Facts:
The attorneys and associates for plaintiff, Kansas City Missouri School District, had been litigating a school district segregation case since 1979 and NAACP had been litigating the case since 1982. Attorneys asked and received reasonable attorney fees under Civil Rights Attorney’s Fees Awards Act of 1976, 42 U.S.C. §1988. All fees were given at current market rates. A Court of Appeals affirmed this award. Missouri contends that the District Court erred in compensating the work of paralegals and law clerks at market rates rather than at cost. The term “market rate” means that fees fluctuate based on supply and demand, while the term “at cost” means that fees cover overhead and benefits.
Issue:
Under the Civil Rights Attorney’s Fees Awards Act of 1976, should the fees awarded cover the costs of paralegals and law clerks?
Holding:
Yes. The Civil Rights Attorney’s Fees Awards Act of 1976 is interpreted as a reasonable fee for the work product of an attorney. The court will calculate the fees according to market rates in the appropriate community.
Reasoning:
The court believes that the Civil Rights Attorney’s Fees Awards Act of 1976, §1988 cannot be meant to only compensate attorneys. The court looked to Blum v. Stenson to specify what is “reasonable”. In Blum v. Stenson, the Supreme Court rejected the argument for nonprofit legal service to be paid by cost. Thus, a reasonable attorney fee under §1988 is one calculated on the rates of the local market. Market rates allow legal teams to receive fees for state cases that are comparable to legal teams litigating cases for fee paying clients. Due to this, the public benefits since less tax dollars are spent paying for state cases. The court rejected the argument a “windfall” being produced by an attorney by billing paralegal fees at cost due to the lack of precedent. The court also reasoned that