The Journal of The DuPage County Bar Association

Back Issues > Vol. 24 (2011-12)

Above The Statutory Cap – Adequate Compensation For Attorneys Under The Equal Access To Justice Act
by Erica J. Balkum

A pronounced criticism of the American legal system is the inability for the poor and middle-class to obtain adequate legal representation to assert protected legal rights and remedy those rights that require vindication. Furthermore, “a legal system that fails to provide equal access to justice does not only pay the price of impairment of justice; it also pays in the hard currency of inefficiency, suboptimal deterrence, and diminished overall legitimacy and acceptability.”[1] However, due to market pressures on attorneys, the legal needs of the poor and the middle-class are often inhibited by their own financial realities. Contingency fees may provide an incentive for lawyers to take on the financial risk of litigation, while preserving the legal system by only taking on meritorious claims. However, in cases where the remedy is low money damages or non-monetary remedies, the correlative incentive to a contingency fee is low or nonexistent. It is here where a more adequate system of compensation needs to evolve.
One way in which to address this unequal access is through fee-shifting of attorneys’ fees, based on the litigating parties’ ability to pay.[2] One such Act, the Equal Access to Justice Act (EAJA) is a “one-way” fee-shifting act that allows the prevailing party[3] against the federal government an award of attorneys’ fees and costs.[4] While the Act’s original intended beneficiaries were small businesses, as a way to protect them from unreasonable regulation by the government, it has been used to assist the poor in obtaining counsel for suits through potential attorneys’ fee compensation:[5] “By counterbalancing some of the advantages that big institutional entities enjoy in litigating against private parties and small businesses, one-way fee shifting enables the latter to engage in … litigation that they could otherwise not afford.”[6]     
Yet, the EAJA has often been criticized for its statutory cap on attorneys’ fees at $125 per hour, which is often well below market value.[7] The statute states, “[A]ttorney fees shall not be awarded in excess of $125 per hour unless the court determines that an increase in the cost of living or a special factor, such as the limited availability of qualified attorneys for the proceedings involved, justifies a higher fee.”[8]While the statute allows for consideration of special factors, such as specialized experience, the court is unlikely to award an hourly rate exceeding the statutory cap.[9] However, courts have been open to calculations based on cost of living increases,[10] which provides more adequate compensation for attorneys, and thus a greater pool of attorneys for providing affordable legal services.

 II. The Statutory Requirements of the EAJA. The Equal Access to Justice Act provides reasonable attorneys’ fees and costs[11] for a “prevailing party”[12] against the federal government. The EAJA states, at subsection (d)(1)(A):
[A] court shall award to a prevailing party other than the United States fees and other expenses … incurred by that party in any civil action (other than cases sounding in tort), including proceedings for judicial review of agency action, brought by or against the United States in any court having jurisdiction of that action, unless the court finds that the position of the United States was substantially justified or that special circumstances make an award unjust.[13]
Thus, the EAJA is used for claims or suits against the federal government, often where the statute for the suit or claim does not specifically address the availability of attorneys’ fees. Thus, the EAJA provides that a district court may award attorneys’ fees when all four factors are met: “(1) the claimant was a ‘prevailing party,’ (2) the government's position was not ‘substantially justified,’ (3) no special circumstances make an award unjust, and (4) the claimant filed a timely and complete application with the district court.”[14]
II.A. “Prevailing Party” Requirement. The “prevailing party” stipulation is a high standard to meet, which requires a court approved settlement or an adjudication on the merits, even if the Government voluntarily changed its position.[15]
Additionally, in Astrue v. Ratliff, the U.S. Supreme Court adjudicated on the meaning of “prevailing party” under the EAJA statute.[16] The case arose out of proceedings where the litigant prevailed on a claim against the Social Security Administration, and Respondent, Catherine Ratliff was the representing attorney of the litigant.  The district court awarded attorney’s fees under the EAJA, however, it provided an administrative offset[17] for the litigant’s preexisting debt to the United States to satisfy part of the amount.[18] Until the Court’s decision, it was unclear whether the prevailing party meant the litigant or the attorney, since the statute’s language could have been construed to mean the litigant or attorney interchangeably for the purposes of attorney fee awards.[19] However, the Court stated, “We have long held that the term ‘prevailing party’ in fee statutes is a ‘term of art’ that refers to the prevailing litigant.”[20] The Court found that language of the statute made clear that the attorney fee award went to the litigant, and not to the attorney.[21]  Thus, the Court held that the attorney fee award was to be offset by a debt owed by the litigant to the United States that predated the suit under the EAJA.[22] Consequently, even if the attorney has a “beneficial interest or contractual right in the fees” the United States assessment for the predated debt is permissible.[23]  Accordingly, under Astrue, the prevailing party is the litigant, not the attorney.
Consequently, it may be in an attorney’s interest to research outstanding debts a client may owe to the federal government, before relying upon the total estimated attorneys’ award.
II.B. Additional Factors for Attorneys’ Fees under the EAJA. The second factor for the court to consider is whether the Government’s position was substantially justified. In the Seventh Circuit, the “prevailing party” requirement is only met when the United States does not have a “substantially justified” position.[24] This means “the government's position must have a reasonable basis in law and fact, and there must exist a reasonable connection between the facts and the government's legal theory.”[25]Additionally, a court must consider the Government’s position as a whole, not the issues that it failed to prevail on.[26] The reviewing court will determine if there was substantial evidence[27] for the Government’s action or presentment to an Administrative Law Judge (ALJ) in an administrative proceeding.[28] Furthermore, a district court’s denial of a motion for attorneys’ fees under the EAJA is “entitled to substantial weight.”[29]
The third factor requires that no special circumstances make an award of attorneys’ fees unjust. According to legislative history, this enabled the courts to use discretion in areas of novel issues and equitable considerations in allowing attorneys’ fees.[30]
The last factor requires that a timely fee application be submitted for attorneys’ fees. Thus, in order to qualify for a fee award, the party must submit a fee application showing that it was otherwise eligible.[31]
Finally, the Act states, “
[A]ttorney fees shall not be awarded in excess of $125 per hour unless the court determines that an increase in the cost of living or a special factor, such as the limited availability of qualified attorneys for the proceedings involved, justifies a higher fee.”[32] This statutory cap is problematic in that it is less than the current market rate for attorneys’ fees.[33] However, courts, including the Northern District of Illinois, have been open to adjusting the statutory rate for cost of living increases.[34]
III. Cases in N.D. Ill. Providing Increased Cost of Living Attorneys' Fees.  A general trend of the Northern District of Illinois is to allow attorneys’ fees to be adjusted above the statutory cap for cost of living increases. This provides attorneys more adequate compensation and a greater incentive to take on the risks of litigation in a client’s case.
For example, in a recent Northern District of Illinois case, the court was willing to award attorneys’ fees above the statutory rate of $125 per hour.[35] The plaintiff sought an increased hourly rate –based on governmental Consumer Product Index numbers –of $172.95 per hour for nine hours of work in 2008, and $171.11 per hour for 13.15 hours in 2009.[36] As the Commissioner for the Social Security Administration did not dispute the reasonableness[37] of the calculation and the court found that the hours and rate also were in fact reasonable, the enhanced rate was awarded, along with costs, which were also found reasonable.[38]
In another Northern District of Illinois case, Khoury v. Astrue, a determination of reasonableness requires an evaluation of similar cases.[39] The court evaluated reasonableness based on hours spent by an attorney on issues comparable to other similar cases; hourly rates of non-attorneys, like paralegals and law clerks; and whether the attorney’s work was legal or clerical.[40] Furthermore, the court also upheld an increased hourly rate above the statutory hourly rate that was adjusted for an increased cost of living.[41]
As to the method of billing, the EAJA does not prescribe a billing method.[42] The only requirement is that the billing be reasonable.[43] However, other district courts have not been as lenient and have discouraged or forbidden quarter hour billing.[44] The court also noted that other courts have reduced awards due to that type of billing.[45] Finally, the court approved the requested $167.80 per hour (calculated by using the Consumer Price Index increase in cost of living since 1995 when the $125 base was established) for work performed in 2008-2009.[46] The court did caution that even if the total fee is within an acceptable range, it still must meet a reasonable requirement.[47]
IV. Conclusion. The Equal Access to Justice Act is a growing tool that allows fee-shifting for prevailing parties against the federal government. It provides a means of securing attorneys’ fees for clients with valid claims that could not otherwise afford the fees an attorney would have to charge for his or her services. As the statutory cap may be inadequate, the Northern District of Illinois has been open to increased compensation due to cost of living increases, when an attorney has moved for those increased hourly rates, and the fees were reasonable.

[1] Issachar Rosen-Zvi, Just Fee Shifting, 37 Fla. St. U. L. Rev. 717, 719 (2010).
[2] Rosen-Zvi, supra note 1, at719.
[3] See discussion of “prevailing party” under the EAJA is provided infra Part II.A.
[4] Rosen-Zvi, supra note 1, at 721.
[5] Id. at 732.
[6] Id. at 733-34.
[7] Id. at 737.
[8] § 2412(d)(2)(A)(ii).
[9] An award for a higher attorneys’ fee rate may be awarded as a special factor when relevant specialized experience was required and the attorney made a detailed account of the specialized experienced that was provided, more than a “blanket statement.” Floroiu v. Gonzales, 498 F.3d 746, 749 (7th Cir. 2007).
[10] Discussed infra Part III. 
[11] Discussion of reasonableness infra Part III.
[12] “Prevailing party” requirement discussed, infra Part II.A.
[13] 28 U.S.C. § 2412 (2010).
[14] See Huber v. Astrue, No. 09-3942, 2010 U.S. App. LEXIS 20296 (7th Cir. Sept 30, 2010) (quoting Stewart v. Astrue, 561 F.3d 679, 683 (7th Cir. 2009)).
[15] See Buckhannon Bd. & Care Home, Inc. v. W. Va. Dep't of Health & Human Res., 532 U.S. 598, 598 (2001) (“[J]udicially sanctioned change in the legal relationship of the parties”).
[16] 130 S. Ct. 2521 (2010).
[17] An “‘administrative offset’ means withholding funds payable by the United States (including funds payable by the United States on behalf of a State government) to, or held by the United States for, a person to satisfy a claim.” 31 U.S.C. § 3701(a)(1) (2010).
[18] Ratliff, 130 S. Ct. at 2524. 
[19] On appeal from the district court, the Court of Appeals for the Eighth Circuit reversed, finding that “EAJA attorneys’ fees are awarded to prevailing parties’ attorneys.” 540 F.3d 800, 802 (2008).
[20] 130 S. Ct. at 2525.
[21] Id. at 2524.
[22] Id. at 2524.
[23] Id. at 2526.
[24] Taylor v. Astrue, No. 10-1809, 2010 U.S. App. Lexis 23023, at *3 (7th Cir. Nov. 3, 2010).
[25] Shalash v. Mukasey, 576 F. Supp. 2d 902, 910 (N.D. Ill. 2008) (citing Cunningham v. Barnhart, 440 F.3d 862, 863-64 (7th Cir. 2006).
[26] See Gatimi v. Holder, 606 F.3d 344, 349 (7th Cir. 2010).
[27] Substantial evidence is defined as “such relevant evidence as a reasonable mind might accept as adequate to support a conclusion.'" Craft v. Astrue, 539 F.3d 668, 673 (7th Cir. 2008).
[28] Taylor, 2010 U.S. App. Lexis 23023, at *4. An appellate court reviews a district court’s decision for a petition for attorneys’ fees under the EAJA for an abuse of discretion, as prescribed by 28 U.S.C. § 2412.  See Huber v. Astrue, No. 09-3942, 2010 U.S. App. LEXIS 20296 (7th Cir. Sept 30, 2010). In this case, the appellate court reversed a denial of attorneys’ fees and costs, and remanded on the award.
[30] HR Rep No. 1418, 96th Cong, 2d Sess. (1980), reprinted in US Code Cong & Ad News 4984, 4990 (1980). See also Ralph V. Seep, What Constitutes "Special Circumstances" Precluding Award of Attorneys' Fees Under Equal Access to Justice Act (28 U.S.C.A. § 2412(d)),106 A.L.R. Fed. 191 (1992).
[31] § 2412(d)(1)(b) (2010). It is further required that an attorney’s statement be submitted with his or her hourly rate and expenses.  Id.
[32] § 2412(d)(2)(A)(ii).
[33] Rosen-Zvi, supra note 1, at 737.
[34] Discussed infra Part III.B.
[35] Strocchia v. Astrue, No. 08 C 2017, 2010 U.S. Dist. LEXIS 133891, at *8 (N.D. Ill. Dec. 14, 2010).
[36] Id. at *8.
[37] Plaintiff has the burden of demonstrating that the requested increases are reasonable. See Hensley v. Eckerhart, 461 U.S. 424, 437 (1983).
[38] Strocchia, 2010 U.S. Dist. LEXIS 133891,  *8 .
[39] Khoury v. Astrue, No. 04 C 5452, 2010 U.S. Dist. LEXIS 130014, at *8-9 (N.D. Ill. Dec. 8, 2010). 
[40] Id. at *9.
[41] Id. at *9.
[42] Schulten v. Astrue, No. 08 C 1181, 2010 U.S. Dist. LEXIS 52788, at *6 (N.D. Ill. May 28, 2010). The Commissioner argued that the plaintiff could not be awarded attorneys’ fees when the attorney billed in quarter hour segments, because the Commissioner argued that the potential for over compensation for ministerial tasks was too greater in quarter hour segments versus six-minute segments. Id.
[43] Id.
[44] Id. at * 11-12 (citing EAJA and non-EAJA cases); e.g., Cambridge Toxicology Grp, Inc. v. Val Exnicios, 495 F.3d 169 (5th Cir. 2007); Welch v. Metrop. Life Ins.. Co., 480 F.3d 942 (9th Cir. 2007); Ingalls Shipbuilding, Inc. v. Dir., 46 F.3d 66 (5th Cir. 1995); D.C. v. Dep’t. of Educ., Civ. No. 0700362 ACK KSC, 2008 U.S. Dist. LEXIS 56507 (D. Hawaii July 5, 2008) (the court "emphasize[d] that billing by the quarter-hour is a strongly disfavored practice," but refused to make any deductions); Wiatt v. State Farm Ins.. Co.,No. CIV 07-0526 JB/KBM, 2008 U.S. Dist. LEXIS 42158 (D.N.M. March 24, 2008) ("[W]hile the Court would prefer to see tenth of an hour increments used in fee claims, it cannot say that other methods of billing are unreasonable per se.”); Winters by Winters v. Dep’t of Health & Human Servs., No. 91-4, 1993 U.S. Claims LEXIS 10 (Fed.Cl. April 1, 1993); Thomas ex rel. A.T. v. Dist. of Columbia, Civil Action No. 03-1791 (CKK), 2007 U.S. Dist. LEXIS 20236 (D.D.C. March 22, 2007)).
[45] Id. at *12 (citing (EAJA and non-EAJA cases); e.g., Miller v. Bowen, 639 F. Supp. 832, 836 (E.D.N.C. 1986); Lopez v. S .F. Unified Sch. Dist., 385 F. Supp. 2d 981, 993 (N.D. Cal. 2005) (reducing fee award by 10% to account for the practice of billing by the quarter-hour); Zucker v. Occidental Petroleum Corp., 968 F. Supp. 1396, 1403 (C.D. Cal.1997) (reducing fee award by 5% due to attorney's practice of rounding to the nearest quarter hour); Miller v. Bowen, 639 F. Supp. 832, 836 (E.D.N.C. 1986) (ordering a 25% reduction in attorney's fee award for, inter alia, using quarter-hour increments to record time).
[46] Id. at *17.
[47] Id at *19; see also Tchemkou v. Mukasey, 517 F.3d 506 (7th Cir. 2008).

Erica J. Balkum, Juris Doctor Candidate 2011, at Northern Illinois University College of Law. She completed her B.A. in Anthropology at the University of Michigan-Ann Arbor.  She also completed her Master of Professional Writing at the University of Southern California in Los Angeles.

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