourages law firms from utilizing paralegals thus additionally hampering clients to receive lower cost legal fees.  What law firm wants to take a loss in profits? What incentive does the law firm have in utilizing paralegals if it cannot push this profit center towards profit? For those Negative Nancys who claim that the increased use of paralegals might result in the less efficient performance of legal services, remember: the attorney is ultimately responsible for the performance of the paralegal.  Therfore, there is no incentive to delegate work to a paralegal that is beyond the paralegal’s capability or to the extent that it would be inefficient.

Oral arguments in Richlin are set fro March 19th with a decision expected by the end of June.