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EAJA Permits Recovery of Fees for Paralegal Services at Market Rates, US Supreme Court Holds

EAJA Permits Recovery of Fees for Paralegal Services at Market Rates, US Supreme Court Holds

The Equal Access to Justice Act (EAJA) authorized prevailing parties to obtain reimbursement of fees expended on paralegal services at market rates, the U.S. Supreme Court held June 2, 2008.

Richlin Security Service Co., a contract security provider for the federal government, won a contract dispute in the Department of Transportation’s Board of Contract Appeals (Board) against the government. Thereafter, Richlin sought $45,145.10 in fees under the EAJA for paralegal work performed on its contract claim and $6,760 for paralegal work performed on the EAJA application itself.

The Board granted Richlin’s fee request in part. While the EAJA authorizes recovery of fees for paralegal services, reimbursement is limited to the actual cost for such work, the Board held, as opposed to the rate billed by a law firm. Accordingly, the Board limited Richlin’s fee recovery for paralegal services to $35 per hour, the average hourly wage for a paralegal in Washington, D.C., instead of $50 to $95 per hour, the prevailing market rates.

Richlin appealed the Board’s decision to the U.S. Court of Appeals for the Federal Circuit. A divided panel of the court affirmed. According to the Court, the EAJA authorized recovery at “prevailing market rates” for only fees of “attorneys, experts, and agents.” The Supreme Court granted certiorari and reversed.

A “straightforward reading” of the EAJA, the Court held, “leads to the conclusion that Richlin was entitled to recover fees for the paralegal services it purchased at the market rate.” The government’s argument that fees for paralegal services are not “fees” under the EAJA, but rather “other expenses” recoverable at only “reasonable cost” stemmed from a “fractured interpretation” of the statute and was “unpersuasive.”

Moreover, adoption of a market-based rule was supported by policy grounds. A cost-based rule, the court explained, would create accounting problems as the salary a paralegal receives does not include other costs, such as benefits and perks, that are also borne by law firms. “Market practice,” on the other hand, is a “more transparent basis for calculating a prevailing party’s recovery under the EAJA.” See: Richlin Security Service Co. v. Chertoff, 128 S. Ct. 2007 (2008).

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