By Joe Palazzolo
- iStock
A Boston-based federal appeals court published a ruling Friday afternoon that has civil rights attorneys rejoicing.
The topic: attorney fees.
The case involved a housekeeper, Carmen Diaz, at a hotel in Dorchester, Mass., who sued her employer in 2008, alleging age discrimination, civil rights violations and defamation, among other things. Only two age-discrimination claims made it to trial. Ms. Diaz prevailed on one of them and was awarded $ 7,650 in damages.
Here’s where the case gets interesting. Ms. Diaz sought $ 139,622 in attorney fees. The judge, William G. Young, reckoned her lawyer, Lynn A. Leonard, should get about a third of that amount, since just two of six claims survived and only one was successful.
Then Judge Young reduced the fees more — to $ 25,000 — after discovering that the hotel had offered Ms. Diaz $ 75,000 to settle the claims prior to trial. Ms. Leonard would have taken in about a third of that in fees if her client had agreed to the settlement, and Ms. Diaz would have walked away with $ 50,000 instead of $ 7,650, Judge Young reasoned.
Though Judge Young said he didn’t doubt the integrity of Ms. Leonard, he nevertheless cut her fees “to deter lawyers from discouraging settlements in order to get rich on the backs of their clients.”
Several groups — including the Massachusetts Employment Lawyers Association, the American Civil Liberties Union of Massachusetts, Gay & Lesbian Advocates & Defenders, the Jewish Alliance for Law and Social Action — urged the U.S. Court of Appeals for the First Circuit to reverse Judge Young’s ruling.
In a friend-of-the-court brief, the groups argued that the ruling created a “Catch-22? for the civil rights attorney:
She is obliged to accede to the dictates of her client to reject a settlement or face severe disciplinary sanction, but if she properly adheres to her obligations and rejects settlement at the client’s behest, she may be penalized by the trial court through a substantial reduction of attorneys’ fees. That is unjust.
In a Sept. 18 opinion that was made public Friday afternoon, the U.S. Court of Appeals for the First Circuit ruled that Judge Young “improperly focused” on Ms. Diaz’s rejection of the settlement in calculating the fees.
Judge Michael Hawkins (a Ninth Circuit judge on loan to the First Circuit) explained the court’s reasoning:
Civil rights attorneys already have incentives to encourage their clients to take reasonable settlement offers, because they can only recover fees if their client is the “prevailing party,” something that is not assured if they take the gamble of going to trial, not to mention the additional work and preparation that is required for taking a case to trial. Further, the district court’s rationale assumes that attorneys are violating their ethical duties, which require the client, not the lawyer, to make all settlement decisions.
The First Circuit sent the case back to the district court, with instructions to ”re-evaluate” the attorney fees.
“I think this is a victory for civil rights plaintiffs,” Ms. Leonard said in an email. “The First Circuit recognized the important public policy behind the fee shifting statute, which is to encourage competent counsel to litigate civil rights violations. Any other outcome would certainly have deterred representation. These cases are difficult, hard fought and risky. No attorney would take a case like this just for the fees, as the district court suggested.”