Alaska Employment Law

The question of whether paralegal services should be valued at cost or at prevailing market rates when determining a fee award to a prevailing party in a suit against the government is now before the U.S. Supreme Court, Richlin Security Service Co. v. Chertoff, No. 06-1717.

Employees of a government contractor were awarded back pay, payroll taxes and Worker’s Compensation premiums by the Department of Transportation Board on Contract Appeals, and the Federal Circuit Court affirmed the award. The employees claimed reimbursement of fees, expenses and costs under the Equal Access to Justice Act, which allows an award to a prevailing party before the Board. Rather than award the cost charged to the client based on prevailing market rates ($50-$95/hr), the Board awarded roughly $35/hr as a “reasonable cost” to the firm that represented the employees, about $10,000 less than the employees sought. A Federal Circuit Court panel affirmed the award and the U.S. Supreme Court granted certiorari.

The employees’ attorney argued that the statute mandates an award of fees to a prevailing party, and the fees can include “reasonable attorney or agents fees” and be based on “prevailing market rates.” The government assistant solicitor argued that the statute provided for two separate items: fees and expenses. Paralegal services, he contends, fall under expenses, which are traditionally calculated at cost, not market rates.