Court Opinion

ID: 2959860
Source: CourtListenerOpinion
Date Created: 2015-09-17 17:35:30.32082+00
Date Added: 2024-06-11T11:42:14.809837
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: July 12, 2007)
 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.

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

                                          -1-
1         AFFIRMED.

 2                                  MITCHELL A. KARLAN (Mark E. Bini
 3                                  and Michelle Craven, on the brief),
 4                                  Gibson, Dunn & Crutcher, LLP, New
 5                                  York, New York, for Plaintiffs-
 6                                  Appellants.
 7
 8                                  THOMAS J. O’CONNOR, Napierski,
 9                                  Vandenburgh & Napierski, LLP,
10                                  Albany, New York, for Defendants-
11                                  Appellees.
12
13                            AMENDED OPINION1

14   JOHN M. WALKER, JR., Circuit Judge:

15        In this appeal from the district court’s disposition of

16   their motion for an award of attorney’s fees, plaintiffs-

17   appellants (“plaintiffs”), who prevailed in a suit brought under

18   the Voting Rights Act of 1965 (“VRA”), seek a recalculation of

19   the amount that they may recoup.   The fee –- historically known

20   as the “lodestar” –- to which their attorneys are presumptively

21   entitled is the product of hours worked and an hourly rate.

22   Plaintiffs argue that the district court applied an unnecessarily

23   strict “forum rule”:   The district court, they contend, required

24   them to show extraordinary special circumstances before it would

25   use in its “lodestar” calculation an hourly rate greater than the

26   hourly rate charged by attorneys in the district where the

27   district court sits.

          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         We agree that the district court may have applied the forum

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

3    proper application in this circuit:     While the district court

4    should generally use the prevailing hourly rate in the district

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

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

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

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

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

10   account for other case-specific variables.

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

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

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

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

15   that the district court consider, in setting the reasonable

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

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

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

19   calculation.   A plaintiff bringing suit under the Voting Rights

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

21   has little incentive to negotiate a rate structure with his

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

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

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

                                     -3-
1    (unfortunately) bears the burden of disciplining the market,

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

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

4    effectively.

5         Bearing these background principles in mind, the district

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

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

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

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

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

11   effectively (taking account of the resources being marshaled on

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

13   timing demands of the case, whether the attorney had an interest

14   (independent of that of his client) in achieving the ends of the

15   litigation or initiated the representation himself, whether the

16   attorney was initially acting pro bono (such that a client might

17   be aware that the attorney expected low or non-existent

18   remuneration), and other returns (such as reputation, etc.) the

19   attorney expected from the 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. We hold only that in calculating
 5   the reasonable hourly rate for particular legal services, a
 6   district court should consider what a reasonable, paying client
 7   would expect to pay. See Pastre v. Weber, 800 F. Supp. 1120,
 8   1125 (S.D.N.Y. 1991) (finding force to the “argument that
 9   [defendant] should not be required to pay for legal services at
10   the rate Hughes Hubbard would charge to [its corporate clients] .

                                    -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.

14                               BACKGROUND

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

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

17   alleging that Albany County’s 2002 legislative redistricting plan

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

19   1973.   On August 22, 2003, the District Court for the Northern

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

1    . . but should . . . compensate plaintiff only for what would
2    have been charged by a competent attorney specializing in civil
3    rights litigation”). Attorneys -- regardless of whether they are
4    pursuing litigation on behalf of a paying client or a non-paying
5    client -- should receive out-of-district fees only if a
6    reasonable, paying client would have retained out-of-district
7    counsel.

                                     -5-
1    conducting its scheduled November 2003 election pending adoption

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

3         Further proceedings below culminated in the district court’s

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

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

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

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

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

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

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

11        Plaintiffs then moved in this court for an award of

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

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

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

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

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

17   plaintiffs had not demonstrated that “special circumstances

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

19   prevailing in the Northern District of New York in calculating

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

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

22        During the course of this litigation, three entities have

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

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

                                     -6-
1    (2) the Washington, D.C.-based non-profit Lawyer’s Committee for

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

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

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

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

6    its ability to quickly prepare the appeal on an abbreviated

7    briefing schedule.

8         Gibson Dunn sought in the district court to recoup

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

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

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

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

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

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

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

16   attempt to contact attorneys or law firms in the Northern

17   District of New York outside of Albany County insofar as

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

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

20   claim that there were no [law firms in Syracuse, Binghamton,

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

22   the district court held that plaintiffs had not adequately

23   justified their request for higher fees.

24        In addition, the district court reduced the fee award

                                    -7-
1    proposed by Gibson Dunn in various other respects not relevant to

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

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

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

5    Northern District.

6                                  ANALYSIS

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

8         Courts in the United States have historically applied the

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

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

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

12   247 (1975).    In 1976, however, Congress enacted the Civil Rights

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

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

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

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

17   the voting guarantees of the fourteenth or fifteenth amendment,

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

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

20        In the accompanying Senate Report, Congress implicitly

21   endorsed two existing methods of calculating the “reasonable fee”

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

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

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

                                      -8-
1    See Lindy Bros. Builder, Inc. v. Am. Radiator & Standard Sanitary

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

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

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

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

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

7    After determining the lodestar, the district court could adjust

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

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

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

11   expended on the litigation multiplied by a reasonable hourly

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

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

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

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

16   based on case-specific considerations.

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

18   district courts to consider twelve specified factors to establish

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

20   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)
3    the level of skill required to perform the legal service
4    properly; (4) the preclusion of employment by the attorney due to
5    acceptance of the case; (5) the attorney’s customary hourly rate;
6    (6) whether the fee is fixed or contingent; (7) the time
7    limitations imposed by the client or the circumstances; (8) the
8    amount involved in the case and the results obtained; (9) the

                                      -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

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

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

1    experience, reputation, and ability of the attorneys; (10) the
2    “undesirability” of the case; (11) the nature and length of the
3    professional relationship with the client; and (12) awards in
4    similar cases. Johnson, 488 F.2d at 717-19.

                                      -10-
1    and his observation from the bench of lawyers at work become

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

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

4    attempt to reduce the calculation of a reasonable fee to

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

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

7    lodestar method was expected to consider fewer variables than a

8    district court utilizing the Johnson method.   In practice,

9    however, both considered substantially the same set of variables

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

11   district court using the lodestar method would set the lodestar

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

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

14   settling on the reasonable fee it was ultimately inclined to

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

16   1982); Baughman v. Wilson Freight Forwarding Co., 583 F.2d 1208,

17   1217-18 (3d Cir. 1978) (permitting the district court to multiply

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

19   that obtaining an exceptional result might justify a further

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

21   court employing the Johnson method would consider factors, such

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

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

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

                                    -11-
1    re First Colonial Corp. of Am., 544 F.2d 1291, 1299-1300 (5th

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

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

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

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

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

7    reasonable hourly rate).

8         The Supreme Court adopted the lodestar method in principle,

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

10   (1984), without, however, fully abandoning the Johnson method.

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

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

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

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

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

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

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

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

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

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

21   subsumed within the initial calculation of hours reasonably

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

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

24   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

                                    -13-
1    method.   Compare Rutherford v. Harris County, Tex., 197 F.3d 173,

2    192 (5th Cir. 1999) (“To decide an appropriate attorney’s fee

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

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

5    Johnson factors.   The court was next obligated to consider

6    whether the lodestar amount should be adjusted upward or

7    downward, depending on the . . . Johnson factors.”) (emphasis

8    added), with Murray v. Weinberger, 741 F.2d 1423, 1430 (D.C. Cir.

9    1984)(“[T]he reasonable hourly rate which is incorporated into

10   the lodestar figure generally reflects the reputation and ability

11   of the attorney, the attorney’s experience, and the level of

12   skill required for the particular case.”), and Bebchick v. Wash.

13   Area Metro. Transit Comm’n, 805 F.2d 396, 404 (D.C. Cir. 1986)

14   (“Of course, ‘the actual rate that applicant’s counsel can

15   command on the market is itself highly relevant proof of the

16   prevailing community rate.’”).

17        And the Supreme Court has not yet fully resolved the

18   relationship between the two methods.   In cases decided after

19   Hensley and Blum, it has both (1) suggested that district courts

20   should use the Johnson factors to adjust the lodestar, see, e.g.,

21   Blanchard, 489 U.S. at 94 (stating that the district court should

22   arrive at an initial estimate and then “adjust this lodestar

23   calculation by other factors”); see also id. (“The Johnson

24   factors may be relevant in adjusting the lodestar amount . . .

                                      -14-
1    .”); Pierce v. Underwood, 487 U.S. 552, 582-83 (1988) (Brennan,

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

3    justify an enhancement of the lodestar”), and (2) reiterated its

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

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

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

7         Our court has done little to resolve this confusion.

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

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

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

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

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

13   (2d Cir. 1997) (“The product of the number of reasonable hours

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

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

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

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

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

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

20   (lodestar calculated on the basis of “prevailing rate

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

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

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

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

                                    -15-
1    their own prevailing market rate”).

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

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

4    equitable inquiry of varying methodology while making a pretense

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

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

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

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

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

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

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

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

13   adjustment; rather, circuit court deference to the district

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

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

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

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

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

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

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

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

22   adjustment is necessary to the determination of a reasonable

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

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

                                      -16-
1    hourly rate, taking account of all case-specific variables.

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

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

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

5    confusion surrounding the lodestar calculation.    In places, the

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

7    calculation process; yet elsewhere it seems to contemplate

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

9    district court emphasizes its role in approximating the workings

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

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

12   ordered by courts.”

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

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

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

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

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

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

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

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

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

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

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

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

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

4    minimum necessary to litigate the case effectively.    The district

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

6    to negotiate with his or her attorneys, using their desire to

7    obtain the reputational benefits that might accrue from being

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

9    that reasonable hourly rate to calculate what can properly be

10   termed the “presumptively reasonable fee.”

11   II. The Forum Rule

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

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

14   just described that the Second Circuit promulgated what we will

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

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

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

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

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

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

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

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

23   succumbed to the general confusion surrounding the difference

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

                                      -18-
1    they considered the variation between indistrict and out-of-

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

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

4    they considered that variation only in deciding whether to adjust

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

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

7    (“[T]he rate prevailing in the appropriate community is only one

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

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

10   court should permit plaintiffs to recover more than a fee

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

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

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

14   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

                                   -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-

 1   court should first “compute[] the base ‘lodestar’ figure by
 2   multiply[ing] the number of hours reasonably expended times the
 3   lawyer’s regular hourly rate” and only then “look also to the
 4   ordinary fee for similar work in the community”) (internal
 5   quotation marks omitted), with Kan. Pub. Employees Ret. Sys. v.
 6   Reimer & Koger Assocs., 165 F.3d 627, 631 (8th Cir. 1999)
 7   (readily upholding use of out-of-district rates in calculating
 8   the presumptively reasonable fee). And those that have adopted a
 9   comparatively strict forum rule have struggled to apply it. See,
10   e.g., Gates v. Deukmejian, 987 F.2d 1392, 1405 n.14 (9th Cir.
11   1992) (discussing whether to use Sacramento or San Francisco
12   hourly rates); McDonald v. Armontrout, 860 F.2d 1456, 1460 n.6
13   (8th Cir. 1988) (“We are not at all convinced that central
14   Missouri is the relevant ‘community’ . . . . [T]he argument for
15   an expansive reading of ‘community’ is particularly strong in a
16   case such as this, since Jefferson City is the capitol of the
17   state and lawyers from throughout the state have business
18   there.”). Compare Grendel’s Den, Inc. v. Larsen, 749 F.2d 945,
19   955 (1st Cir. 1984) (using county–based version of the forum
20   rule), with Cunningham v. City of McKeesport, 753 F.2d 262, 267
21   (3d Cir. 1985) (location of attorney’s home office is the
22   relevant community), and Davis County Solid Waste Mgmt. & Energy
23   Recovery Special Serv. Dist. v. E.P.A., 169 F.3d 755, 759 (D.C.
24   Cir. 1999) (announcing an exception to the forum rule to govern
25   cases where “the home market is substantially less costly and the
26   site of the bulk of the legal work”).

                                    -20-
1    district attorney was reasonable under the circumstances as they

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

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

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

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

6    rather than in deciding whether to adjust a presumptively

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

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

9    Court’s focus on reasonable hourly rates rather than reasonable

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

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

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

13   (4th Cir. 1994) (“In circumstances where it is reasonable to

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

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

16   38, 40 (1st Cir. 1982) (“If a local attorney could perform the

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

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

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

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

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

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

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

24   litigation,” the difficulty of obtaining local counsel competent

                                    -21-
1    to prosecute a particular case is “little more than [a] routine

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

3    (1988) (emphasis added).    The Supreme Court distinguished that

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

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

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

7    $125 per hour unless the court determines that . . . the limited

8    availability of qualified attorneys for the proceedings involved

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

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

11   06-0525, Slip. Op. at *10 (2d Cir. Apr. 17, 2007).

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

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

14   attorney’s services in calculating the presumptively reasonable

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

16   today are increasingly interconnected.    To define markets simply

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

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

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

20   law provides for or permits fee awards based on geographic

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

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

23   cases (including many voting rights cases) are intrinsically

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

                                     -22-
1    smaller than the district itself.     By asking what a reasonable,

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

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

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

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

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

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

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

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

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

11   own reputational or societal goals.    Indeed, by focusing on the

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

13   necessary would be willing to compensate his attorney, the

14   district court can enforce market discipline, approximating the

15   negotiation that might ensue were the client actually required to

16   pay the attorney’s fees.

17        In occasionally permitting a deviation from forum rates in

18   setting the rate that will yield the presumptively reasonable

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

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

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

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

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

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

                                    -23-
1    although we emphasized that district courts should generally use

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

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

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

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

6    district courts where appropriate to employ out-of-district rates

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

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

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

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

11   from such other district will be dissuaded from taking

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

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

14   analysis was the belief that district courts should award fees

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

          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
12   counsel after TCBY sued them. The [defendants] point out that
13   they are Minnesota residents who were forced to litigate the case
14   in Arkansas under the agreement’s forum selection clause, and
15   they were unfamiliar with Arkansas counsel . . . . [T]he district
16   court could have properly based the fee award on the higher
17   Minneapolis rates . . . .”).

                                    -24-
1    Coughlin, 801 F.2d 570, 576 (2d Cir. 1986).   See, e.g., Agent

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

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

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

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

6    (2d Cir. 2001) (explaining that an attorney-client agreement may

7    provide compelling evidence of the “prevailing market rate”).8

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

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

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

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

12   calculate the presumptively reasonable fee.

          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”).
          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    III. The District Court’s Decision

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

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

4    They suggest that the district court calculated the presumptively

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

6    queried whether the plaintiffs had shown sufficient cause to

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

8    reasonable fee.

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

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

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

12   undertaking representation such as that of plaintiffs often

13   obtain considerable non-monetary returns — in experience,

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

15   agendas — and would have insisted on paying his attorneys at a

16   rate no higher than that charged by Albany attorneys (and there

17   is no cross-appeal).

18        Moreover, the considerable deference that we owe to a

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

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

21   proximity to and has greater experience with the relevant

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

23   counsels against remanding this case to the district court for

24   further, likely unnecessary, proceedings.

                                   -26-
1                              CONCLUSION

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

3   the district court.

                                  -27-