Opinion ID: 3152589
Heading Depth: 2
Heading Rank: 4

Heading: Computerized Research

Text: The firm sought to include as a recoverable litigation expense nearly $10,000 for computerized legal research. The judge excluded this expense from the firm’s recovery, hold- ing that electronic research merely “cuts down on a lawyer’s expenditure of his or her more tedious research time” for which the firm was already compensated as part of the contingent fee. Whether computerized legal-research expenses are recoverable is a question relevant to the calculation of damages. As we’ve explained, this is a matter of substantive law and thus is governed by state law. Conveniently, on this question the Illinois courts have adopted our rule. Guerrant v. Roth, 777 N.E.2d 499, 506 (Ill. App. Ct. 2002) (“[F]ederal courts in Illinois have more thoroughly addressed the issue of reimbursement of computer-assisted legal research charges.”). The firm argues that there is tension in our caselaw on the question whether these research expenses should be separately recoverable. That’s not accurate. Our circuit’s rule is straightforward: In fixed-fee cases, these charges are not 18 No. 13-2434 separately recoverable; in lodestar cases, they are. 3 See, e.g., Montgomery v. Aetna Plywood, Inc., 231 F.3d 399, 409, n.3 (7th Cir. 2000) (“When a court uses the percentage-of-recovery method of calculating attorney’s fees, such charges are simply subsumed in the award of attorneys’ fees. … When a court uses the lodestar method of calculating attorney’s fees, computer research charges are separately recoverable, but (and this is the important point) only as a type of attorneys’ fee, not as an expense.”). Here is how the Illinois Appellate Court has explained the rationale for treating computerized research differently in fixed-fee and lodestar cases: 3 That our caselaw is consistent is not to say that the distinction we’ve drawn continues to make sense. The background assumption is that lawyers are mainly reliant on non-computerized research methods—or, at the very least, that an entirely offline research system remains a viable option for practicing law in 2015. It strikes us as anachronistic to conceptualize computerized legal research as a mere time-saving shortcut deviating from the standard practice of leafing through copies of caselaw reporters. To the extent this logic was ever compelling, it has long since fallen out of step with prevailing legal practice. However, this case is not the proper vehicle for revisiting our rule on the separate recoverability of these expenses. The retainer agreement was concluded under the rule distinguishing between lodestar and fixed-fee arrangements; abruptly shifting the legal landscape now would have the collateral effect of disrupting one of the presumptions that may have guided the contracting parties (if only marginally). And as a procedural matter, we are sitting in diversity and applying Illinois law. Consequently, we leave for another day the question whether, decades into the digital age, there remains any logical rationale for treating computerized legal research as a novel indulgence. No. 13-2434 19 Where the attorney’s fee is a contingent one or is otherwise fixed so as not to reflect the actual time spent on a cause of action, the rationale that the computer expense is counter-balanced by a benefit to the attorney in saving time holds water because the fee remains un- changed, while the time expended on research is reduced. On the other hand, where an attor- ney works on a per diem basis, the time he saves does not inure to his economic benefit because he will simply be paid for fewer hours, while nevertheless incurring the expense of computer assistance. Under these circumstances, the ra- tionale for attorney advantage falls away, and the attorney should not be required to absorb the additional expense engendered by comput- er research fees in light of the diminished billa- ble hours that result from such computer assis- tance. Johnson v. Thomas, 794 N.E.2d 919, 935 (Ill. App. Ct. 2003) (internal citations and quotation marks omitted). Applying this rule here, it was not error to exclude the firm’s computerized-research costs from the recoverable litigation expenses. For the foregoing reasons, the district court’s judgment is REVERSED, and the case is REMANDED for further proceedings consistent with this opinion.