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Paralegal Services Reimbursed at Market Rate Under Federal EAJA

The Richlin Security Service Co. (Richlin) provided guards for U.S. government detainees at the Los Angeles International Airport during the 1990s. Contract ambiguities resulted in Richlin guards being underpaid. In 1995, the U.S. Department of Labor ordered the government to pay $1.5 million in back wages to Richlin. That order was upheld by the Department of Transportation Board of Contract Appeals (Board), which also awarded Richlin over $50,000 in attorney fees.

Since Richlin’s lawyer had used paralegals, the Board also awarded Richlin a little over $10,000 in costs for paralegal services based on a rate of $35 per hour. Believing he was entitled to bill for paralegal services at the market rate for attorneys of $125 per hour, Richlin’s lawyer appealed to the U.S. Court of Appeals for the Federal Circuit.

On appeal, the Court found that attorney fees could be reimbursed to a prevailing party at the market rate of $125 per hour under the federal Equal Access to Justice Act (EAJA), 5 U.S.C. § 504 (a) (2). However, since paralegals aren’t attorneys, their services must be reimbursed as costs in the amount actually paid, under § 504 (a)(1). Since the amount awarded was never challenged by the Board, it was upheld by the Court, which dismissed the appeal. See: Richlin Security Service Co. v. Chertoff, 472 F.3d 1370 (Fed Cir. 2006).

The U.S. Supreme Court accepted review, and remanded the case on June 2, 2008, reversing the appellate decision. The Supreme Court held that a prevailing party that satisfies the EAJA's other requirements is not limited in its recovery of paralegal fees to its attorney's cost for such services, but may recover paralegal fees at prevailing market rates. See: Richlin Security Service Co. v. Chertoff, 128 S.Ct. 2007 (2008).

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