* The Honorable Sandra Day O’Connor, Associate Justice 1 (Retired) of the United States Supreme Court, sitting by 2 designation. 3 -1- 06-0086-cv Arbor Hill Concerned C itizens Nei ghborhood Ass’n v. County of Albany UNITED STATES COURT OF APPEALS 1 FOR THE SECOND CIRCUIT 2 3 August Term 2006 4 (Argued: October 11, 2006 Decided: April 24, 2007) 5 (Amended: July 12, 2007) 6 Docket No. 06-0086-cv 7 -----------------------------------------------------x 8 ARBOR HILL CONCERNED CITIZENS NEIGHBORHOOD 9 ASSOCIATION, ALBANY COUNTY BRANCH OF THE NATIONAL 10 ASSOCIATION FOR THE ADVANCEMENT OF COLORED PEOPLE, 11 AARON MAIR, MARYAM MAIR, AND MILDRED CHANG, 12 13 Plaintiffs-Appellants , 14 15 -- v. -- 16 17 COUNTY OF ALBANY AND ALBANY COUNTY BOARD OF 18 ELECTIONS, 19 20 Defendants-Appellees , 21 22 –- and -– 23 24 THE REPUBLICAN CAUCUS OF THE ALBANY COUNTY 25 LEGISLATURE, 26 27 Intervenors
. 28 29
-----------------------------------------------------x 30 31 B e f o r e : JACOBS, Chief Judge , WALKER, Circuit Judge , 32 O’CONNOR, Associate Justice Retired

. * 33 Appeal from an order of the United States District Court for 34 the Northern District of New York (Norman A. Mordue, Judge ) 35 granting in part and denying in part plaintiffs-appellants’ 36 motion for attorney’s fees. 371 After due consideration of Plaintiffs-Appellants’ petition 1 for rehearing, which is denied, we have sua sponte amended our 2 opinion. 3 -2-

AFFIRMED. 1 MITCHELL A. KARLAN (Mark E. Bini 2 and Michelle Craven, on the brief ), 3 Gibson, Dunn & Crutcher, LLP, New 4 York, New York, for Plaintiffs5 Appellants
. 6 7 THOMAS J. O’CONNOR, Napierski, 8 Vandenburgh & Napierski, LLP, 9 Albany, New York, for Defendants10 Appellees
. 11 12 AMENDED OPINION 1 13 JOHN M. WALKER, JR., Circuit Judge : 14 In this appeal from the district court’s disposition of 15 their motion for an award of attorney’s fees, plaintiffs16 appellants (“plaintiffs”), who prevailed in a suit brought under 17 the Voting Rights Act of 1965 (“VRA”), seek a recalculation of 18 the amount that they may recoup. The fee –- historically known 19 as the “lodestar” –- to which their attorneys are presumptively 20 entitled is the product of hours worked and an hourly rate. 21 Plaintiffs argue that the district court applied an unnecessarily 22 strict “forum rule”: The district court, they contend, required 23 them to show extraordinary special circumstances before it would 24 use in its “lodestar” calculation an hourly rate greater than the 25 hourly rate charged by attorneys in the district where the 26 district court sits. 27-3-

We agree that the district court may have applied the forum 1 rule in too unyielding a fashion. We therefore clarify its 2 proper application in this circuit: While the district court 3 should generally use the prevailing hourly rate in the district 4 where it sits to calculate what has been called the “lodestar” –- 5 what we think is more aptly termed the “presumptively reasonable 6 fee” -- the district court may adjust this base hourly rate to 7 account for a plaintiff’s reasonable decision to retain out-of8 district counsel, just as it may adjust the base hourly rate to 9 account for other case-specific variables. 10 Moreover, this dispute concerning the “forum rule” is but a 11 symptom of a more serious illness: Our fee-setting jurisprudence 12 has become needlessly confused -- it has come untethered from the 13 free market it is meant to approximate. We therefore suggest 14 that the district court consider, in setting the reasonable 15 hourly rate it uses to calculate the “lodestar,” what a 16 reasonable, paying client would be willing to pay, not just in 17 deciding whether to use an out-of-district hourly rate in its fee 18 calculation. A plaintiff bringing suit under the Voting Rights 19 Act, pursuant to which fees can be recovered from the other side, 20 has little incentive to negotiate a rate structure with his 21 attorney prior to the litigation ; the district court must act 22
later to ensure that the attorney does not recoup fees that the 23 market would not otherwise bear. Indeed, the district court 242 Our decision today in no way suggests that attorneys from 1 non-profit organizations or attorneys from private law firms 2 engaged in pro bonowork are excluded from the usual approach to 3 determining attorneys’ fees. We hold only that in calculating 4 the reasonable hourly rate for particular legal services, a 5 district court should consider what a reasonable, paying client 6 would expect to pay. See Pastre v. Weber , 800 F. Supp. 1120, 7 1125 (S.D.N.Y. 1991) (finding force to the “argument that 8 [defendant] should not be required to pay for legal services at 9 the rate Hughes Hubbard would charge to [its corporate clients] . 10
-4- (unfortunately) bears the burden of disciplining the market, 1 stepping into the shoes of the reasonable, paying client, who 2 wishes to pay the least amount necessary to litigate the case 3 effectively. 4 Bearing these background principles in mind, the district 5 court should, in determining what a reasonable, paying client 6 would be willing to pay, consider factors including, but not 7 limited to, the complexity and difficulty of the case, the 8 available expertise and capacity of the client’s other counsel 9 (if any), the resources required to prosecute the case 10 effectively (taking account of the resources being marshaled on 11 the other side but not endorsing scorched earth tactics), the 12 timing demands of the case, whether the attorney had an interest 13 (independent of that of his client) in achieving the ends of the 14 litigation or initiated the representation himself, whether the 15 attorney was initially acting pro bono (such that a client might 16 be aware that the attorney expected low or non-existent 17 remuneration), and other returns (such as reputation, etc.) the 18 attorney expected from the representation. 2 19. . but should . . . compensate plaintiff only for what would 1 have been charged by a competent attorney specializing in civil 2 rights litigation”). Attorneys -- regardless of whether they are 3 pursuing litigation on behalf of a paying client or a non-paying 4 client -- should receive out-of-district fees only if a 5 reasonable, paying client would have retained out-of-district 6 counsel. 7 -5-

Although we clarify the application of the forum rule, we 1 affirm the judgment of the district court in this case. It is 2 clear that the district court would adhere to its fee award were 3 we to vacate the district court’s judgment and remand for 4 reconsideration. Indeed, we believe that a reasonable, paying 5 resident of Albany would have made a greater effort to retain an 6 attorney practicing in the Northern District of New York, whether 7 in Syracuse, Binghamton, Utica, or Kingston, than did plaintiffs. 8 The rates charged by attorneys practicing in the Southern 9 District of New York would simply have been too high for a 10 thrifty, hypothetical client -- at least in comparison to the 11 rates charged by local attorneys, with which he would have been 12 familiar. 13
BACKGROUND 14 On April 22, 2003, plaintiffs filed a complaint against 15 Albany County and its Board of Elections (“Albany defendants”) 16 alleging that Albany County’s 2002 legislative redistricting plan 17 violated § 2 of the Voting Rights Act of 1965. See 42 U.S.C. § 18 1973. On August 22, 2003, the District Court for the Northern 19 District of New York (Mordue, Judge ) enjoined Albany County from 20-6-

conducting its scheduled November 2003 election pending adoption 1 by the Albany County Legislature of a revised redistricting plan. 2 Further proceedings below culminated in the district court’s 3 rejection of plaintiffs’ request that it order Albany County to 4 hold a special election to take the place of the enjoined 5 November 2003 election; plaintiffs then appealed to this court. 6 On January 28, 2004, we vacated the district court’s judgment and 7 ordered the County to hold the special election on March 2, 2004. 8
See Arbor Hill Concerned Citizens Neighborhood Ass’n v. County of 9 Albany , 357 F.3d 260 (2d Cir. 2004) (“ Arbor Hill I ”). 10 Plaintiffs then moved in this court for an award of 11 attorney’s fees under 42 U.S.C. § 1973l(e). While we 12 acknowledged the merit of the motion in principle, we remanded 13 for a determination of the appropriate fee. See Arbor Hill 14 Concerned Citizens Neighborhood Ass’n v. County of Albany , 369 15 F.3d 91 (2d Cir. 2004) (“ Arbor Hill II ”). We noted that 16 plaintiffs had not demonstrated that “special circumstances 17 existed” that would justify the use of higher rates than those 18 prevailing in the Northern District of New York in calculating 19
that fee. Arbor Hill II , 369 F.3d at 96 (quoting In re “Agent 20 Orange” Prods. Liab. Litig. , 818 F.2d 226, 232 (2d Cir. 1987)). 21 During the course of this litigation, three entities have 22 rendered legal services to the plaintiffs: (1) the Albany law 23 firm of DerOhannesian & DerOhannesian (“D&D”), as local counsel; 24-7-

(2) the Washington, D.C.-based non-profit Lawyer’s Committee for 1 Civil Rights Under Law (“LCCRUL”), selected for its voting rights 2 expertise; and (3) the Manhattan law firm of Gibson, Dunn & 3 Crutcher (“Gibson Dunn”), chosen because of the firm’s practice 4 before the Second Circuit and the firm’s “muscle,” specifically, 5 its ability to quickly prepare the appeal on an abbreviated 6 briefing schedule. 7 Gibson Dunn sought in the district court to recoup 8 attorney’s fees calculated on the basis of the hourly rate 9 charged by most attorneys in the Southern District of New York 10 (and the hourly rate usually charged by Gibson Dunn). The 11 district court denied Gibson Dunn’s request that it adjust the 12 hourly rate it would use to calculate the fees due from that 13 prevalent in the Northern District of New York. The district 14 court explained, “[i]t is undisputed that plaintiffs did not even 15 attempt to contact attorneys or law firms in the Northern 16 District of New York outside of Albany County insofar as 17 obtaining representation in this matter.” Noting that “it was 18 plaintiffs[’] obligation to submit factual support for their 19 claim that there were no [law firms in Syracuse, Binghamton, 20 Utica or Kingston] ready, willing or able to take [their] case,” 21 the district court held that plaintiffs had not adequately 22 justified their request for higher fees. 23 In addition, the district court reduced the fee award 24-8-

proposed by Gibson Dunn in various other respects not relevant to 1 this appeal. Plaintiffs then timely appealed the fee award, 2 challenging only the district court’s decision to award Gibson 3 Dunn a fee based on the hourly rate commonly charged in the 4 Northern District. 5
ANALYSIS 6 I. A Brief History of Attorney’s Fees Awards 7 Courts in the United States have historically applied the 8 “American Rule,” under which each party is to bear its own costs 9 of litigation, unmitigated by any fee-shifting exceptions. See 10 Alyeska Pipeline Servs. Co. v. Wilderness Soc’y , 421 U.S. 240, 11 247 (1975). In 1976, however, Congress enacted the Civil Rights 12 Attorney’s Fees Awards Act, which, like the provision of the VRA 13 at issue in this appeal, provided that prevailing parties could 14 recoup “reasonable attorney’s fee[s].” See 42 U.S.C. § 1988(b); 15
cf. 42 U.S.C. § 1973l(e) (“In any action or proceeding to enforce 16 the voting guarantees of the fourteenth or fifteenth amendment, 17 the court, in its discretion, may allow the prevailing party . . 18 . a reasonable attorney’s fee . . . .”). 19 In the accompanying Senate Report, Congress implicitly 20 endorsed two existing methods of calculating the “reasonable fee” 21 that were developed in the 1970s by the circuit courts. 22
See Hensley v. Eckerhart , 461 U.S. 424, 429-30 & n.3 (1983). The 23 first, developed by the Third Circuit, was the “lodestar” method. 243The twelve Johnsonfactors are: (1) the time and labor 1 required; (2) the novelty and difficulty of the questions; (3) 2 the level of skill required to perform the legal service 3 properly; (4) the preclusion of employment by the attorney due to 4 acceptance of the case; (5) the attorney’s customary hourly rate; 5 (6) whether the fee is fixed or contingent; (7) the time 6 limitations imposed by the client or the circumstances; (8) the 7 amount involved in the case and the results obtained; (9) the 8 -9- See Lindy Bros. Builder, Inc. v. Am. Radiator & Standard Sanitary 1 Corp. , 487 F.2d 161 (3d Cir. 1973). The lodestar was the product 2 of the attorney’s usual hourly rate and the number of hours 3
worked. See id . at 167 (directing district courts to calculate 4 the lodestar using the attorney’s “normal billing rate”); see 5
also City of Burlington v. Dague , 505 U.S. 557, 559 (1992). 6 After determining the lodestar, the district court could adjust 7 it in setting the reasonable fee. See generally Hensley , 461 8 U.S. at 433 (“The most useful starting pointfor determining the 9 amount of a reasonable fee is the number of hours reasonably 10 expended on the litigation multiplied by a reasonable hourly 11 rate. This calculation provides an objective basis on which to 12
make an initial estimate . . . .”) (emphasis added); Lindy , 487 13 F.2d at 168-69. Thus, the lodestar method involved two steps: 14 (1) the lodestar calculation; and (2) adjustment of the lodestar 15 based on case-specific considerations. 16 The second method, developed by the Fifth Circuit, was for 17 district courts to consider twelve specified factors to establish 18
a reasonable fee. See Johnson v. Ga. Highway Express, Inc. , 488 19 F.2d 714 (5th Cir. 1974), 3 abrogated on other grounds by 20experience, reputation, and ability of the attorneys; (10) the 1 “undesirability” of the case; (11) the nature and length of the 2 professional relationship with the client; and (12) awards in 3 similar cases. Johnson , 488 F.2d at 717-19. 4 -10- Blanchard v. Bergeron , 489 U.S. 87, 92-93, 96 (1989) (declining 1 to limit fee award to amount stipulated in attorney-client 2 agreement). The Johnsonmethod differed from the lodestar method 3 in that it contemplated a one-step inquiry. 4 These two circuits had sought to channel the district 5 court’s discretion in different ways. The lodestar method was 6 consistent with the law firm practice of accounting for each 7 billable hour. See Lindy , 487 F.2d at 167 (“[T]he first inquiry 8 of the court should be into the hours spent by the attorneys . . 9 . .”); see also Gisbrecht v. Barnhart , 535 U.S. 789, 800-01 10 (2002) (“As it became standard accounting practice to record 11 hours spent on a client’s matter, attorneys increasingly realized 12 that billing by hours devoted to a case was administratively 13 convenient . . . .”). When the lodestar did not accurately 14 reflect the market, the district court retained authority to 15 adjust the lodestar to ensure that the fee ultimately awarded was 16 reasonable. By contrast, under the Johnsonmethod, the “hours 17 claimed or spent on a case” were not “the sole basis for 18 determining a fee.” Johnson , 488 F.2d at 717. Rather than 19 depending on market forces, the Johnsonmethod relied on the 20 district court’s experience and judgment. See id. at 718 (“[T]he 21 trial judge’s expertise gained from past experience as a lawyer 22-11-

and his observation from the bench of lawyers at work become 1 highly important”); id. at 720 (discussing the necessary 2 “balancing process”). Compare id. (“By this discussion we do not 3 attempt to reduce the calculation of a reasonable fee to 4 mathematical precision.”), with Lindy , 487 F.2d at 167. 5 In theory, therefore, a district court that adopted the 6 lodestar method was expected to consider fewer variables than a 7 district court utilizing the Johnsonmethod. In practice, 8 however, both considered substantially the same set of variables 9 –- just at a different point in the fee-calculation process. A 10 district court using the lodestar method would set the lodestar 11
and thenconsider whether, in light of variables such as the 12 difficulty of the case, it should adjust the lodestar before 13 settling on the reasonable fee it was ultimately inclined to 14
award. See, e.g. , Silberman v. Bogle , 683 F.2d 62, 64 (3d Cir. 15 1982); Baughman v. Wilson Freight Forwarding Co. , 583 F.2d 1208, 16 1217-18 (3d Cir. 1978) (permitting the district court to multiply 17 the lodestar by a “contingency factor” and accepting, in theory, 18 that obtaining an exceptional result might justify a further 19 upward departure from the lodestar). By contrast, a district 20 court employing the Johnsonmethod would consider factors, such 21 as the difficulty of the case, earlier in the fee-calculation 22 process by weighing them in setting its tentative reasonable fee, 23 from which there would seldom be a need to depart. See, e.g. , In 24-12-

re First Colonial Corp. of Am. , 544 F.2d 1291, 1299-1300 (5th 1 Cir. 1977) (outlining a process whereby first, the attorney 2 seeking fees would document the hours devoted to the case; 3 second, the district court would consider the Johnsonfactors and 4 set a reasonable hourly rate; and third, the district court would 5 explain how it balanced the Johnsonfactors to arrive at the 6 reasonable hourly rate). 7 The Supreme Court adopted the lodestar method in principle, 8

see Hensley , 461 U.S. at 433; Blum v. Stenson , 465 U.S. 886 9 (1984), without, however, fully abandoning the Johnsonmethod. 10 Rather than using the attorney’s own billing rate to calculate 11 the lodestar and then examining the lodestar in light of case12 specific variables to ensure that it was in fact a reasonable 13 fee, as the Third Circuit had suggested, the Supreme Court 14 instructed district courts to use a reasonable hourly rate –- 15 which it directed that district courts set in light of the 16
Johnsonfactors –- in calculating what it continued to refer to 17
as the lodestar. See Hensley , 461 U.S. at 434 n.9 (“The district 18 court also may consider other factors identified in [ Johnson ] 19 though it should note that many of these factors usually are 20
subsumedwithin the initial calculation of hours reasonably 21 expended at a reasonable hourly rate.”) (citation omitted) 22 (emphasis added); Blum , 465 U.S. at 898-900. The Supreme Court 23 collapsed what had once been a two-step inquiry into a single- 24-13-

step inquiry; it shifted district courts’ focus from the 1
reasonableness of the lodestar to the reasonableness of the 2 hourly rate used in calculating the lodestar, which in turn 3
became the de factoreasonable fee. 4 But the Supreme Court’s emphasis on the Third Circuit’s 5 economic model, see, e.g. , Missouri v. Jenkins , 491 U.S. 274, 283 6 (1989) (“Our cases have repeatedly stressed that attorney’s fees 7 . . . are to be based on market rates for the services 8 rendered.”), and its simultaneous invocation of the equitable 9
Johnsonfactors at an early stage of the fee-calculation process , 10 proved to be in tension, see Blum , 465 U.S. at 895 n.11 (“We 11 recognize, of course, that determining an appropriate ‘market 12 rate’ for the services of a lawyer is inherently difficult . . . 13 [since m]arket prices . . . are determined by supply and 14 demand.”). While the Third Circuit had expected district courts 15 to correct for market dysfunction, the Supreme Court now asked 16 district court judges to hypothesize that market on the basis of 17 their experience as lawyers within their districts and on the 18 basis of affidavits provided by the parties. Generally speaking, 19 the rates an attorney routinely charges are those that the market 20 will bear; yet the Supreme Court required that the district 21 courts conjure a different, “reasonable” hourly rate. 22
After Hensleyand Blum , circuit courts struggled with the 23 nettlesome interplay between the lodestar method and the Johnson 24-14-

method. Compare Rutherford v. Harris County, Tex. , 197 F.3d 173, 1 192 (5th Cir. 1999) (“To decide an appropriate attorney’s fee 2 award, the district court was firstrequired to calculate a 3 lodestar fee depending on the circumstances of the case and the 4
Johnsonfactors. The court was next obligated to consider 5 whether the lodestar amount should be adjusted upward or 6 downward, depending on the . . . Johnsonfactors.”) (emphasis 7 added), with Murray v. Weinberger , 741 F.2d 1423, 1430 (D.C. Cir. 8 1984)(“[T]he reasonable hourly rate which is incorporated into 9 the lodestar figure generally reflects the reputation and ability 10 of the attorney, the attorney’s experience, and the level of 11 skill required for the particular case.”), and Bebchick v. Wash. 12 Area Metro. Transit Comm’n , 805 F.2d 396, 404 (D.C. Cir. 1986) 13 (“Of course, ‘the actual rate that applicant’s counsel can 14 command on the market is itself highly relevant proof of the 15 prevailing community rate.’”). 16 And the Supreme Court has not yet fully resolved the 17 relationship between the two methods . In cases decided after 18 Hensleyand Blum , it has both (1) suggested that district courts 19
should use the Johnsonfactors to adjust the lodestar, see, e.g. , 20
Blanchard , 489 U.S. at 94 (stating that the district court should 21 arrive at an initial estimate and then “adjust this lodestar 22 calculation by other factors”); see also id. (“The Johnson 23 factors may be relevant in adjusting the lodestar amount . . . 24-15-

.”); Pierce v. Underwood , 487 U.S. 552, 582-83 (1988) (Brennan, 1 J., concurring) (suggesting that factors might exist “that would 2 justify an enhancement of the lodestar”), and (2) reiterated its 3 holding in Hensleyand Blumthat “many of the Johnsonfactors 4 ‘are subsumed within the initial calculation.’” Penn. v. Del. 5 Valley Citizens’ Council for Clean Air , 478 U.S. 546, 564 (1986). 6 Our court has done little to resolve this confusion. 7 Compare Kassim v. City of Schenectady , 415 F.3d 246, 255-56 (2d 8 Cir. 2005) (affirming the district court’s authority to “reduce 9 the fee awarded to a prevailing plaintiff below the lodestarby 10 reason of the plaintiff’s ‘partial or limited success’”) 11 (emphasis added), with Luciano v. Olsten Corp. , 109 F.3d 111, 116 12 (2d Cir. 1997) (“The product of the number of reasonable hours 13 times a reasonable hourly rate, however, does not end the 14 inquiry. There remain other considerations, based on the facts 15 of the particular case, that may lead the district court to 16 ultimately make an adjustment to the hourly structure.”) 17 (internal citations omitted), and McDonald v. Pension Plan of the 18 NYSA-ILA Pension Trust Fund , 450 F.3d 91, 97 (2d Cir. 2006) 19 (lodestar calculated on the basis of “prevailing rate 20 [specifically] for ERISA practitioners in this Circuit”) 21 (emphasis added), and Chambless v. Masters, Mates & Pilots 22 Pension Plan , 885 F.2d 1053, 1058 (2d Cir. 1989) (suggesting, in 23 determining the lodestar, that “smaller firms may be subject to 24-16-

their own prevailing market rate”). 1 The net result of the fee-setting jurisprudence here and in 2 the Supreme Court is that the district courts must engage in an 3 equitable inquiry of varying methodology while making a pretense 4 of mathematical precision. See Report of the Third Circuit Task 5 Force, Court Awarded Attorney Fees , 108 F.R.D. 237, 247 (1985) 6 (“The Lindyprocess creates a sense of mathematical precision 7 that is unwarranted . . . .”). The “lodestar” is no longer a 8 lodestar in the true sense of the word –- “a star that leads,” 9 Webster’s Third International Dictionary1329 (1981). Nor do 10 courts use it in the way the term was first used by the Third 11 Circuit –- as a base amount that is susceptible of ready 12 adjustment; rather, circuit court deference to the district 13 court’s estimate of a “reasonable” hourly rate is a “lodestar” 14 only in the sense that it is a guiding jurisprudential principle, 15

see Dague , 505 U.S. at 562 (“The ‘lodestar’ figure has, as its 16 name suggests, become the guiding light of our fee-shifting 17 jurisprudence.”). What the district courts in this circuit 18 produce is in effect not a lodestar as originally conceived, but 19 rather a “presumptively reasonable fee.” See id. (holding that 20 the fee applicant bears the “burden of showing that ‘. . . an 21 adjustment is necessaryto the determination of a reasonable 22 fee’”). The focus of the district courts is no longer on 23 calculating a reasonable fee , but rather on setting a reasonable 244 While we do not purport to require future panels of this 1 court to abandon the term –- it is too well entrenched –- this 2 panel believes that it is a term whose time has come. 3 -17- hourly rate , taking account of all case-specific variables. 1 The district court’s opinion, including the report and 2 recommendation of Magistrate Judge David R. Homer, with which the 3 district court agreed after de novoreview, reflects the general 4 confusion surrounding the lodestar calculation. In places, the 5 district court appears to envision a two-step lodestar6 calculation process; yet elsewhere it seems to contemplate 7 undertaking the calculation in one step. Likewise, at times, the 8 district court emphasizes its role in approximating the workings 9 of the market, but it also suggests some difference between 10 “rates . . . paid by private retained clients . . . [and rates] 11 ordered by courts.” 12 The meaning of the term “lodestar” has shifted over time, 13 and its value as a metaphor has deteriorated to the point of 14 unhelpfulness. This opinion abandons its use. 4 We think the 15 better course –- and the one most consistent with attorney’s fees 16 jurisprudence –- is for the district court, in exercising its 17 considerable discretion, to bear in mind all of the case-specific 18 variables that we and other courts have identified as relevant to 19 the reasonableness of attorney’s fees in setting a reasonable 20 hourly rate. The reasonable hourly rate is the rate a paying 21 client would be willing to pay. In determining what rate a 22-18-

paying client would be willing to pay, the district court should 1 consider, among others, the Johnsonfactors; it should also bear 2 in mind that a reasonable, paying client wishes to spend the 3 minimum necessary to litigate the case effectively. The district 4 court should also consider that such an individual might be able 5 to negotiate with his or her attorneys, using their desire to 6 obtain the reputational benefits that might accrue from being 7 associated with the case. The district court should then use 8 that reasonable hourly rate to calculate what can properly be 9 termed the “presumptively reasonable fee.” 10 II. The Forum Rule 11 We turn now to the particular fee-calculation rule at issue 12 in this case. It was against the muddled legal landscape we have 13 just described that the Second Circuit promulgated what we will 14 call the “forum rule.” The Supreme Court directed that district 15 courts should use the “prevailing [hourly rate] in the community” 16 in calculating the lodestar –- or what we are now calling the 17 presumptively reasonable fee. After Blum , we explained that the 18 “community” for purposes of this calculation is the district 19 where the district court sits. See Polk v. N.Y. State Dep’t of 20
Corr. Servs. , 722 F.2d 23, 25 (2d Cir. 1983). 21 However, district courts –- and indeed our court –- quickly 22 succumbed to the general confusion surrounding the difference 23 between a “lodestar” and a reasonable hourly rate. Sometimes, 245Attorneys have had trouble understanding the strict forum 1 rule. For instance, in this case, Michael C. Lynch, counsel to 2 the Albany defendants, explained in an affidavit filed with this 3 court in Arbor Hill II that the “‘relevant community’ for 4 purposes of . . . [setting the hourly rate] is the Albany, 5 Capital District region in the Northern District of New York.” 6 See also Farbotko v. Clinton County of New York , 433 F.3d 204, 7 209 (2d Cir. 2005) (“[T]he prevailing market rate for attorneys 8 in Syracuse and Albany . . . may not accurately reflect the rate 9 prevailing across the entire Northern District.”). The district 10 court, by contrast, considered the “relevant community” to be the 11 entire Northern District of New York. 12 Confusion surrounding the forum rule is endemic, and not 13 unique to our circuit. Other circuits, too, have debated whether 14 to consider out-of-district rates in setting the reasonable 15 hourly rate or in setting the reasonable fee (after arriving at a 16 presumptively reasonable fee using in-district rates). Compare 17 Shakopee Mdewakanton Sioux Cmty. v. City of Prior Lake, Minn. , 18 771 F.2d 1153, 1160 (8th Cir. 1985) (noting that the district 19 -19-they considered the variation between indistrict and out-of1 district rates in setting the hourly rate (which they then used 2 to calculate the presumptively reasonable fee); but sometimes, 3 they considered that variation only in deciding whether to adjust 4 the presumptively reasonable fee after they had arrived at it (on 5 the basis of in-district rates). Compare Polk , 722 F.2d at 25 6 (“[T]he rate prevailing in the appropriate community is only one 7 of many factors bearing on determination of a fee award.”), with 8 Arbor Hill II , 369 F.3d at 96-97 (intimating that a district 9 court should permit plaintiffs to recover more than a fee 10 calculated on the basis of the hourly rate usually charged by 11 attorneys in the forum district only if plaintiffs could “show[] 12 . . . that the case required special expertise beyond the 13 competence of [forum district] law firms”). 5 14court should first “compute[] the base ‘lodestar’ figure by 1 multiply[ing] the number of hours reasonably expended times the 2 lawyer’s regular hourly rate” and only then “look also to the 3 ordinary fee for similar work in the community”) (internal 4 quotation marks omitted), with Kan. Pub. Employees Ret. Sys. v. 5 Reimer & Koger Assocs. , 165 F.3d 627, 631 (8th Cir. 1999) 6 (readily upholding use of out-of-district rates in calculating 7 the presumptively reasonable fee). And those that have adopted a 8 comparatively strict forum rule have struggled to apply it. See, 9 e.g. , Gates v. Deukmejian , 987 F.2d 1392, 1405 n.14 (9th Cir. 10 1992) (discussing whether to use Sacramento or San Francisco 11 hourly rates); McDonald v. Armontrout , 860 F.2d 1456, 1460 n.6 12 (8th Cir. 1988) (“We are not at all convinced that central 13 Missouri is the relevant ‘community’ . . . . [T]he argument for 14 an expansive reading of ‘community’ is particularly strong in a 15 case such as this, since Jefferson City is the capitol of the 16 state and lawyers from throughout the state have business 17 there.”). Compare Grendel’s Den, Inc. v. Larsen , 749 F.2d 945, 18 955 (1st Cir. 1984) (using county–based version of the forum 19 rule), with Cunningham v. City of McKeesport , 753 F.2d 262, 267 20 (3d Cir. 1985) (location of attorney’s home office is the 21 relevant community), and Davis County Solid Waste Mgmt. & Energy 22 Recovery Special Serv. Dist. v. E.P.A. , 169 F.3d 755, 759 (D.C. 23 Cir. 1999) (announcing an exception to the forum rule to govern 24 cases where “the home market is substantially less costly and the 25 site of the bulk of the legal work”)

. 26 -20-

We now clarify that a district court may use an out-of1 district hourly rate –- or some rate in between the out-of2 district rate sought and the rates charged by local attorneys –- 3 in calculating the presumptively reasonable fee if it is clear 4 that a reasonable, paying client would have paid those higher 5 rates. We presume, however, that a reasonable, paying client 6 would in most cases hire counsel from within his district, or at 7 least counsel whose rates are consistent with those charged 8 locally. This presumption may be rebutted -- albeit only in the 9 unusual case -- if the party wishing the district court to use a 10 higher rate demonstrates that his or her retention of an out-of- 11-21-

district attorney was reasonable under the circumstances as they 1 would be reckoned by a client paying the attorney’s bill. 2 We believe that the district court’s assessment of the 3 reasonableness of a prevailing party’s decision to retain out-of4 district counsel is best considered in setting the hourly rate –- 5 rather than in deciding whether to adjust a presumptively 6 reasonable fee –- for three reasons. First, our holding comports 7 with the holdings of several sister circuits and with the Supreme 8 Court’s focus on reasonable hourly rates rather than reasonable 9
fees. See, e.g. , Blum , 465 U.S. at 895 (emphasizing the 10 importance of using the “market rate” in calculating attorney’s 11 fees); Rum Creek Coal Sales, Inc. v. Caperton , 31 F.3d 169, 175 12 (4th Cir. 1994) (“In circumstances where it is reasonable to 13 retain attorneys from other communities . . . the rates in those 14 communities may also be considered.”); Maceira v. Pagan , 698 F.2d 15 38, 40 (1st Cir. 1982) (“If a local attorney could perform the 16 service, a well-informed private client, paying his own fees, 17 would probably hire local counsel at the local, average rate.”); 18 Chrapliwy v. Uniroyal, Inc. , 670 F.2d 760, 769 (7th Cir. 1982) 19 (querying whether “the choice of counsel was improvident”)

. 20 Second, in Pierce v. Underwood , a case interpreting the 21 attorney’s fees provision of the Equal Access to Justice Act 22 (“EAJA”), the Supreme Court hinted that in the “broad spectrum of 23 litigation,” the difficulty of obtaining local counsel competent 24-22-

to prosecute a particular case is “little more than [a] routine 1 reason[] why market rates are what they are,” 487 U.S. 552, 573 2 (1988) (emphasis added). The Supreme Court distinguished that 3 “broad spectrum of litigation” from the attorney’s fees provision 4 of the EAJA, which stipulates that fees “shall be based upon 5 prevailing market rates” but “shall not be awarded in excess of 6 $125 per hour unless the court determines that . . . the limited 7 availability of qualified attorneys for the proceedings involved 8 justifies a higher fee.” 28 U.S.C. § 2412(d)(2)(A)(ii); see 9 Pierce , 487 U.S. at 571-72; see generally Healey v. Rovner , No. 10 06-0525, Slip. Op. at *10 (2d Cir. Apr. 17, 2007). 11 Third and finally, our holding honors the Supreme Court’s 12 emphasis on the need to use the approximate market rate for an 13 attorney’s services in calculating the presumptively reasonable 14
fee. See Jenkins , 491 U.S. at 283. The legal communities of 15 today are increasingly interconnected. To define markets simply 16 by geography is too simplistic. Sometimes, legal markets may be 17 defined by practice area. See A.R. ex rel. R.V. v. New York City 18 Dep’t of Educ. , 407 F.3d 65, 80 (2d Cir. 2005) (“So long as the 19 law provides for or permits fee awards based on geographic 20 markets for services, a lawyer may be paid at different rates for 21 otherwise indistinguishable services.”). On the other hand, many 22 cases (including many voting rights cases) are intrinsically 23 local, and the relevant legal market may be coextensive with or 24-23-

smaller than the district itself. By asking what a reasonable, 1 paying client would do, a district court best approximates the 2 workings of today’s market for legal services. See Malthur v. 3 Bd. of Trs. of S. Ill. Univ. , 317 F.3d 738, 744 (7th Cir. 2003) 4 (“The realities of the legal community today mean that though 5 some attorney probably could have represented [the plaintiff], 6 one factor or another prevented them from taking the case when he 7 needed a lawyer.”). Not incidentally, a reasonable, paying 8 client might consider whether a lawyer is willing to offer his 9 services in whole or in part pro bono , or to promote the lawyer’s 10 own reputational or societal goals. Indeed, by focusing on the 11 hourly rate at which a client who wished to pay no more than 12 necessary would be willing to compensate his attorney, the 13 district court can enforce market discipline, approximating the 14 negotiation that might ensue were the client actually required to 15 pay the attorney’s fees. 16 In occasionally permitting a deviation from forum rates in 17 setting the rate that will yield the presumptively reasonable 18 fee, we have in mind no substantial change in circuit law; where 19 circumstances have warranted it, we have not insisted on strict 20
adherence to the forum rule. In Polk , we approved the use of an 21 out-of-district hourly rate. 722 F.2d at 25 (considering whether 22 “[c]ounsel might . . . have expected plaintiff’s claim to be 23 adjudicated in the Southern District”). In Agent Orange , 246Of the three cases cited in Agent Orange , two have since 1 been called into question to the extent they purport to require 2 strict application of the forum rule. Compare Chrapliwy , 670 3 F.2d at 768-69, with People Who Care v. Rockford Bd. of Educ., 4 Sch. Dist. No. 205 , 90 F.3d 1307, 1310 (7th Cir. 1996) (“The 5 attorney’s actual billing rate for comparable work is 6 ‘presumptively appropriate’ to use as the market rate.”); compare 7 Avalon Cinema Corp. v. Thompson , 689 F.2d 137, 139-40 (8th Cir. 8 1982) (en banc), with TCBY Sys., Inc. v. RSP Co. , 33 F.3d 925, 9 931 (8th Cir. 1994) (“[Defendants] argue they should be awarded 10 the Minneapolis rate because they reasonably chose Minneapolis 11 counsel after TCBY sued them. The [defendants] point out that 12 they are Minnesota residents who were forced to litigate the case 13 in Arkansas under the agreement’s forum selection clause, and 14 they were unfamiliar with Arkansas counsel . . . . [T]he district 15 court could have properly based the fee award on the higher 16 Minneapolis rates . . . .”). 17 -24- although we emphasized that district courts should generally use 1 “the hourly rates employed in the district in which the reviewing 2 court sits” in calculating the presumptively reasonable fee, 818 3 F.2d at 232, we again upheld a district court’s decision to use 4 different rates. 6And since Polkand Agent Orange , we have urged 5 district courts where appropriate to employ out-of-district rates 6 in calculating the fee due. See, e.g. , New York City Dep’t of 7
Educ. , 407 F.3d at 81 & n.17 (“[T]here is good reason for a 8 district court not be wed to the rates in its own community. If 9 they are lower than those in another district, skilled lawyers 10 from such other district will be dissuaded from taking 11 meritorious cases in the district with lower rates.”). 12
In both Polkand Agent Orange , the touchstone of our 13 analysis was the belief that district courts should award fees 14 just high enough “to attract competent counsel,” Lewis v. 157 Indeed, Polksaid that the panel was simply applying 1 established law. And when we decided Polk , circuit precedent was 2 clear that district courts had considerable flexibility in 3 setting the relevant legal community for purposes of determining 4 the hourly rate to be used in calculating the presumptively 5 reasonable fee. See, e.g. , Cohen v. West Haven Bd. of Police 6 Comm’rs , 638 F.2d 496, 506 (2d Cir. 1980) (holding that the 7 district court should have looked to prevailing rates “in the 8 area”). 9

8 Were a strict forum rule the settled law of this circuit, 1 we could not have used a lower hourly rate than the hourly rate 2 prevailing in the district where the district court sat to 3 calculate the presumptively reasonable fee in Crescent 4 Publishing

. See also Sands v. Runyon , 28 F.3d 1323, 1333-34 (2d 5 Cir. 1994) (permitting district court to consider retainer 6 agreement in setting hourly rate below prevailing hourly rate in 7 the district); cf. Pinkham v. Camex, Inc. , 84 F.3d 292, 294 (8th 8 Cir. 1996). But see Reiter v. MTA New York City Transit Auth. , 9 457 F.3d 224, 233 (2d Cir. 2006) (vacating district court 10 judgment because district court used hourly rate set forth in 11 retainer agreement without considering prevailing Southern 12 District rates). 13 -25- Coughlin , 801 F.2d 570, 576 (2d Cir. 1986). See, e.g. , Agent 1 Orange , 818 F.2d at 233 (“Undercompensation could deny counsel 2 their right to fair and just fees; overcompensation would not be 3 consistent with the need to prevent windfalls.”); 7 cf. Crescent 4 Publ’g Group, Inc. v. Playboy Enters., Inc. , 246 F.3d 142, 151 5 (2d Cir. 2001) (explaining that an attorney-client agreement may 6 provide compelling evidence of the “prevailing market rate”). 8 7 We adhere to this touchstone, but we would not be true to it by 8 insisting on an overly strict application of the forum rule. 9 Rather, to reiterate, a district court should consider the rate a 10 reasonable, paying client would pay, and use that rate to 11 calculate the presumptively reasonable fee. 12-26-

III. The District Court’s Decision 1 For the foregoing reasons, we agree with plaintiffs that the 2 district court may have applied the forum rule too strictly. 3 They suggest that the district court calculated the presumptively 4 reasonable fee (on the basis of in-district rates) and then 5 queried whether the plaintiffs had shown sufficient cause to 6 rebut the presumption that it was, in fact, the ultimate 7
reasonable fee. 8 However, we find no error in the district court’s fee award, 9 even when evaluated under the analysis we use. We are confident 10 that a reasonable, paying client would have known that law firms 11 undertaking representation such as that of plaintiffs often 12 obtain considerable non-monetary returns — in experience, 13 reputation, or achievement of the attorneys’ own interests and 14 agendas — and would have insisted on paying his attorneys at a 15 rate no higher than that charged by Albany attorneys (and there 16 is no cross-appeal). 17 Moreover, the considerable deference that we owe to a 18 district court’s assessment of the Johnsonand other factors, see 19
Farbotko , 433 F.3d at 210 (“The district court is in closer 20 proximity to and has greater experience with the relevant 21 community whose prevailing market rate it is determining.”), 22 counsels against remanding this case to the district court for 23 further, likely unnecessary, proceedings. 24-27- CONCLUSION 1 For the reasons set forth above, we AFFIRM the judgment of 2 the district court. 3