Thursday, April 10, 2008

Are copyright lawyers worth more than other lawyers?

When it comes to awarding attorneys fees to the prevailing party under an authorizing statute (like 17 USC 505), courts apply a variety of factors. One, like that for obscenity, is a community-standards approach: what is the prevailing rate in the relevant community for attorneys? Due to cost of living variances, an attorney in South Dakota is likely to charge less than one in Manhattan, all other things being equal. Specialists also get to charge more, at least when they are doing specialist work. But are there differences in rates within the same community for difference types of specialists, and if so, how do copyright lawyers stack up to their colleagues?

That was an issue in Astro-Med, Inc. v. Plant, an April 3,2008 opinion from the U.S. court in the District of Rhode Island, 2008 WL 919674 No. CA 06-533 ML, by Judge David L. Martin, USMJ. Two of plaintiff’s attorneys requested a rate of $365 an hour; defendant objected. The customary fee in Rhode Island (that is the community standard) was said to be between $225 to $325, so plaintiffs were asking top dollar. This is the rate plaintiff was said to have been charged by its lawyers, and plaintiff argued this fact ended the inquiry. The court disagreed, citing FRCP 37 for a “reasonableness” approach; for example, plaintiff could have agreed to have paid its lawyer an unreasonable amount, perhaps in the hope of getting most of it eventually footed by defendant.


The next step was to figure out what was reasonable under the circumstances, a step determined figuring out the prevailing market rates for those “in the community for similar services by lawyers of reasonably comparable skill, experience and reputation.” And it is here that one had to look for the type of case it was. The case at hand wasn’t a copyright case, but the court looked to a recent opinion in a copyright case in the same district by Magistrate Judge Lincoln D. Almond in a copyright infringement action involving one of the same lawyers; in that case he had been awarded $365 an hour, Mag Jewelry Co., Inc. v. Cherokee, Inc., et al., C.A. No. 04-174T, slip op. at 7 (D.R.I. Dec. 26, 2007). Judge Almond also noted that the case before him “involve [d] an analysis of prevailing market rates for copyright litigators,” id., and that the plaintiff had itself “described the area of copyright infringement law as a specialty and a complex area of law,” id. (internal quotation marks omitted).

The case at hand, even though involving one of the same attorneys was for an alleged breach of an employment agreement and the alleged misappropriation of trade secrets. The Court held, “While the latter claim may involve a degree of complexity somewhat greater than that found in routine business litigation, overall the action is not on a par with copyright infringement litigation. Thus, the Court concludes that a reasonable hourly rate for Attorney Scott is $325.00 per hour. As Attorney Duffy's experience is comparable to that of Attorney Scott, the Court also fixes his hourly rate of compensation at $325.00. “

So there you have it, a lawyer trying a copyright case can be awarded more per hour than when he tries a trade secret case.

2 comments:

Tal Benschar said...

The argument that the client agreed to pay an unreasonably high fee in the hope of recovering from the defendant is bogus and ignores the reality that most cases settle and even if not one may lose or even prevail but not be awarded fees.

The point was best put by one court as follows:

"In assessing the reasonableness both of the hourly rates and of the time spent, the Court is cognizant of the fact that the fees sought here are not hypothetical amounts prepared only for purposes of a fee application. Rather, they are embodied in invoices prepared as the litigation progressed, and actually paid by [plaintiff], a sophisticated client familiar with the real estate and legal markets in New York. The [plaintiff] could not have been assured that it would be awarded fees at the end of the litigation; rather, in the event of a loss or a settlement, it would have had to bear those fees unreimbursed. As numerous courts have recognized, negotiation and payment of fees by sophisticated clients are solid evidence of their reasonableness in the market. . . . Certainly, the [plaintiff] could have found cheaper lawyers, but it was not required to do so. The [Plaintiff] chose these lawyers, agreed to be responsible for their fees, and paid them, without regard to whether the fees would be recovered at the end of the case."

Bleecker Charles Co. v. 350 Bleecker Street Apartment Corp., 212 F.Supp.2d 226, 230 (S.D.N.Y.2002)

William Patry said...

Tal, I was referring to something different by using the word "reasonable." Certainly if courts are simply going to award fees based on whatever the attorneys actually charges, you never have to worry about what a reasonable community rate is. If you are going to look at what a reasonable rate in the relevant community is, then it is possible that even though the client paid the fees, the court won't award them if they are higher than that rate. In that case, the higher charged rate is "not reasonable" but only in an objective, comparative sense.

I think the focus on rates is too restrictive, and clients are guilty of this too. If attorney A charges $365 an hour, and attorney B, $750 an hour, what matters, quantitatively -- that is, the end bill, is how many hours both worked. Many specialist attorneys charge more per hour but may end up charging less because they have to do less research, have more experience, etc. In that very common situation, clients are penalized by courts that only look at the rate.