What Is Wrong With Our Country: Civil Rights Attorney’s Fees Award Act of 1976

I started this current series to discuss what is wrong with our country and what we need to do to fix it. While I have discussed some of the topics that I will be including in this series, they have been included in other articles. In this series I will concentrate on a single topic. This will also mean that some of the articles may be slightly shorter than my readers have grown accustomed to, however they will still be written with the same attention to detail. This series will have no set number of articles and will continue to grow as I come across additional subjects.

The Civil Rights Attorney’s Fees Award Act of 1976 is a law of the United States codified in 42 U.S.C. § 1988. It is often referred to as “Section 1988.” It allows a Federal court to award reasonable attorney’s fees to a prevailing party in certain civil rights cases. The Act was designed to create an enforcement mechanism for the nation’s civil rights laws without creating an enforcement bureaucracy, because the prospect of being awarded attorneys’ fees is thought to incentivize attorneys to bring civil rights cases on behalf of plaintiffs.

The text of 42 U.S.C. § 1988(b) are as follows:

“Attorney’s fees In any action or proceeding to enforce a provision of sections 1981, 1981a, 1982, 1983, 1985, and 1986 of this title, title IX of Public Law 92–318, the Religious Freedom Restoration Act of 1993, the Religious Land Use and Institutionalized Persons Act of 2000, title VI of the Civil Rights Act of 1964, or section 12361 of title 34, the court, in its discretion, may allow the prevailing party, other than the United States, a reasonable attorney’s fee as part of the costs, except that in any action brought against a judicial officer for an act or omission taken in such officer’s judicial capacity such officer shall not be held liable for any costs, including attorney’s fees, unless such action was clearly in excess of such officer’s jurisdiction.”

Congress enacted the Civil Rights Attorney’s Fees Awards Act of 1976 in response to the Supreme Court decision in Alyeska Pipeline Service Co. v. Wilderness Society, 421 U.S. 240 (1975). There, the Court reaffirmed the “American Rule” that each party to a lawsuit should ordinarily bear its own attorney’s fees.

Congress decided to enact this Act to guarantee the availability of attorney’s fees awards by statute because the cost of litigating a constitutional claim may be prohibitive for plaintiffs, especially since those who are most likely to bring suit for a constitutional violation are individuals or groups of individuals with more modest means. Even prior to enactment of the Act, courts have recognized the need to award attorney’s fees where plaintiffs perform the services of a “private attorney general” by bringing cases the resolution of which might impact more than just the individual plaintiff.

Two elements of the statute have been subject to the interpretation of the Supreme Court: who qualifies as a “prevailing party,” and how courts should calculate “reasonable attorney’s fees.”

The Supreme Court has interpreted Section 1988 to apply in different ways to prevailing plaintiffs and prevailing defendants. Prevailing plaintiffs ordinarily should receive an attorney’s fee award unless the award would be unjust. On the other hand, a prevailing defendant is only awarded fees if the litigation is unreasonable, frivolous, or meritless.

The Supreme Court has also clarified in Buckhannon Board and Care Home v. West Virginia Department of Health and Human Resources that to prevail means to obtain a judicial decree on the merits of the case. This means that in order to be eligible for attorney’s fees, there must be a court-ordered change in the legal case, or something in the court records that determines a winner.

“Reasonable Attorney’s Fees”

While the law itself does not explain what is a reasonable fee, both the House and Senate Reports accompanying the Act expressly endorse the analysis set forth in the case Johnson Highway Express, Inc.

Johnson Highway Express, Inc. identifies 12 factors to be considered in calculating a reasonable attorney’s fee:

the time and labor required;
the novelty and difficulty of the question
the skill required to perform the legal services properly;
the preclusion of other employment by the attorney due to acceptance of the case;
the customary fee;
whether the fee is fixed or contingent;
time limitations imposed by the client or the circumstances;
the amount involved and the results obtained;
the experience, reputation, and ability of the attorney;
the “undesirability” of the case;
the nature and length of the professional relationship with the client; and
awards in similar cases.

Hensley v. Eckerhart, 461 U.S. 424 (1983) announced certain guidelines for calculating a reasonable attorney’s fee under 1988, which involved at the basic level the number of hours reasonably expended on the case multiplied by a reasonable hourly rate. In addition, “the fee award should not be reduced simply because the plaintiff failed to prevail on every contention raised in the lawsuit.”

City of Riverside v. Rivera, 477 US 561 (1986) affirmed that the amount of damages a plaintiff recovers is certainly relevant to the amount of attorney’s fees to be awarded under 1988. It is, however, only one of many factors that a court should consider in calculating an award of attorney’s fees. The court rejected the proposition that fee awards under 1988 should necessarily be proportionate the amount of damages a civil rights plaintiff actually recovers.

The Senate explicitly considered the possibility of a case where there are little or no damages and said that the attorney’s fees awarded should “not be reduced because the rights involved may be nonpecuniary in nature.”

Amendments and legislative challenges

The House of Representatives passed a bill entitled the ” Veterans’ Memorials, Boy Scouts, Public Seals, and Other Public Expressions of Religion Protection Act of 2006″ on September 26, 2006. The corresponding Senate Bill was introduced on July 20, 2006 but did not pass. Were this bill to become law, it would amend Section 1988 to disallow the awarding of attorneys’ fees to prevailing parties in Establishment Clause cases, “including violations relating to: (1) religious words or imagery in veterans’ memorials, public buildings, or official seals of states or their subdivisions; and (2) the chartering of Boy Scout units by states or their subdivisions and the Boy Scouts’ using public buildings.”

42 U.S.C. § 1988 has been amended a number of times. The latest amendment passed as Public Law 106-274 on September 22, 2000, and in relevant part added the Religious Land Use and Institutionalized Persons Act of 2000 as an applicable statute under which the attorney’s fees provision applies.

Ethical and Legal Concerns in Compelling the Waiver of Attorney’s Fees by Civil Rights Litigants for Favorable Settlement of Cases under the Civil Rights Attorney’s Fees Awards Act of 1976.

THE Civil Rights Attorney’s Fees Awards Act of 1976 (“Fees Act” ) deals solely with the awarding of attorney’s fees. The Fees Act was enacted to encourage private enforcement of the civil rights
laws by filling the “anomalous gaps in our civil rights laws created by the United States Supreme Court’s decision in Alaska.” The Supreme Court held in Alaska Pipeline Service Co. v. Wilderness Society that absent specific legislative authorization, courts were to apply the traditional rule prohibiting the award of attorney’s fees to the prevailing party. The Fees Act is the legislative response which enables powerless minorities and the poor to purchase legal representation in civil rights cases which often yield little monetary recovery, but which are of great personal and societal importance.

The Fees Act and many other federal statutes8 authorize fee shifting as a method of promoting private enforcement of publicly beneficial statutory policies. In so doing they contravene the standard American rule requiring each side in civil litigation to bear its own attorney’s fees. Although these statutes are numerous, their effectiveness relies upon continual judicial appreciation of the ameliorative and utilitarian purposes intended by their creator.

Ever growing inroads are being made into the initial successes of civil rights attorneys in gaining Fees Act awards. One of the most serious and significant of these is the increasing practice of defense counsel, especially those who represent public entities, of conditioning favorable offers to settle the merits of Fees Act cases on the acceptance of full or partial waivers of attorneys’ fees by plaintiffs’ lawyers. This waiver aggravates the inherent tension in a non-fee-generating civil rights case between the low income plaintiff, whose primary interest is in success on the merits, and his attorney, whose economic aim is to obtain an award of counsel fees. It accordingly provokes a potential conflict of interest between attorney and client, caused by the attorney’s duty of loyalty to the client and self-interest in gaining an award of fees; this invariably results in the attorney’s capitulation in the fee waiver demand and recommendation of the beneficial settlement of the merits.’ However, in spite of the recognition of this inherent ethical dilemma by courts, commentators, and those conducting studies of attorney’s fees, the problem has received only cursory discussion.

This article examines the practice of simultaneous negotiation of the merits and attorney’s fees in the settlement of Fees Act cases and the ethical constraints which this practice places on attorney participants. It also analyzes the impact of this practice on enforcement of the civil rights laws, its conflict with the public policy of the Fees Act, and possible judicial remedies which could obviate the practice.

Impact of the Court Decisions
Many of the courts confronting this ethical issue have continued to exhibit a cavalier attitude towards the analysis set out in Prandini. Thus, the courts’ recognition of the inherent ethical conflict of interest is often followed by perfunctory approval, adoption, recommendation,” or rejection”‘ of the Prandini requirement that settlement of the merits occur before any consideration of attorney’s fees. Rather than providing firm guidance, these decisions have left a legacy of ambiguity to lower courts.”

For example, in Aho v. Clark,” a suit for declaratory and injunctive relief to require implementation of state-wide school breakfast program, the Ninth Circuit approved a consent decree that was silent on the question of attorneys’ fees because it found that the parties had intended it to be an “amicable settlement.” The court concluded
that it would be “manifestly unfair” to the State of Hawaii to approve a subsequent Fees Act request that would alter the parties’ original compromise. Yet, shortly thereafter, the Ninth Circuit implicitly reversed itself in Mendoza. Without even mentioning
Aho, the court “strongly discouraged” the use of the same contemporaneous settlement process it had previously endorsed in Aho. In support of this new stance, the Mendoza court cited Prandini. However, Mendoza’s qualified endorsement of Prandini does not provide either courts or counsel with any clear guidance. District courts, with their discretion only slightly narrowed, are free to continue their case-by-case supervision of simultaneous settlements; defense counsel, tempted to gamble with demands for fee waivers, are merely faced with lower odds for success.

Conflicts of Interest
The barriers to appellate review in Fees Act waiver cases have contributed to the courts’ failure to appreciate and carefully distinguish between the diverse conflicts of interest presented by different pre-trial simultaneous settlements. There are as many different potential conflicts of interest involved as there are combinations of participants. For instance, a conflict of interest occurs when an attorney simultaneously negotiates attorney’s fees and a settlement of the claims of uncertified and unnamed class members. A second conflict of interest arises between counsel and a certified class when a defendant offers excessive fees in return for a “sweetheart” settlement
on the merits. Third, there is serious potential for a conflict of interest between attorney and client when the attorney is confronted with a request to waive a Fees Act attorney’s fee award. All three conflict of interest problems can be, and have been, resolved through the use of the Prandini dual negotiation method. Yet, courts have
been reluctant to employ this method. Notably, this failure to apply the Prandini method is much more harmful in Fees Act waiver cases than in excessive fee situations. The difference becomes evident when the four general aims of awarding statutory attorney’s fees are examined.

Statutory attorney’s fees have four broad goals. First, they stimulate legal representation through the availability of fee awards. Second, they facilitate the enforcement of rights through improved access to legal representation. Third, they deter non-compliance by defendants and by potential violators. Fourth, they demonstrate a national commitment to protect the class of persons who benefit through direct enforcement of the rights involved, and to protecting the public in general, which benefits through voluntary compliance.

When an overly generous fee offer is made by a defendant, the courts’ prime concern is to shield the individual named plaintiffs and the remainder of the class from their attorney’s self-interest in profiting from the terms of the settlement, through the receipt of a disproportionate share of the settlement as attorney’s fees. In addition, the courts are concerned that the attorney’s self-interest will motivate him to settle the lawsuit at a premature stage and/or to settle it on terms detrimental to the named plaintiffs and/or the class.

Implicit in the courts’ recognition of this need to protect plaintiffs and the interested class is the assumption that a single monetary pot exists to be split between client and attorney. No doubt this is a valid assumption in most commercial cases where monetary relief is fundamental. However, this premise is of less value in many Fees Act cases. In civil rights cases, monetary recovery often plays a subordinate role to injunctive and declaratory relief, and it is much more difficult to convert these nonmonetary settlement offers into precise dollar equivalents. Therefore, in any monetary “sweetheart” settlement, the primary concern of the court, quite properly, is that a
client’s recovery not be sacrificed to attorney’s greed.

When excessive fee settlements are weighed against the purposes of providing statutory fee awards, they seriously threaten only the goal of assuring an adequate and fair recovery to injured parties. At worst, they have only a minimal negative impact on the other policy aims of statutory fee-shifting, and at best, they actually serve these
purposes. Excessive fees stimulate and draw practitioners, who anxiously await clients. Indeed, the extra incentive of pocketing disproportionate shares of settlements may even draw aggressive, skilled counsel, capable of maximizing overall settlements. Consequently, the use of excessive fee settlements does not significantly reduce the
deterrent effect of the Fees Act on defendants and potential violators, since it is the overall monetary level of a settlement which deters, not its apportionment between attorney and client.

Excessive fee settlements are largely problems of misallocation between attorney and client. As such, they can usually be controlled by two time-consuming alternatives to the bifurcated settlement. The first is a case-by-case monitoring of the reasonableness of attorney’s fees settlements. 35 The second is a search for an adversarial interest
in each case so that settlement does not take place in an ex parte environment.

When full or partial Fees Act waiver settlements are compared with the purposes of statutory fee awards, they present very different problems from those which result in excessive fee situations. In Fees Act waiver settlements, the courts know that settlement terms lack reasonable compensation for attorneys. Non-allocation, not misallocation, is the issue. The danger to named plaintiffs and to the class comes from an attorney who might be tempted, by self-interest in fees, to continue a lawsuit beyond the optimal settlement point on the merits. Thus, only the unscrupulous attorney who presses forward, sacrificing the client’s interest, poses a realistic threat to a civil rights
plaintiff. Client interest, ethical constraints, defendant pressure, and court supervision make this rare.

Therefore the injury in fee waivers is almost never to the named plaintiffs and/or the class who receive an adequate recovery (or an excessive one if the common fund analogy is valid). The damage is to the truly unrepresented class, who are unable to obtain legal representation to bring civil rights claims in the future. The harm is to the
general public as well, which suffers not only from lax enforcement of the civil rights laws, but also from the diminishing of the deterrent impact of attorney’s fees by the perception that the cost of noncompliance has been freed from the burden of Fees Act Awards. A Fees Act attorney’s fee waiver shortchanges the public as much as it harms the attorney who foregoes the award.

As a result, a number of courts have recognized the importance of separate settlements of the merits and attorney’s fees where potential conflicts of interest arise in “sweetheart” settlements. A close analysis of the potential conflicts of interest in full and partial fee waiver settlements, and the resultant harm to the congressional policies embodied in the Fees Act, dictate that separate settlements are even more necessary in these circumstances.

Economic Impact
Even though the exact contours of the civil rights bar are unclear, its precarious financial plight is readily apparent. Even when attorney’s fees are awarded in civil rights cases, they do not approach the large sums often granted in commercial antitrust and corporate securities actions. Moreover, the existence of a “public interest discount” has been well documented. This results in disparate and inequitable determinations of reasonable attorney’s fees in commercial and civil rights cases.’ This occurs despite the specific requirement in the Fees Act’s legislative history that reasonable attorney’s
fees in civil rights cases be set by the same standards that apply in other cases. Compliance and enforcement of civil rights laws require not only the availability of attorney’s fees but also the maintenance of ample fees.

The policy of promoting compliance and enforcement of civil rights legislation through the award of attorney’s fees has caused the courts to consistently hold that legal services attorneys are eligible for Fees Act awards on the same basis as their counterparts in private practice. It has been argued, however, that legal services attorneys
are already “instinctively” motivated by their interest in civil rights enforcement to bring civil rights cases, and do not need the additional incentive supplied by potential fees awards. If a fee award is made, some argue, the amount should be keyed to their minimal legal services salary, rather than the high rates charged by private attorneys.
Public officials have argued that since the government provides funding for legal services, a fees award against public officials would require the government to pay twice for the same services. To their credit, the courts have rejected these arguments, and have also refused to inquire into the source of attorneys’ motivation to represent
civil rights clients. To do so would be anomalous, for to inquire as to specific motivation would only result in penalizing attorneys in inverse proportion to their commitment to civil rights. Lower fee awards would be made to the most highly motivated, often members of those few firms dedicated to civil rights litigation on a full-time basis.

A number of recent articles have offered theoretical analyses and economic models to describe and explain individual attorney motivation and resource allocation in response to monetary incentives. Not surprisingly, lawyers dance to the beat of the marketplace. One proffered model, even when discounted for factors high on the priority list of civil rights attorneys such as professional satisfaction, societal contribution and ethical considerations, concludes that “fee for service lawyers” will withdraw resources from a given case when total expected costs exceed total expected benefits. No matter how sophisticated the analysis of attorney responses becomes, the conclusion remains that the more we decrease the reasonable expectation of Fees
Act awards, the less likely it is that Fees Act cases will be initiated.

While the impairment to the availability of attorney’s fees in civil rights cases caused by conditional fee settlements does not approach their almost total abrogation by the decision in Alaska, that experience provides an indication of the immediate hardship suffered by civil rights claimants whenever there is a reduction in attorney’s fees awards. Personal horror stories of attorneys who lost face because of Alyeska abound, and Congress “received evidence that private lawyers were refusing to take certain types of civil rights cases.”

Once attorney’s fees are threatened, alternative sources of legal representation for poor civil rights litigants, in both complicated and mundane cases, become extremely limited. In the more mundane civil rights cases, which often yield “modest cash awards,” the Third Circuit has recognized that ” ‘f/legal aid organizations are often the sole representatives of the economically, socially and culturally deprived in their disputes with landlords, government welfare agencies, employers and creditors.” In addition, legal services offices are compelled to make choices between equally worthy cases based upon the likelihood of fees awards. Although legal services attorneys are salaried and can theoretically make unlimited investments in particular cases, the current level of federal legal services program funding allows them to meet only approximately 20-25% of the need for such assistance. Consequently, there is pressure to supplement budgets with attorney’s fees awards, especially if this enables an office to expand the number of civil rights cases it can accept. If attorney’s fees awards are threatened by the settlement tactics of particular defendants, a legal services program may divert energy from cases against these defendants which involve important public issues, and expend disproportionate amounts of
time on cases where Fees Act awards are more likely. Therefore, not only does conditional fee waiver practice reduce the supply of private civil rights attorneys, but it also distorts the priorities of legal services lawyers and constricts the channels of legal representation for the
poor.

CONCLUSION
The Fees Act relies on a direct, rather uncomplicated process to assure that one of our most important national priorities is accomplished. Our basic civil rights are enforced by requiring those who have abused the fundamental rights of others to furnish their victims with the means to gain access to our judicial system and to acquire the tools needed to obtain redress. In conjunction with compensation for the injury, the wrongdoer provides the necessary inducement to vindicate the wrong; in so doing, he discourages others from committing similar transgressions. The Fees Act attempts to neutralize the factor of wealth in the fair administration of justice and to preserve
freedom of choice in securing expert legal representation to assist in the enforcement of the civil rights laws.

Any interference with the availability of Fees Act awards-even one that is merely perceived as a hindrance-must be closely examined by the courts. Demands for full or partial waiver of Fees Act awards in return for favorable settlements of the merits seriously obstruct this essential safeguard.

After careful analysis, the alleged benefits of simultaneous settlements prove to be greatly exaggerated. Any advantages are clearly outweighed by the havoc the practice brings to the settlement process. Defense counsel act unethically in offering such settlements and plaintiffs’ attorneys are tempted to act unethically in resisting them.
They breed discontent and foster conflict between attorney and client. They heighten bitterness between opposing counsel. They involve courts in the review of unjust and unethical settlement agreements. This divide-and-conquer path to settlement has no place in a scheme that was created to encourage the enforcement of civil rights. It contravenes the purpose and objectives of the Fees Act and immerses the legal profession in an unethical practice imbued with the appearance of impropriety.

The best remedy for this harmful settlement procedure is that required by Prandini. Negotiation of attorney’s fees in Fees Act cases must begin after the settlement of the merits has been determined. This remedy has the advantages of being straightforward, effective, and workable; eliminating the unethical conduct and potential conflicts of interest; preserving adversarial input during both phases of the settlement process, thereby rendering compromises which provide fair relief to plaintiffs and reasonable levels of attorneys’ fees; and being self-policing by parties confronted with fee waiver requests. Finally, it is preferable both to time consuming, case-by-case court
dissections of simultaneous settlements and to other alternatives.

It is insufficient for courts to simply identify the potential conflicts of interest in simultaneous settlements. The tactic should be prohibited and remedied by bifurcated settlement. The congressional policy reflected in the Fees Act and the distinct ethical duties of the legal profession, combined with the general supervisory power of the
courts, provide ample and explicit legal authority to restrict this intrusion on the administration of justice and to mandate a specific remedy.

After having investigated this subject it seems to me that the judge has a determinative power on where to charge the looser with the legal fees of the winner. When I obtained my first divorce not only did I have to pay court fees but I had to pay for my ex-wife’s legal fees. Since she was awarded a rather large monthly alimony check, I thought this was adding insult to injury. Not to mention that I had to balance out my 401K so it matched hers. I think that there should be a limit to what the judges can decide for a settlement, based on the financial status of both parties. I was placed in a situation of financial distress for 10 years. Since I ended up loosing my house, you might say that I have never totally recovered from the settlement. I don’t these judges care how these settlements affect the parties. I believe that this is a bad law and should be repealed.

Resources

en.wikipedia.org, “Civil Rights Attorney’s Fees Award Act of 1976.” By wikipedia Editors; digitalcommons.law.villanova.edu, “Ethical and Legal Concerns in Compelling the Waiver of Attorney’s Fees by Civil Rights Litigants for Favorable Settlement of Cases under the Civil Rights Attorney’s Fees Awards Act of 1976.” By James Kraus;

Addendum

Common Sense and Ramblings In America

What Is Wrong With Our Country: Civil Rights Attorney’s Fees Award Act of 1976

“Reasonable Attorney’s Fees”

Amendments and legislative challenges

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“Reasonable Attorney’s Fees”

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