Opinion ID: 387362
Heading Depth: 2
Heading Rank: 4

Heading: Substantive Inequities Feared from the New Method

Text: 314
315 a. The argument is made that small law practices will not be able to prove expenses as high as those of better established practices or larger firms, and thus will not be able to secure equivalent fees for the same work. 316 This may or may not be true (small firms frequently have higher per lawyer overhead), but the question of course arises: Is there any alternate work in which such firms would have been engaged in which they would get greater fees? The answer is that these firms, perhaps composed of younger lawyers, will get just as good fees as any alternative work they could possibly do, and probably better at this stage of their careers. 317 A more fundamental answer is that if both small and large firms obtain a full return of their actual expenses, plus a reasonable profit, there can be no inequity in the treatment of large and small firms. 318 b. It is alleged that the formula is inapplicable to a solo practitioner, because there are no guideposts as to his salary from his associate's salary or his partner's income. 319 Perhaps the solo practitioner is a case in which a fairer award can be made without using the cost-plus formula, and there is nothing in our opinion which mandates the cost-plus formula in every case. However, it would be possible to take the going salary rate of several firms for lawyers of the same years of experience, extrapolate if need be, and award the solo practitioner a fee based on that plus his overhead and a reasonable profit. 320
321 A similar claim is made for these specialists, alleging that the public interest and civil rights firms operate under far lower salary, overhead, and profit margins than others in private practice. The argument is made that somehow cost plus reasonable profit penalizes these firms. 322 The answer is the same as to a small firm or solo practitioner. They will be guaranteed a reasonable profit above their actual costs. We are not aware that public interest and civil rights firms usually receive more than this. However, the trial court could-and, in our view, should -evaluate the special skills which a public interest or civil rights firm may bring to bear among the other quality factors which the court applies to the actual cost plus reasonable profit figures. If the attorneys are specialists in Title VII cases, and thus may have been able to do the work at a high standard with a minimum of hours expended, then their profit in the total compensation awarded should indeed be higher than it otherwise would.
323 It is also argued that most Title VII cases are on a contingent fee basis and thus a successful Title VII case should produce a substantial reward in order to allow their practice to continue. We agree. Contingency is a factor which should be evaluated at the time the trial judge is pondering the reasonable profit part of the fee to be allowed. A reasonable profit in a contingency fee case should be higher than where the fee is relatively certain and the only question decided by the outcome of the case is who pays it. 50
324 The argument is made that somehow a fully remunerative contingency fee recovery from the Government will not be had, and therefore class action claims cannot be sustained. The basis of this is obscure, for it seems readily apparent that the formula of actual cost plus a reasonable profit is in every way fully remunerative, especially when it is remembered that other factors are to be taken into account, as set forth above. 325
326 It is claimed that counsel in this type practice usually have a very low salary overhead and profit margin. If this is true, the cost plus reasonable profit will guarantee them a return that will be at least equal to that received in their usual practice, and probably better.
327 It is argued that those who habitually work long hours will be disadvantaged by any formula based on the average hourly rate of return, since their average hourly return will necessarily be low. If that is true, then the return in these Title VII cases will in no way differ from the alternative work which they might be doing. 328 The theory implicit in several of these hypothetical problems raised above is that somehow compensation for the Title VII work should be a bonanza to lawyers in these particular cases, in order that they may continue their practice in other worthwhile but relatively unremunerative type cases. We cannot see that this is a valid argument at all for fixing a fee against the Government-in fact, it virtually admits that some lawyers have been relying on Title VII work to gain relative bonanzas. 329
330 This is the bugaboo that good firms will simply be unwilling to disclose comprehensive financial information. 51 331 As pointed out above, the required information is not nearly so comprehensive as the parties make it out to be. Unless a firm is drastically out of line in its salary scale or its overhead costs, no detailed data need be submitted to the court. An affidavit of a partner that, based on its accounting records, the average overhead per lawyer was so many dollars an hour and the average salary paid to, for example, lawyers with two years of experience, was a certain amount, should be sufficient, unless this appeared drastically in error when compared to firms similarly situated. 332