Recovery of Paralegal Fees
The debate over recovery of paralegal fees has been around as long as there have been paralegals. Many courts, bar associations and paralegal associations have addressed the issue over the years. The courts have held that fees for paralegal services are recoverable if they are substantive (as opposed to clerical) in nature -- work that an attorney would perform if it weren't performed by a paralegal.
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Recoverability of Paralegal Fees
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When paralegals perform legally substantive work on legal matters, attorneys bill their clients for paralegal time. Until the late 1980s, compensation for paralegal time was calculated as part of the attorney's operating cost, at the actual cost of the paralegal's salary, or at market rate (hourly billing rate). From 1989 forward, however, paralegal fees have more consistently been calculated at market rate. Examples of court opinions, rules and guidelines developed over the years follow.
Computer Statistics, Inc. v. Blair
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When courts began to address awarding of paralegal fees in the 1970s, decisions clashed. "Defendants' contention that paralegal fees may not be recovered as a cost is without merit. Generally, there is a split in authority as to whether the fees paid a paralegal are recoverable as part of attorneys fees or as part of costs." Computer Statistics, Inc. v. Blair, 418 F.Supp. 1339, 1352 (S.D.Tex. 1976).
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Pacific Coast Agr. Export Ass'n v. Sunkist Growers, Inc.
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In 1975, the U.S. Court of Appeals affirmed a paralegal fee award in an antitrust case, holding that the work delegated to paralegals was previously performed by inexperienced attorneys: "As a matter of policy, the use of paralegal help in this fashion greatly reduces the cost of legal services to the public and is thus a practice to be encouraged." Pacific Coast Agr. Export Ass'n v. Sunkist Growers, Inc., 526 F.2d 1196, 1210 (9th Cir. 1975).
Missouri v. Jenkins, 1989
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The National Federation of Paralegal Associations heralded the first U.S. Supreme Court opinion addressing paralegal fees as a "landmark decision permitting the award of attorney fees for paralegal time, significantly, at market rate."
"By encouraging the use of lower-cost paralegals, rather than attorneys wherever possible, permitting market-rate billing of paralegal hours' encourages cost-effective delivery of legal services and, by reducing the spiraling cost of civil rights litigation, furthers the policies underlying civil rights statutes." Missouri v. Jenkins, 491 U.S. 274, 288 (1989).
Michigan Court Rule 2.626
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A new court rule, adopted by the Michigan Supreme Court, permitting the awarding of attorney fees for work done by paralegals went into effect on January 1, 2001. Michigan Court Rule 2.626 provides that an attorney fee award may include an award for the time and labor of a paralegal who "contributed nonclerical, legal support under the supervision of an attorney." The rule goes on to state that any such paralegal must meet the membership criteria for the paralegal/legal assistant section of the State Bar of Michigan.
ABA Model Guidelines for the Use of Paralegal Services
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Guideline 8 of the ABA Model Guidelines for the Utilization of Paralegal Services, as updated in 2004, states: "A lawyer may include a charge for the work performed by a paralegal in setting a charge and/or billing for legal services." It goes on to cite Missouri v. Jenkins, and describes in more detail what type of paralegal work qualifies for compensation.
Richlin v. Chertoff, 2008
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In a more recent case, the U.S. Supreme Court was asked to review whether paralegal fees could be reimbursed at market rates under the Equal Access to Justice Act. Citing Missouri v Jenkins, the court again stated paralegal fees may be awarded at market rates. Richlin Security Service Co. v. Chertoff, 553 U. S. ____ (2008).
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References
- Michigan Bar Journal; The Common Sense of Paralegal Utilization; Sharon A. Werner; July 2007
- National Federation of Paralegal Associations: Recovery of paralegal fees
- ABA Model: Guidelines for the Utilization of Paralegal Services (PDF)
- National Association of Legal Assistants: The US Supreme Court and Paralegals
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