Courts Push Back on Exorbitant Attorneys Fees | KingSpry

Courts Begin to Push Back on Exorbitant Prevailing Party Attorneys’ Fees

Posted on October 2nd, 2019
by John E. Freund, III

In a step forward for public education, courts are beginning to scrutinize more closely the fee demands made by parent’s counsel in IDEA and related cases as a result of challenges to those fees by district counsel.

Amendment Results in Change to the Practice Under the IDEA

In 1990, Congress amended the IDEA to permit award of attorney’s fees to parents who prevail at a hearing.  Thus, in proceedings brought under the Act, a court, in its discretion, may award reasonable attorneys’ fee as part of the costs to the prevailing party who is the parent of a child with a disability.  Similar fee shift laws apply in civil rights and employment cases.

That amendment resulted in a change to the practice under the IDEA.  At a recent hearing in the Middle District Court on a school district’s challenge to prevailing party fees, KingSpry attorney Glenna Hazeltine testified:

When I first began this practice the hearings were about [for example] how many OT sessions a child might need.  The hearings tended to be collegial and they tended to be relatively brief compared to how they are now. ….Since [1990] the requests for fees have escalated to the point that school districts are loathe to go to hearing because of the expense.  It is the tail that wags the dog. The claim for attorney’s fees drives decision-making, not what a school district believes it has provided for a child.  And it’s very sad to see a school district that believes it has done its utmost for a child…have to settle a case because they cannot afford to go to hearing.

(A.B. v. Pleasant Valley School District, Case No. 3:17-CV-0231, Transcript of Proceedings, Excerpt Testimony of Glenna M. Hazeltine, Esq. Before The Honorable A. Richard Caputo, Thursday June 20, 2019.)

To merit an award of attorney’s fees, a parent must first establish that he or she was the prevailing party. Next the fees and costs must be reasonable.  Once it is established that the parent prevailed, the court must establish reasonable fees under the lodestar formula, which is the number of hours reasonably expended multiplied by a reasonable hourly rate. The parent bears the burden of documenting the reasonable hourly rate by submitting documentation showing that the rate is the community billing rate charged by attorneys of equivalent skill and practice performing work of similar complexity.

Although prevailing party fees are supposed to reflect rates nomrally charged in the community, prevailing attorneys in special education cases regularly claim $400-$550/hr and more, whereas attorneys for the LEA are paid between $150-$200/hr.

In examining the lodestar, a recent decision in the United States District Court for the Middle District of Pennsylvania focused on the concept of proportionality and substantially reduced a parent’s claim for attorney’s fees by 80% because the parent succeeded in far fewer than all of the claims that were brought.  A.P. v Shamokin.

Likewise, fees were substantially reduced when a court found that plaintiffs’ proposed hourly billing rates were unreasonable and lowered them to comport with the reasonable rates applicable in the community in which the case arose.  Furthermore, the number of the claimed hours billed was also reduced. As a result, the fee claim of $139,145.50 was reduced by almost half to $70,610.78. Beattie v. Line Mountain School District.

Fees were reduced in another case following a court’s line-by-line review of the itemized bills submitted. In that case, the fees were awarded as a sanction that was to be paid by plaintiff’s attorney who had acted “in bad faith, vexatiously, wantonly and for oppressive reasons.” Keister v. PPL Corporation.

Sending a warning to greedy lawyers, the Third Circuit in two recent cases made clear that fee petitions submitted in bad faith can be denied in their entirety.  Clemens v. New  York Central Mutual Fire Insurance Company.  After 10 years of litigation and a paltry $25,000 settlement, a plaintiff’s attorney’s demands for $750,000 in fees was denied in full and she was sanctioned $50,000. Young v. Smith.

In A.B., the District prevailed on all of the nine issues identified by parent’s counsel at hearing. The hearing officer nonetheless awarded compensatory education based on the child’s attendance, an issue that was not identified by either side. The parent claimed prevailing party status and, when the District refused the attorney’s fees demanded, the parent proceeded to the Middle District Court.

Following briefing and oral argument, the Court substantially reduced fees by 42%, from $155,000 to $64,999.39.  The Court first reduced the lodestar claimed by parent’s counsel on the ground that the prevailing market rate in the Middle District did not support the billable hourly rate claimed of $500 and so reduced the those rates to from $300 to $375.  The Court then further reduced the fees based on the partial relief granted. Parent’s counsel has appealed the case to the Third Circuit Court of Appeals.

However, each of the cases is in part fact specific: there is no ready or easy way to attack fees and so reduce them.  But courts appear to be increasingly willing to scrutinize fee demands more closely.

Bottom Line for Schools

In all but the most minor cases, LEAs should diligently scrutinize Plaintiff attorney fees demands.  Insist upon itemized billings and consult experienced counsel to ensure that hourly rates are reasonable and necessary.  Require that Plaintiff’s counsel recognize reductions for limited success or in the case of settlement discounts for the possibility of not prevailing. Carefully review trust arrangements to ensure that parent’s counsel are not double-dipping fees from the trust.

The cost of prevailing attorney’s fees is rapidly crippling a system intended to decide the special needs of children to the benefit of practitioners and the expediency of the adults in the room.

If you have a question, contact your legal counsel or one of the education attorneys at KingSpry.

This School Law Bullet is a publication of the KingSpry Education Law Practice Group. John E. Freund is our editor. It is meant to be informational and does not constitute legal advice.