In Perdue v. Kenny A (pdf), much anticipated by civil rights and public interest groups that depend on fee-shifting statutes when they win, the Court said judges may award fee enhancements above the „lodestar“ amount to lawyers for superior performance — but only in rare and well-documented circumstances. The 5-4 majority rejected the fee enhancement in the case before it and sent it back to lower courts with the possibility that, with enough justification, the additional award could be revived.
At issue in Perdue were attorney fees awarded in 2006 by Senior Judge Marvin Shoob of the U.S. District Court for the Northern District of Georgia to lawyers who brought and won a class action challenging the state’s foster care system.
On top of a $6 million „lodestar“ amount — calculated on the basis of lawyers‘ fees in the local legal market — the judge approved an additional $4.5 million for the winning lawyers for Children’s Rights Inc. and the Atlanta firm Bondurant, Mixson & Elmore. Shoob applauded the lawyers for „a higher degree of skill, commitment“ than he had ever seen in 27 years on the bench. The 11th U.S. Circuit Court of Appeals upheld the award.
Justice Samuel Alito Jr., writing for the majority, said fee enhancements for superior attorney performance are permissible in exceptional cases. But in this case, Alito said, the judge did not provide „proper justification“ for the enhancement under a series of factors he listed, aimed at proving that the lodestar fee alone would not have been adequate to attract competent counsel.
The federal fee-shifting law, Alito wrote, „serves an important public purpose by making it possible for persons without means to bring suit to vindicate their rights. But unjustified enhancements that serve only to enrich attorneys are not consistent with the statute’s aim.“
In a footnote, Alito added that if the $4.5 million fee enhancement had remained in place, the lawyers for the foster care plaintiffs „would earn as much as the attorneys at some of the richest law firms in the country.“
In a partial concurrence and dissent, Justice Stephen Breyer agreed that fee enhancements should be available in some cases. But he said the majority should not have second-guessed the district court judge’s fee award. Based on the evidence in the record, Breyer said the judge „did not abuse his discretion“ when awarding an enhanced fee. Justices John Paul Stevens, Ruth Bader Ginsburg and Sonia Sotomayor joined Breyer.
Mark Cohen, the Troutman Sanders partner who argued the case for Georgia, applauded the ruling as „good news for the taxpayers of Georgia, particularly given the financial concerns the state is facing right now.“ Cohen acknowledged that the Court did not completely disallow fee enhancements, as he had urged, but said „there’s not much room left“ under the standards of proof the Court set. „They left the door ajar, a very small crack,“ he said.
Former solicitor general Paul Clement, the King & Spalding partner who argued for the foster care plaintiffs, disagreed, asserting that „I don’t think that it’s going to be anymore difficult than before“ to document the evidence needed to justify a fee enhancement, and that’s what his clients will do on remand. On the main question of whether superior performance can trigger fee enhancements at all, Clement said, „We won, 9-0.“ Clement added, „there’s a lot to like in the decision.“