Court Opinion

ID: 2960072
Source: CourtListenerOpinion
Date Created: 2015-09-17 17:40:15.796909+00
Date Added: 2024-06-11T11:37:10.721600
License: Public Domain

06-0086-cv
     Arbor Hill Concerned Citizens Neighborhood Ass’n v. County of Albany

 1                        UNITED STATES COURT OF APPEALS
 2                            FOR THE SECOND CIRCUIT
 3
 4                             August Term 2006
 5        (Argued: October 11, 2006        Decided: April 24, 2007)
 6                        (Amended: April 10, 2008)
 7                          Docket No. 06-0086-cv
 8   -----------------------------------------------------x
 9   ARBOR HILL CONCERNED CITIZENS NEIGHBORHOOD
10   ASSOCIATION, ALBANY COUNTY BRANCH OF THE NATIONAL
11   ASSOCIATION FOR THE ADVANCEMENT OF COLORED PEOPLE,
12   AARON MAIR, MARYAM MAIR, AND MILDRED CHANG,
13
14               Plaintiffs-Appellants,
15
16                           -- v. --
17
18   COUNTY OF ALBANY AND ALBANY COUNTY BOARD OF
19   ELECTIONS,
20
21               Defendants-Appellees,
22
23                           –- and -–
24
25   THE REPUBLICAN CAUCUS OF THE ALBANY COUNTY
26   LEGISLATURE,
27
28               Intervenors.
29
30   -----------------------------------------------------x
31
32   B e f o r e :     JACOBS, Chief Judge, WALKER, Circuit Judge,
33                     O’CONNOR, Associate Justice Retired.*

34         Appeal from an order of the United States District Court for

35   the Northern District of New York (Norman A. Mordue, Judge)

36   granting in part and denying in part plaintiffs-appellants’

37   motion for attorney’s fees.

38         AFFIRMED.

           *
1           The Honorable Sandra Day O’Connor, Associate Justice
2    (Retired) of the United States Supreme Court, sitting by
3    designation.

                                          -1-
 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 Plaintiffs-
 5                                  Appellants.
 6
 7                                  THOMAS J. O’CONNOR, Napierski,
 8                                  Vandenburgh & Napierski, LLP,
 9                                  Albany, New York, for Defendants-
10                                  Appellees.
11
12                            AMENDED OPINION1

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, plaintiffs-

16   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        We agree that the district court may have applied the forum

28   rule in too unyielding a fashion.     We therefore clarify its

          1
1           After due consideration of Plaintiffs-Appellants’ petition
2    for rehearing, which is denied, we have sua sponte amended our
3    opinion.

                                     -2-
1    proper application in this circuit:   While the district court

2    should generally use the prevailing hourly rate in the district

3    where it sits to calculate what has been called the “lodestar” –-

4    what we think is more aptly termed the “presumptively reasonable

5    fee” -- the district court may adjust this base hourly rate to

6    account for a plaintiff’s reasonable decision to retain out-of-

7    district counsel, just as it may adjust the base hourly rate to

8    account for other case-specific variables.

9         Moreover, this dispute concerning the “forum rule” is but a

10   symptom of a more serious illness:    Our fee-setting jurisprudence

11   has become needlessly confused -- it has come untethered from the

12   free market it is meant to approximate.   We therefore suggest

13   that the district court consider, in setting the reasonable

14   hourly rate it uses to calculate the “lodestar,” what a

15   reasonable, paying client would be willing to pay, not just in

16   deciding whether to use an out-of-district hourly rate in its fee

17   calculation.   A plaintiff bringing suit under the Voting Rights

18   Act, pursuant to which fees can be recovered from the other side,

19   has little incentive to negotiate a rate structure with his

20   attorney prior to the litigation; the district court must act

21   later to ensure that the attorney does not recoup fees that the

22   market would not otherwise bear.   Indeed, the district court

23   (unfortunately) bears the burden of disciplining the market,

24   stepping into the shoes of the reasonable, paying client, who

25   wishes to pay the least amount necessary to litigate the case

                                     -3-
1    effectively.

2         Bearing these background principles in mind, the district

3    court should, in determining what a reasonable, paying client

4    would be willing to pay, consider factors including, but not

5    limited to, the complexity and difficulty of the case, the

6    available expertise and capacity of the client’s other counsel

7    (if any), the resources required to prosecute the case

8    effectively (taking account of the resources being marshaled on

9    the other side but not endorsing scorched earth tactics), the

10   timing demands of the case, whether an attorney might have an

11   interest (independent of that of his client) in achieving the

12   ends of the litigation or might initiate the representation

13   himself, whether an attorney might have initially acted pro bono

14   (such that a client might be aware that the attorney expected low

15   or non-existent remuneration), and other returns (such as

16   reputation, etc.) that an attorney might expect from the

17   representation.2

          2
 1          Our decision today in no way suggests that attorneys from
 2   non-profit organizations or attorneys from private law firms
 3   engaged in pro bono work are excluded from the usual approach to
 4   determining attorneys’ fees. The reasonableness of a fee award
 5   does not depend on whether the attorney works at a private law
 6   firm or a public interest organization, see Blum v. Stenson, 465
 7   U.S. 886, 894 (1984) (“Congress did not intend the calculation of
 8   fee awards to vary depending on whether plaintiff was represented
 9   by private counsel or by a nonprofit legal services
10   organization.”), nor is the award necessarily limited because the
11   attorney has agreed to undertake the case for a reduced fee
12   compared to the customary market rate, see Reiter v. MTA N.Y.
13   City Transit Auth., 457 F.3d 224, 233 (2d Cir. 2006).
14   Nevertheless, the nature of representation and type of work
15   involved in a case are critical ingredients in determining the
16   “reasonable” hourly rate. See, e.g., Blum, 465 U.S. at 895 n.11

                                    -4-
1         Although we clarify the application of the forum rule, we

2    affirm the judgment of the district court in this case.   It is

3    clear that the district court would adhere to its fee award were

4    we to vacate the district court’s judgment and remand for

5    reconsideration.   Indeed, we believe that a reasonable, paying

6    resident of Albany would have made a greater effort to retain an

7    attorney practicing in the Northern District of New York, whether

8    in Syracuse, Binghamton, Utica, or Kingston, than did plaintiffs.

9    The rates charged by attorneys practicing in the Southern

10   District of New York would simply have been too high for a

11   thrifty, hypothetical client -- at least in comparison to the

12   rates charged by local attorneys, with which he would have been

13   familiar.

 1   (“[R]equested rates [must be] in line with those prevailing in
 2   the community for similar services . . . .” (emphasis added));
 3   see also Cohen v. W. Haven Bd. of Police Comm’rs, 638 F.2d 496,
 4   506 (2d Cir. 1980) (“The fees that would be charged for similar
 5   work by attorneys of like skill in the area [is] the starting
 6   point for determination of a reasonable fee award.”); Pastre v.
 7   Weber, 800 F. Supp. 1120, 1125 (S.D.N.Y. 1991) (finding force in
 8   the “argument that [defendant] should not be required to pay for
 9   legal services at the rate Hughes Hubbard would charge to [its
10   corporate clients] . . . but should . . . compensate plaintiff
11   only for what would have been charged by a competent attorney
12   specializing in civil rights litigation”). These factors may
13   justify compensating an attorney at a rate lower than his or her
14   customary rate for a different type of practice, regardless of
15   whether the attorney has agreed to take the case on a pro bono or
16   reduced-fee basis. All we are holding is that in calculating the
17   reasonable hourly rate for particular legal services, a district
18   court should consider all relevant circumstances in concluding
19   what a reasonable client would expect to pay. Thus, attorneys –
20   regardless of whether they are pursuing litigation on behalf of a
21   paying client or a non-paying client – should receive out-of-
22   district fees only if a reasonable, paying client would have
23   retained out-of-district counsel.

                                     -5-
1                                BACKGROUND

2         On April 22, 2003, plaintiffs filed a complaint against

3    Albany County and its Board of Elections (“Albany defendants”)

4    alleging that Albany County’s 2002 legislative redistricting plan

5    violated § 2 of the Voting Rights Act of 1965.   See 42 U.S.C. §

6    1973.   On August 22, 2003, the District Court for the Northern

7    District of New York (Mordue, Judge) enjoined Albany County from

8    conducting its scheduled November 2003 election pending adoption

9    by the Albany County Legislature of a revised redistricting plan.

10        Further proceedings below culminated in the district court’s

11   rejection of plaintiffs’ request that it order Albany County to

12   hold a special election to take the place of the enjoined

13   November 2003 election; plaintiffs then appealed to this court.

14   On January 28, 2004, we vacated the district court’s judgment and

15   ordered the County to hold the special election on March 2, 2004.

16   See Arbor Hill Concerned Citizens Neighborhood Ass’n v. County of

17   Albany, 357 F.3d 260 (2d Cir. 2004) (“Arbor Hill I”).

18        Plaintiffs then moved in this court for an award of

19   attorney’s fees under 42 U.S.C. § 1973l(e).   While we

20   acknowledged the merit of the motion in principle, we remanded

21   for a determination of the appropriate fee.   See Arbor Hill

22   Concerned Citizens Neighborhood Ass’n v. County of Albany, 369

23   F.3d 91 (2d Cir. 2004) (“Arbor Hill II”).   We noted that

24   plaintiffs had not demonstrated that “special circumstances

25   existed” that would justify the use of higher rates than those

                                     -6-
1    prevailing in the Northern District of New York in calculating

2    that fee.   Arbor Hill II, 369 F.3d at 96 (quoting In re “Agent

3    Orange” Prods. Liab. Litig., 818 F.2d 226, 232 (2d Cir. 1987)).

4         During the course of this litigation, three entities have

5    rendered legal services to the plaintiffs: (1) the Albany law

6    firm of DerOhannesian & DerOhannesian (“D&D”), as local counsel;

7    (2) the Washington, D.C.-based non-profit Lawyer’s Committee for

8    Civil Rights Under Law (“LCCRUL”), selected for its voting rights

9    expertise; and (3) the Manhattan law firm of Gibson, Dunn &

10   Crutcher (“Gibson Dunn”), chosen because of the firm’s practice

11   before the Second Circuit and the firm’s “muscle,” specifically,

12   its ability to quickly prepare the appeal on an abbreviated

13   briefing schedule.

14        Gibson Dunn sought in the district court to recoup

15   attorney’s fees calculated on the basis of the hourly rate

16   charged by most attorneys in the Southern District of New York

17   (and the hourly rate usually charged by Gibson Dunn).   The

18   district court denied Gibson Dunn’s request that it adjust the

19   hourly rate it would use to calculate the fees due from that

20   prevalent in the Northern District of New York.   The district

21   court explained, “[i]t is undisputed that plaintiffs did not even

22   attempt to contact attorneys or law firms in the Northern

23   District of New York outside of Albany County insofar as

24   obtaining representation in this matter.”   Noting that “it was

25   plaintiffs[’] obligation to submit factual support for their

                                     -7-
1    claim that there were no [law firms in Syracuse, Binghamton,

2    Utica or Kingston] ready, willing or able to take [their] case,”

3    the district court held that plaintiffs had not adequately

4    justified their request for higher fees.

5         In addition, the district court reduced the fee award

6    proposed by Gibson Dunn in various other respects not relevant to

7    this appeal.   Plaintiffs then timely appealed the fee award,

8    challenging only the district court’s decision to award Gibson

9    Dunn a fee based on the hourly rate commonly charged in the

10   Northern District.

11                                 ANALYSIS

12   I. A Brief History of Attorney’s Fees Awards

13        Courts in the United States have historically applied the

14   “American Rule,” under which each party is to bear its own costs

15   of litigation, unmitigated by any fee-shifting exceptions.    See

16   Alyeska Pipeline Servs. Co. v. Wilderness Soc’y, 421 U.S. 240,

17   247 (1975).    In 1976, however, Congress enacted the Civil Rights

18   Attorney’s Fees Awards Act, which, like the provision of the VRA

19   at issue in this appeal, provided that prevailing parties could

20   recoup “reasonable attorney’s fee[s].”   See 42 U.S.C. § 1988(b);

21   cf. 42 U.S.C. § 1973l(e) (“In any action or proceeding to enforce

22   the voting guarantees of the fourteenth or fifteenth amendment,

23   the court, in its discretion, may allow the prevailing party . .

24   . a reasonable attorney’s fee . . . .”).

25        In the accompanying Senate Report, Congress implicitly

                                      -8-
1    endorsed two existing methods of calculating the “reasonable fee”

2    that were developed in the 1970s by the circuit courts.

3    See Hensley v. Eckerhart, 461 U.S. 424, 429-30 & n.3 (1983).           The

4    first, developed by the Third Circuit, was the “lodestar” method.

5    See Lindy Bros. Builder, Inc. v. Am. Radiator & Standard Sanitary

6    Corp., 487 F.2d 161 (3d Cir. 1973).         The lodestar was the product

7    of the attorney’s usual hourly rate and the number of hours

8    worked.       See id. at 167 (directing district courts to calculate

9    the lodestar using the attorney’s “normal billing rate”); see

10   also City of Burlington v. Dague, 505 U.S. 557, 559 (1992).

11   After determining the lodestar, the district court could adjust

12   it in setting the reasonable fee.         See generally Hensley, 461

13   U.S. at 433 (“The most useful starting point for determining the

14   amount of a reasonable fee is the number of hours reasonably

15   expended on the litigation multiplied by a reasonable hourly

16   rate.       This calculation provides an objective basis on which to

17   make an initial estimate . . . .”) (emphasis added); Lindy, 487

18   F.2d at 168-69.       Thus, the lodestar method involved two steps:

19   (1) the lodestar calculation; and (2) adjustment of the lodestar

20   based on case-specific considerations.

21        The second method, developed by the Fifth Circuit, was for

22   district courts to consider twelve specified factors to establish

23   a reasonable fee.       See Johnson v. Ga. Highway Express, Inc., 488

24   F.2d 714 (5th Cir. 1974),3 abrogated on other grounds by

             3
1           The twelve Johnson factors are: (1) the time and labor
2    required; (2) the novelty and difficulty of the questions; (3)

                                         -9-
1    Blanchard v. Bergeron, 489 U.S. 87, 92-93, 96 (1989) (declining

2    to limit fee award to amount stipulated in attorney-client

3    agreement).   The Johnson method differed from the lodestar method

4    in that it contemplated a one-step inquiry.

5         These two circuits had sought to channel the district

6    court’s discretion in different ways.   The lodestar method was

7    consistent with the law firm practice of accounting for each

8    billable hour.   See Lindy, 487 F.2d at 167 (“[T]he first inquiry

9    of the court should be into the hours spent by the attorneys . .

10   . .”); see also Gisbrecht v. Barnhart, 535 U.S. 789, 800-01

11   (2002) (“As it became standard accounting practice to record

12   hours spent on a client’s matter, attorneys increasingly realized

13   that billing by hours devoted to a case was administratively

14   convenient . . . .”).   When the lodestar did not accurately

15   reflect the market, the district court retained authority to

16   adjust the lodestar to ensure that the fee ultimately awarded was

17   reasonable.   By contrast, under the Johnson method, the “hours

18   claimed or spent on a case” were not “the sole basis for

19   determining a fee.”   Johnson, 488 F.2d at 717.   Rather than

20   depending on market forces, the Johnson method relied on the

 1   the level of skill required to perform the legal service
 2   properly; (4) the preclusion of employment by the attorney due to
 3   acceptance of the case; (5) the attorney’s customary hourly rate;
 4   (6) whether the fee is fixed or contingent; (7) the time
 5   limitations imposed by the client or the circumstances; (8) the
 6   amount involved in the case and the results obtained; (9) the
 7   experience, reputation, and ability of the attorneys; (10) the
 8   “undesirability” of the case; (11) the nature and length of the
 9   professional relationship with the client; and (12) awards in
10   similar cases. Johnson, 488 F.2d at 717-19.

                                    -10-
1    district court’s experience and judgment.   See id. at 718 (“[T]he

2    trial judge’s expertise gained from past experience as a lawyer

3    and his observation from the bench of lawyers at work become

4    highly important”); id. at 720 (discussing the necessary

5    “balancing process”).   Compare id. (“By this discussion we do not

6    attempt to reduce the calculation of a reasonable fee to

7    mathematical precision.”), with Lindy, 487 F.2d at 167.

8         In theory, therefore, a district court that adopted the

9    lodestar method was expected to consider fewer variables than a

10   district court utilizing the Johnson method.   In practice,

11   however, both considered substantially the same set of variables

12   –- just at a different point in the fee-calculation process.     A

13   district court using the lodestar method would set the lodestar

14   and then consider whether, in light of variables such as the

15   difficulty of the case, it should adjust the lodestar before

16   settling on the reasonable fee it was ultimately inclined to

17   award.   See, e.g., Silberman v. Bogle, 683 F.2d 62, 64 (3d Cir.

18   1982); Baughman v. Wilson Freight Forwarding Co., 583 F.2d 1208,

19   1217-18 (3d Cir. 1978) (permitting the district court to multiply

20   the lodestar by a “contingency factor” and accepting, in theory,

21   that obtaining an exceptional result might justify a further

22   upward departure from the lodestar).   By contrast, a district

23   court employing the Johnson method would consider factors, such

24   as the difficulty of the case, earlier in the fee-calculation

25   process by weighing them in setting its tentative reasonable fee,

                                    -11-
1    from which there would seldom be a need to depart.   See, e.g., In

2    re First Colonial Corp. of Am., 544 F.2d 1291, 1299-1300 (5th

3    Cir. 1977) (outlining a process whereby first, the attorney

4    seeking fees would document the hours devoted to the case;

5    second, the district court would consider the Johnson factors and

6    set a reasonable hourly rate; and third, the district court would

7    explain how it balanced the Johnson factors to arrive at the

8    reasonable hourly rate).

9         The Supreme Court adopted the lodestar method in principle,

10   see Hensley, 461 U.S. at 433; Blum v. Stenson, 465 U.S. 886

11   (1984), without, however, fully abandoning the Johnson method.

12   Rather than using the attorney’s own billing rate to calculate

13   the lodestar and then examining the lodestar in light of case-

14   specific variables to ensure that it was in fact a reasonable

15   fee, as the Third Circuit had suggested, the Supreme Court

16   instructed district courts to use a reasonable hourly rate –-

17   which it directed that district courts set in light of the

18   Johnson factors –- in calculating what it continued to refer to

19   as the lodestar.   See Hensley, 461 U.S. at 434 n.9 (“The district

20   court also may consider other factors identified in [Johnson]

21   though it should note that many of these factors usually are

22   subsumed within the initial calculation of hours reasonably

23   expended at a reasonable hourly rate.”) (citation omitted)

24   (emphasis added); Blum, 465 U.S. at 898-900.   The Supreme Court

25   collapsed what had once been a two-step inquiry into a single-

                                    -12-
1    step inquiry; it shifted district courts’ focus from the

2    reasonableness of the lodestar to the reasonableness of the

3    hourly rate used in calculating the lodestar, which in turn

4    became the de facto reasonable fee.

5         But the Supreme Court’s emphasis on the Third Circuit’s

6    economic model, see, e.g., Missouri v. Jenkins, 491 U.S. 274, 283

7    (1989) (“Our cases have repeatedly stressed that attorney’s fees

8    . . . are to be based on market rates for the services

9    rendered.”), and its simultaneous invocation of the equitable

10   Johnson factors at an early stage of the fee-calculation process,

11   proved to be in tension, see Blum, 465 U.S. at 895 n.11 (“We

12   recognize, of course, that determining an appropriate ‘market

13   rate’ for the services of a lawyer is inherently difficult . . .

14   [since m]arket prices . . . are determined by supply and

15   demand.”).   While the Third Circuit had expected district courts

16   to correct for market dysfunction, the Supreme Court now asked

17   district court judges to hypothesize that market on the basis of

18   their experience as lawyers within their districts and on the

19   basis of affidavits provided by the parties.   Generally speaking,

20   the rates an attorney routinely charges are those that the market

21   will bear; yet the Supreme Court required that the district

22   courts conjure a different, “reasonable” hourly rate.

23        After Hensley and Blum, circuit courts struggled with the

24   nettlesome interplay between the lodestar method and the Johnson

25   method.   Compare Rutherford v. Harris County, Tex., 197 F.3d 173,

                                    -13-
1    192 (5th Cir. 1999) (“To decide an appropriate attorney’s fee

2    award, the district court was first required to calculate a

3    lodestar fee depending on the circumstances of the case and the

4    Johnson factors.   The court was next obligated to consider

5    whether the lodestar amount should be adjusted upward or

6    downward, depending on the . . . Johnson factors.”) (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   Hensley and Blum, it has both (1) suggested that district courts

19   should use the Johnson factors 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   .”); Pierce v. Underwood, 487 U.S. 552, 582-83 (1988) (Brennan,

25   J., concurring) (suggesting that factors might exist “that would

                                      -14-
1    justify an enhancement of the lodestar”), and (2) reiterated its

2    holding in Hensley and Blum that “many of the Johnson factors

3    ‘are subsumed within the initial calculation.’” Penn. v. Del.

4    Valley Citizens’ Council for Clean Air, 478 U.S. 546, 564 (1986).

5         Our court has done little to resolve this confusion.

6    Compare Kassim v. City of Schenectady, 415 F.3d 246, 255-56 (2d

7    Cir. 2005) (affirming the district court’s authority to “reduce

8    the fee awarded to a prevailing plaintiff below the lodestar by

9    reason of the plaintiff’s ‘partial or limited success’”)

10   (emphasis added), with Luciano v. Olsten Corp., 109 F.3d 111, 116

11   (2d Cir. 1997) (“The product of the number of reasonable hours

12   times a reasonable hourly rate, however, does not end the

13   inquiry.   There remain other considerations, based on the facts

14   of the particular case, that may lead the district court to

15   ultimately make an adjustment to the hourly structure.”)

16   (internal citations omitted), and McDonald v. Pension Plan of the

17   NYSA-ILA Pension Trust Fund, 450 F.3d 91, 97 (2d Cir. 2006)

18   (lodestar calculated on the basis of “prevailing rate

19   [specifically] for ERISA practitioners in this Circuit”)

20   (emphasis added), and Chambless v. Masters, Mates & Pilots

21   Pension Plan, 885 F.2d 1053, 1058 (2d Cir. 1989) (suggesting, in

22   determining the lodestar, that “smaller firms may be subject to

23   their own prevailing market rate”).

24        The net result of the fee-setting jurisprudence here and in

25   the Supreme Court is that the district courts must engage in an

                                    -15-
1    equitable inquiry of varying methodology while making a pretense

2    of mathematical precision.   See Report of the Third Circuit Task

3    Force, Court Awarded Attorney Fees, 108 F.R.D. 237, 247 (1985)

4    (“The Lindy process creates a sense of mathematical precision

5    that is unwarranted . . . .”).    The “lodestar” is no longer a

6    lodestar in the true sense of the word –- “a star that leads,”

7    Webster’s Third International Dictionary 1329 (1981).    Nor do

8    courts use it in the way the term was first used by the Third

9    Circuit –- as a base amount that is susceptible of ready

10   adjustment; rather, circuit court deference to the district

11   court’s estimate of a “reasonable” hourly rate is a “lodestar”

12   only in the sense that it is a guiding jurisprudential principle,

13   see Dague, 505 U.S. at 562 (“The ‘lodestar’ figure has, as its

14   name suggests, become the guiding light of our fee-shifting

15   jurisprudence.”).   What the district courts in this circuit

16   produce is in effect not a lodestar as originally conceived, but

17   rather a “presumptively reasonable fee.”    See id. (holding that

18   the fee applicant bears the “burden of showing that ‘. . . an

19   adjustment is necessary to the determination of a reasonable

20   fee’”).   The focus of the district courts is no longer on

21   calculating a reasonable fee, but rather on setting a reasonable

22   hourly rate, taking account of all case-specific variables.

23        The district court’s opinion, including the report and

24   recommendation of Magistrate Judge David R. Homer, with which the

25   district court agreed after de novo review, reflects the general

                                      -16-
1    confusion surrounding the lodestar calculation.    In places, the

2    district court appears to envision a two-step lodestar-

3    calculation process; yet elsewhere it seems to contemplate

4    undertaking the calculation in one step.   Likewise, at times, the

5    district court emphasizes its role in approximating the workings

6    of the market, but it also suggests some difference between

7    “rates . . . paid by private retained clients . . . [and rates]

8    ordered by courts.”

9         The meaning of the term “lodestar” has shifted over time,

10   and its value as a metaphor has deteriorated to the point of

11   unhelpfulness.   This opinion abandons its use.4   We think the

12   better course –- and the one most consistent with attorney’s fees

13   jurisprudence –- is for the district court, in exercising its

14   considerable discretion, to bear in mind all of the case-specific

15   variables that we and other courts have identified as relevant to

16   the reasonableness of attorney’s fees in setting a reasonable

17   hourly rate.   The reasonable hourly rate is the rate a paying

18   client would be willing to pay.   In determining what rate a

19   paying client would be willing to pay, the district court should

20   consider, among others, the Johnson factors; it should also bear

21   in mind that a reasonable, paying client wishes to spend the

22   minimum necessary to litigate the case effectively.    The district

23   court should also consider that such an individual might be able

          4
1           While we do not purport to require future panels of this
2    court to abandon the term –- it is too well entrenched –- this
3    panel believes that it is a term whose time has come.

                                    -17-
1    to negotiate with his or her attorneys, using their desire to

2    obtain the reputational benefits that might accrue from being

3    associated with the case.   The district court should then use

4    that reasonable hourly rate to calculate what can properly be

5    termed the “presumptively reasonable fee.”

6    II. The Forum Rule

7         We turn now to the particular fee-calculation rule at issue

8    in this case.   It was against the muddled legal landscape we have

9    just described that the Second Circuit promulgated what we will

10   call the “forum rule.”   The Supreme Court directed that district

11   courts should use the “prevailing [hourly rate] in the community”

12   in calculating the lodestar –- or what we are now calling the

13   presumptively reasonable fee.    After Blum, we explained that the

14   “community” for purposes of this calculation is the district

15   where the district court sits.    See Polk v. N.Y. State Dep’t of

16   Corr. Servs., 722 F.2d 23, 25 (2d Cir. 1983).

17        However, district courts –- and indeed our court –- quickly

18   succumbed to the general confusion surrounding the difference

19   between a “lodestar” and a reasonable hourly rate.    Sometimes,

20   they considered the variation between indistrict and out-of-

21   district rates in setting the hourly rate (which they then used

22   to calculate the presumptively reasonable fee); but sometimes,

23   they considered that variation only in deciding whether to adjust

24   the presumptively reasonable fee after they had arrived at it (on

25   the basis of in-district rates).    Compare Polk, 722 F.2d at 25

                                      -18-
1    (“[T]he rate prevailing in the appropriate community is only one

2    of many factors bearing on determination of a fee award.”), with

3    Arbor Hill II, 369 F.3d at 96-97 (intimating that a district

4    court should permit plaintiffs to recover more than a fee

5    calculated on the basis of the hourly rate usually charged by

6    attorneys in the forum district only if plaintiffs could “show[]

7    . . . that the case required special expertise beyond the

8    competence of [forum district] law firms”).5

          5
 1          Attorneys have had trouble understanding the strict forum
 2   rule. For instance, in this case, Michael C. Lynch, counsel to
 3   the Albany defendants, explained in an affidavit filed with this
 4   court in Arbor Hill II that the “‘relevant community’ for
 5   purposes of . . . [setting the hourly rate] is the Albany,
 6   Capital District region in the Northern District of New York.”
 7   See also Farbotko v. Clinton County of New York, 433 F.3d 204,
 8   209 (2d Cir. 2005) (“[T]he prevailing market rate for attorneys
 9   in Syracuse and Albany . . . may not accurately reflect the rate
10   prevailing across the entire Northern District.”). The district
11   court, by contrast, considered the “relevant community” to be the
12   entire Northern District of New York.
13        Confusion surrounding the forum rule is endemic, and not
14   unique to our circuit. Other circuits, too, have debated whether
15   to consider out-of-district rates in setting the reasonable
16   hourly rate or in setting the reasonable fee (after arriving at a
17   presumptively reasonable fee using in-district rates). Compare
18   Shakopee Mdewakanton Sioux Cmty. v. City of Prior Lake, Minn.,
19   771 F.2d 1153, 1160 (8th Cir. 1985) (noting that the district
20   court should first “compute[] the base ‘lodestar’ figure by
21   multiply[ing] the number of hours reasonably expended times the
22   lawyer’s regular hourly rate” and only then “look also to the
23   ordinary fee for similar work in the community”) (internal
24   quotation marks omitted), with Kan. Pub. Employees Ret. Sys. v.
25   Reimer & Koger Assocs., 165 F.3d 627, 631 (8th Cir. 1999)
26   (readily upholding use of out-of-district rates in calculating
27   the presumptively reasonable fee). And those that have adopted a
28   comparatively strict forum rule have struggled to apply it. See,
29   e.g., Gates v. Deukmejian, 987 F.2d 1392, 1405 n.14 (9th Cir.
30   1992) (discussing whether to use Sacramento or San Francisco
31   hourly rates); McDonald v. Armontrout, 860 F.2d 1456, 1460 n.6
32   (8th Cir. 1988) (“We are not at all convinced that central
33   Missouri is the relevant ‘community’ . . . . [T]he argument for
34   an expansive reading of ‘community’ is particularly strong in a

                                   -19-
1         We now clarify that a district court may use an out-of-

2    district hourly rate –- or some rate in between the out-of-

3    district rate sought and the rates charged by local attorneys –-

4    in calculating the presumptively reasonable fee if it is clear

5    that a reasonable, paying client would have paid those higher

6    rates.   We presume, however, that a reasonable, paying client

7    would in most cases hire counsel from within his district, or at

8    least counsel whose rates are consistent with those charged

9    locally.   This presumption may be rebutted -- albeit only in the

10   unusual case -- if the party wishing the district court to use a

11   higher rate demonstrates that his or her retention of an out-of-

12   district attorney was reasonable under the circumstances as they

13   would be reckoned by a client paying the attorney’s bill.

14        We believe that the district court’s assessment of the

15   reasonableness of a prevailing party’s decision to retain out-of-

16   district counsel is best considered in setting the hourly rate –-

17   rather than in deciding whether to adjust a presumptively

18   reasonable fee –- for three reasons.   First, our holding comports

19   with the holdings of several sister circuits and with the Supreme

 1   case such as this, since Jefferson City is the capitol of the
 2   state and lawyers from throughout the state have business
 3   there.”). Compare Grendel’s Den, Inc. v. Larsen, 749 F.2d 945,
 4   955 (1st Cir. 1984) (using county–based version of the forum
 5   rule), with Cunningham v. City of McKeesport, 753 F.2d 262, 267
 6   (3d Cir. 1985) (location of attorney’s home office is the
 7   relevant community), and Davis County Solid Waste Mgmt. & Energy
 8   Recovery Special Serv. Dist. v. E.P.A., 169 F.3d 755, 759 (D.C.
 9   Cir. 1999) (announcing an exception to the forum rule to govern
10   cases where “the home market is substantially less costly and the
11   site of the bulk of the legal work”).

                                    -20-
1    Court’s focus on reasonable hourly rates rather than reasonable

2    fees.   See, e.g., Blum, 465 U.S. at 895 (emphasizing the

3    importance of using the “market rate” in calculating attorney’s

4    fees); Rum Creek Coal Sales, Inc. v. Caperton, 31 F.3d 169, 175

5    (4th Cir. 1994) (“In circumstances where it is reasonable to

6    retain attorneys from other communities . . . the rates in those

7    communities may also be considered.”); Maceira v. Pagan, 698 F.2d

8    38, 40 (1st Cir. 1982) (“If a local attorney could perform the

9    service, a well-informed private client, paying his own fees,

10   would probably hire local counsel at the local, average rate.”);

11   Chrapliwy v. Uniroyal, Inc., 670 F.2d 760, 769 (7th Cir. 1982)

12   (querying whether “the choice of counsel was improvident”).

13        Second, in Pierce v. Underwood, a case interpreting the

14   attorney’s fees provision of the Equal Access to Justice Act

15   (“EAJA”), the Supreme Court hinted that in the “broad spectrum of

16   litigation,” the difficulty of obtaining local counsel competent

17   to prosecute a particular case is “little more than [a] routine

18   reason[] why market rates are what they are,” 487 U.S. 552, 573

19   (1988) (emphasis added).   The Supreme Court distinguished that

20   “broad spectrum of litigation” from the attorney’s fees provision

21   of the EAJA, which stipulates that fees “shall be based upon

22   prevailing market rates” but “shall not be awarded in excess of

23   $125 per hour unless the court determines that . . . the limited

24   availability of qualified attorneys for the proceedings involved

25   justifies a higher fee.”   28 U.S.C. § 2412(d)(2)(A)(ii); see

                                    -21-
1    Pierce, 487 U.S. at 571-72; see generally Healey v. Rovner, No.

2    06-0525, Slip. Op. at *10 (2d Cir. Apr. 17, 2007).

3           Third and finally, our holding honors the Supreme Court’s

4    emphasis on the need to use the approximate market rate for an

5    attorney’s services in calculating the presumptively reasonable

6    fee.    See Jenkins, 491 U.S. at 283.   The legal communities of

7    today are increasingly interconnected.     To define markets simply

8    by geography is too simplistic.    Sometimes, legal markets may be

9    defined by practice area.    See A.R. ex rel. R.V. v. New York City

10   Dep’t of Educ., 407 F.3d 65, 80 (2d Cir. 2005) (“So long as the

11   law provides for or permits fee awards based on geographic

12   markets for services, a lawyer may be paid at different rates for

13   otherwise indistinguishable services.”).     On the other hand, many

14   cases (including many voting rights cases) are intrinsically

15   local, and the relevant legal market may be coextensive with or

16   smaller than the district itself.      By asking what a reasonable,

17   paying client would do, a district court best approximates the

18   workings of today’s market for legal services.     See Malthur v.

19   Bd. of Trs. of S. Ill. Univ., 317 F.3d 738, 744 (7th Cir. 2003)

20   (“The realities of the legal community today mean that though

21   some attorney probably could have represented [the plaintiff],

22   one factor or another prevented them from taking the case when he

23   needed a lawyer.”).    Not incidentally, a reasonable, paying

24   client might consider whether a lawyer is willing to offer his

25   services in whole or in part pro bono, or to promote the lawyer’s

                                     -22-
1    own reputational or societal goals.   Indeed, by focusing on the

2    hourly rate at which a client who wished to pay no more than

3    necessary would be willing to compensate his attorney, the

4    district court can enforce market discipline, approximating the

5    negotiation that might ensue were the client actually required to

6    pay the attorney’s fees.

7         In occasionally permitting a deviation from forum rates in

8    setting the rate that will yield the presumptively reasonable

9    fee, we have in mind no substantial change in circuit law; where

10   circumstances have warranted it, we have not insisted on strict

11   adherence to the forum rule.   In Polk, we approved the use of an

12   out-of-district hourly rate.   722 F.2d at 25 (considering whether

13   “[c]ounsel might . . . have expected plaintiff’s claim to be

14   adjudicated in the Southern District”).   In Agent Orange,

15   although we emphasized that district courts should generally use

16   “the hourly rates employed in the district in which the reviewing

17   court sits” in calculating the presumptively reasonable fee, 818

18   F.2d at 232, we again upheld a district court’s decision to use

19   different rates.6   And since Polk and Agent Orange, we have urged

          6
 1          Of the three cases cited in Agent Orange, two have since
 2   been called into question to the extent they purport to require
 3   strict application of the forum rule. Compare Chrapliwy, 670
 4   F.2d at 768-69, with People Who Care v. Rockford Bd. of Educ.,
 5   Sch. Dist. No. 205, 90 F.3d 1307, 1310 (7th Cir. 1996) (“The
 6   attorney’s actual billing rate for comparable work is
 7   ‘presumptively appropriate’ to use as the market rate.”); compare
 8   Avalon Cinema Corp. v. Thompson, 689 F.2d 137, 139-40 (8th Cir.
 9   1982) (en banc), with TCBY Sys., Inc. v. RSP Co., 33 F.3d 925,
10   931 (8th Cir. 1994) (“[Defendants] argue they should be awarded
11   the Minneapolis rate because they reasonably chose Minneapolis

                                    -23-
1    district courts where appropriate to employ out-of-district rates

2    in calculating the fee due.   See, e.g., New York City Dep’t of

3    Educ., 407 F.3d at 81 & n.17 (“[T]here is good reason for a

4    district court not be wed to the rates in its own community.     If

5    they are lower than those in another district, skilled lawyers

6    from such other district will be dissuaded from taking

7    meritorious cases in the district with lower rates.”).

8         In both Polk and Agent Orange, the touchstone of our

9    analysis was the belief that district courts should award fees

10   just high enough “to attract competent counsel,” Lewis v.

11   Coughlin, 801 F.2d 570, 576 (2d Cir. 1986).   See, e.g., Agent

12   Orange, 818 F.2d at 233 (“Undercompensation could deny counsel

13   their right to fair and just fees; overcompensation would not be

14   consistent with the need to prevent windfalls.”);7 cf. Crescent

15   Publ’g Group, Inc. v. Playboy Enters., Inc., 246 F.3d 142, 151

16   (2d Cir. 2001) (explaining that an attorney-client agreement may

1    counsel after TCBY sued them. The [defendants] point out that
2    they are Minnesota residents who were forced to litigate the case
3    in Arkansas under the agreement’s forum selection clause, and
4    they were unfamiliar with Arkansas counsel . . . . [T]he district
5    court could have properly based the fee award on the higher
6    Minneapolis rates . . . .”).
          7
1           Indeed, Polk said that the panel was simply applying
2    established law. And when we decided Polk, circuit precedent was
3    clear that district courts had considerable flexibility in
4    setting the relevant legal community for purposes of determining
5    the hourly rate to be used in calculating the presumptively
6    reasonable fee. See, e.g., Cohen v. West Haven Bd. of Police
7    Comm’rs, 638 F.2d 496, 506 (2d Cir. 1980) (holding that the
8    district court should have looked to prevailing rates “in the
9    area”).

                                    -24-
1    provide compelling evidence of the “prevailing market rate”).8

2    We adhere to this touchstone, but we would not be true to it by

3    insisting on an overly strict application of the forum rule.

4    Rather, to reiterate, a district court should consider the rate a

5    reasonable, paying client would pay, and use that rate to

6    calculate the presumptively reasonable fee.

7    III. The District Court’s Decision

8         For the foregoing reasons, we agree with plaintiffs that the

9    district court may have applied the forum rule too strictly.

10   They suggest that the district court calculated the presumptively

11   reasonable fee (on the basis of in-district rates) and then

12   queried whether the plaintiffs had shown sufficient cause to

13   rebut the presumption that it was, in fact, the ultimate

14   reasonable fee.

15        However, we find no error in the district court’s fee award,

16   even when evaluated under the analysis we use.   We are confident

17   that a reasonable, paying client would have known that law firms

18   undertaking representation such as that of plaintiffs often

          8
 1          Were a strict forum rule the settled law of this circuit,
 2   we could not have used a lower hourly rate than the hourly rate
 3   prevailing in the district where the district court sat to
 4   calculate the presumptively reasonable fee in Crescent
 5   Publishing. See also Sands v. Runyon, 28 F.3d 1323, 1333-34 (2d
 6   Cir. 1994) (permitting district court to consider retainer
 7   agreement in setting hourly rate below prevailing hourly rate in
 8   the district); cf. Pinkham v. Camex, Inc., 84 F.3d 292, 294 (8th
 9   Cir. 1996). But see Reiter v. MTA New York City Transit Auth.,
10   457 F.3d 224, 233 (2d Cir. 2006) (vacating district court
11   judgment because district court used hourly rate set forth in
12   retainer agreement without considering prevailing Southern
13   District rates).

                                   -25-
1    obtain considerable non-monetary returns — in experience,

2    reputation, or achievement of the attorneys’ own interests and

3    agendas — that might cause them to accept such representation

4    despite a prevailing hourly rate that is lower than the law

5    firm’s customary billing rates, and that the client would have

6    insisted on paying his attorneys at a rate no higher than that

7    charged by Albany attorneys (and there is no cross-appeal).

8         Moreover, the considerable deference that we owe to a

9    district court’s assessment of the Johnson and other factors, see

10   Farbotko, 433 F.3d at 210 (“The district court is in closer

11   proximity to and has greater experience with the relevant

12   community whose prevailing market rate it is determining.”),

13   counsels against remanding this case to the district court for

14   further, likely unnecessary, proceedings.

15                              CONCLUSION

16        For the reasons set forth above, we AFFIRM the judgment of

17   the district court.

                                   -26-