UNIONS NEED AGENCY HELP ON ATTORNEY FEES
There are more and more signs that employee attorneys, including union attorneys, are getting greedy on attorney fees. Not long ago we posted a story entitled, “The $796.00 Per Hour Federal Job” to share that the Dept. of Justice now considers it acceptable for attorneys with over 20 years of experience to charge that per hour, including those representing federal employees in adverse actions and grievances. We think it is time that union attorneys who are paid annual salaries from members’ dues do something to avoid handing Senator Grassley, Congressman Issa, or even the Rush Limbaughs of the world a big, multi-spiked, poison-tipped club to beat federal unions into giving up any fee entitlement via an obscure midnight rider on some bill about Inter-Galactic, Trans-Genus, Penguin Husbandry or other totally unrelated piece of legislation. Because unions are understandably reluctant to solve a problem most do not think they have, agencies should be leading the reform effort. After all the agencies paying outlandish hourly rate fees also will be dragged through the mud in the process which means they need to do something to protect their own flanks. Here is how agencies could protect themselves at the bargaining table—and patch a few gaping holes in the Attorney Fee statute.
The worst time for an agency to try to limit the amount of attorney fees a union demands is after the agency has lost a case and the arbitrator has ruled the union is entitled to fees. Unions know that if the agency refuses to accept their fee demands they can go back to the arbitrator and bill even more hours writing briefs and conducting hearings just to set the fee amount. The best time for an agency to launch a change effort is in term negotiations when the union is asking for a lot of things more important to its members and even its institution than attorney fees. An agency demand for a modest attorney fee article is the perfect counter to union demands for more official time or even additional promotion procedures. If the term contract isn’t open, nothing stops an agency from proposing a mid-term MOU.
Restriction #1– (Which Laffey Matrix?) The FLRA has endorsed attorneys practicing in the Washington, DC area claiming fees under the Adjusted Laffey Matrix, which suggests experienced attorneys be paid approximately $250.00 more per hour than the basic Laffey Matrix. Consequently, agencies should demand that unions renounce any entitlement to the Adjusted Matrix. That is hardly a big sacrifice since even the basic Matrix suggests agencies pay an hourly fee of up to $568.00 an hour.
Restriction #2– (What is a Reasonable Hourly Fee Figure?) The law states that employees are entitled to “reasonable” attorney fees (5 USC 5596(b)(1)(A)(ii)) just as it says that unions are entitled to a “reasonable” amount of official time (5 USC 7131(d)). The specifics of what is reasonable in both cases is negotiable. The courts and FLRA have held that typically attorney fees are reasonable if they mirror what similar attorneys in the community are paid and the hours they would charge, which is commonly known as the Lodestar rate.) But they never said that the parties were barred from setting that hourly fee figure in advance via negotiations. For example, agencies could propose that salaried union attorneys charge only 75% of the Laffey Matrix figure or even 75% of the local rate charged by similarly situated attorneys outside the DC area. Another approach would be to limit costs to no more than twice the total compensation costs to the union of the attorney, e.g., if a staff attorney is paid $150 an hour in salary and benefits, she could only charge up to $300.00 per hour. Given that the courts and FLRA have not ruled illegal an agency proposal to limit the fees to the actual hourly total compensation figure of the staff attorneys, some agency should probably test the limits of this. After all, the Supreme Court said, “[A] reasonable attorney’s fee is one that is adequate to attract competent counsel, but that does not produce windfalls to attorneys.” (Perdue v Kenny) It specifically rejected the idea that attorney fees are “a form of economic relief to improve the financial lot of attorneys.” When a union attorney costs the union $150 an hour, but it is paid fees of $300 per hour, it sure seems like a windfall to us.
Even when a discount figure off the lodestar rate is settled upon there are other elements to the hourly figure issue.
Restriction #2A- (The Year of Payment or Use) Case law seems to allow attorneys to charge the current hourly rate for his/her time even though the time may have been expended a decade ago. For example, if a rookie attorney started a case in 2006 and after the arbitration, exceptions, remand, another decision and an FLRA ruling declaring it final and binding he did not claim fees until 2016, when he has ten years of experience, should he be allowed to charge $200.00 more an hour under the Laffey Matrix for ten-year old time?
Restriction #2B- (Enhancement) One of our least favorite features of the attorney fee case law the courts have developed is that attorneys can ask for rates even higher than the Laffey Matrix or community average where the attorney achieved “exceptional success.” The Supreme Court’s decision in Perdue v. Kenny offers some rules for enhancement that parties could model their own contract language upon. For example, while there is a “strong presumption” that the Laffey/lodestar rates are sufficient in the vast majority of cases, they can be increased only in “extraordinary,” “rare,” and “exceptional” circumstances where there is “specific objective evidence,” other than that normally considered in calculating a lodestar rate. One basis for getting an enhancement is a delay in payment. Since the federal process is the epitome of delay, the parties should agree on the point at which something becomes extraordinarily delayed. The novelty and complexity of a case are not grounds for enhancement according to the Court.
Restriction #2C– (Agency Burdens) Case law allows agencies to oppose the union’s evidence of what other attorneys in the community charge by presenting evidence of its own. One way to do that would be to find surveys reporting on the average hourly rate of attorneys in an area. OPM could also help agencies by collecting data from them as to what they have paid recently and circulate agency-favorable settlements for others to use. But another intriguing source of what lawyers charge to work on federal sector arbitration disputes in a community is the fees charged by arbitrators who do that work in that area. An agency can use Cyberfeds.com to identify the experienced arbitrators who are attorneys and work in a particular area to determine what they charge on average. If four attorney-arbitrators, with NAA membership, working or living in Des Moines, Iowa all charge $1,800. a day for their services, doesn’t that strongly suggest that the average hourly rate for comparable legal services in $225.00 an hour for an eight hour day? It does to us. It also suggests that the union attorney limit her fees to the hourly rate charged by the arbitrator assigned a case. This would be a reasonable way to set a comparable hourly rate anywhere, whether the Laffey Matrix was available or not. Agencies should get it recognized in their agreements as a legitimate benchmark if they cannot agree on another fixed figure or formula.
Restriction #2D– (Attorney Selection) Agencies cannot restrict which attorney a union assigns to a case, but given that the hourly rate attorneys are allowed escalates with each year of experience, agencies have a big interest in who is assigned the case. For example, suppose a union had two nearly identical cases to arbitrate, but that one was virtually a sure winner while the other was a long shot. Now assume that the union had two attorneys to assign these to, namely, one with 25 years of experience and the other with only a year’s experience. From a financial perspective, the union should assign the more experienced attorney to the sure winner because she is likely to generate far more in attorney fees than the rookie. But any agency could protect itself from over-priced staff working cases by negotiating a cap on the level of legal experience that will be fee compensated, e.g., ten years. Unions, on the other hand, can fairly ask for exceptions to that rule.
Restriction #2E – (Travel Time and Traveling Attorneys) Case law seems to suggest that an agency cannot object to a union flying someone from Washington, San Francisco, or New York City to do a case in Grand Forks, ND even though the traveling attorney might charge three times what a local Grand Forks, fully capable attorney would charge to win the same case. The traveler would also bill for time spent traveling to and from Grand Forks even though he might have spent the time sipping a fine scotch all the way out and back. While the courts and others may consider that acceptable, agencies should not—nor should unions. Nothing bars the agency from proposing the union agree that if it does fly in someone when there is locally available legal talent available that it agrees to cap its fees at the local market rate and at half that for travel time Unions will look unreasonable if they object for any other reason that they want an exception when the case it clearly outside the competence of local talent, even with remote supervision by experienced experts. (See SSA and AFGE, 64 FLRA 630 (2010))
Restriction #3– (What is “Billing Judgment?”) Attorneys are required by their Codes of Professional Responsibility and other mandates to exercise “billing judgment” when billing agencies for fees. Generally, this means they must pay a penalty if they charge for too many hours or too high an hourly rate. Agencies should demand via contract language salaried union attorneys commit to do this because as we have seen in existing federal sector decisions attorneys can have their bills reduced by 25% if they violate this standard. See DOD and AFGE, 60 FLRA 636 (2005))
A section dealing with the “Billing Judgment” obligation would also be also be a good place to address what kind of work is billable as attorney time. Should time spent copying, collating, typing, and filing be considered legal work or non-reimbursable secretarial work? What about time paging through paycheck stubs to simply count the total number of hours each of 100 employees worked on overtime for each of the last 52 pay periods? Shouldn’t an attorney be obligated to delegate that work to a paralegal, whose times is billed at a fraction of a barred attorney’s time, or suffer a reduction of his fee when doing that himself? How about when the union assigns two attorneys to a case—and one merely monitors the other or changes time reviewing the same documents that the primary attorney did? That would all seem to be negotiable as part of determining what is a reasonable fee.
Restrictions #4– (What About Documentation?) Attorney’s cannot just write a figure on a piece of paper and send it over as their fee. They have to document how they used their time. While MSPB has some regulations addressing what they must provide at a minimum (5 USC § 1201.203), nothing stops an agency from demanding a deeper level of detail. For example, should an attorney be allowed to charge 7 hours for “Reviewing the Promotion Package for Candidate #4,” or should he be required to detail what he was doing for those 7 hours, e.g., exploring what theory of the case by looking at what data in the file? Agencies should demand significant documentation, e.g., a list of what the attorney did in ten minute segments, what theory or claim he was examining when reviewing the material, etc. Agencies should also require attorneys to disclose their fee agreement with the employee to determine just how inexpensively he was willing to do the case for if not awarded government fees.
Restriction #5– (What About Unsuccessful Claims?) Assume that the union took a case to arbitration claiming that an employee did not get a cash incentive award because of 1- procedural error, 2- age discrimination, and 3- union animus. Should its attorney be reimbursed for all the time she put into the case if the arbitrator only sustained the procedural error claim and rejected the other two theories? A large body of case law suggests that the attorney can only bill for the time spent on successful claims. “In addition, the Authority has adopted the Supreme Court’s ruling that “in cases involving a single successful claim, ‘[a] reduced fee award is appropriate if the relief, however significant, is limited in comparison to the scope of the litigation as a whole.'” (See NAGE and VA, 65 FLRA 452 (2011)) Not only should agencies write that obligation into their contracts, but they also should try to add some federal sector, collective bargaining specificity. For example, what if the arbitrator did not even address the discrimination and animus claims once she decided there was a fatal procedural error? Or what if the union challenged an arbitration claiming harmful procedural error as well as a lack of proof? Both are theories recognized under the same law unlike the opening example. Is that enough to limit the time that can be charged if the unions wins on only one of those theories? Currently, nothing bars the parties from bargaining over that.
Restriction #6– (What About Unsalaried Union Attorneys?) Some unions hire private attorneys to represent employees in grievances that the unions send to arbitration. If the case is processed under the collective bargaining grievance-arbitration process it seems reasonable that agencies be allowed to limit those private attorneys under the same fee rules as salaried union attorneys. If the private attorneys want more, let the union pay them. After all, why should an agency have to pay maybe $500 more an hour for attorney fees just because the union decided to hire a private attorney rather than use a salaried one already on their staff? If the union wants the private attorney to be eligible for the highest fee possible send the adverse action claims to MSPB, the discrimination claims to EEOC, and violations of personnel law to OSC. Frankly, given the profit unions make currently under the Laffey and lodestar concepts it seems economically irrational to hire outside counsel.
Restriction #7– (What About the Arbitrator’s Burden?) A contract article on “Attorney Fees” should also impose requirements on the arbitrator who rules on the fee request. Arbitrators are not allowed to pick a fee number out of thin air, nor split the difference between the agency and union offers, nor even simply summarized the arguments of both parties and then pronounce a figure. In fact, FLRA has imposed significant burdens on them already that agencies should propose be placed in the term contract so there is no dispute over them case by case. Here is what FLRA said in one case,
When an arbitrator considers a union’s request for attorney fees, such requests “must be closely examined to ensure that the number of hours expended was reasonable[,]” … because “the number of hours expended are not necessarily those ‘reasonably expended.’ …In addition, when an arbitrator makes a determination as to a union’s request for attorney fees, the arbitrator must support his or her determination as to the reasonableness of the fee request….Here, the Arbitrator found that the number of hours requested “seems reasonable” because the Union’s attorney was “well prepared.” …However, there is no indication in the award that, in making that finding, the Arbitrator considered “the nature of the case and the details of the request,” and he did not “defend[ ] his judgment in a reasoned … opinion on what the case should have cost[.]”…Thus, the Arbitrator did not make specific factual findings to support his conclusion that the amount of the fees requested is reasonable. (VA and AFGE, 64 FLRA 794 (2010))
Given that FLRA generally remands a case to an arbitrator when she fails to properly document his decision, agencies should consider proposing that they will not be billed for union attorney time devoted to the remand decision or even the arbitrator’s fee. The agency has a good argument for that if it places the above and other FLRA criteria in their contracts. That should motivate the union to join the agency in petitioning each arbitrator to stick close to the legal burden criteria.
Restriction #8– (Who Gets the Money?) Imagine a union allows an already salaried attorney to keep all the attorney fees she earns or almost all of them. Now imagine that attorney uses all that money to make big dollar political contributions to union-favorable candidates for political office or even opponents of the Congressional reps sitting on the agency’s oversight committee. Perhaps the attorney matches what the union could contribute as a legit way around the campaign contribution laws. That possibility underscores that an agency also has an interest in how the attorney fees it pays out are used. While agencies probably cannot tell a union how to spend the attorney fees its staff earns, there is a way to limit the political exposure the agency has. Courts and the FLRA have ruled that unions may charge market or Laffey rates for staff legal work only where they establish a Legal Defense Fund that is used solely for legal defense purposes. Agencies should want that because while it does not tightly restrict how a union spends its legal fee funds, it at least ensures they will not be used directly for political activity. If a union insists that its staff attorneys directly receive the funds, then the agency should insist it agree that the attorneys may only receive an amount equal to their total compensation costs to the union. That can be several hundred dollars cheaper per hour than market or Laffey rates. AFGE v FLRA, 944 F.2d 922 (D.C. Cir. 1991)
Conclusion– Our list above is not complete, e.g., we have not addressed what to do when an attorney bills tens of thousands in fees for getting an employee three hours of retroactive comp time. (See Air Force and AFGE, 65 FLRA 921 (2011)) Do the parties want to treat that as meeting the “interest of justice” standard as FLRA has or can they find a brighter rule? All we have tried to do here is show the parties what the path might look like to a term contract article or MOU spelling out how attorney fee issues are to be processed and decided. Ideally, this pushes both parties to think more rigorously about what they would want, and that, in turn, will reduce the chances of some political ideologue exploiting the details of a handful of questionable decisions to punish everyone.
Nor have we spent much time addressing what agencies can do to help themselves even where the union wants to slug it out for fees. There are about a half-dozen things, and we will deal with them in a future article.
Finally, we suspect that some will see this post as anti-union despite our best effort to promote changes that will protect this vital employee benefit from a handful of outlandish decisions that could undermine all unions. Not long ago we ran across four arbitration decisions in the public domain that awarded attorney fees to the same attorney who in each case processed grievances around the same time and under the same theory, but for different groups of employees. One arbitrator gave him $350 an hour, another $410, a third $425 and a fourth arbitrator awarded him $510. A savvy union can avoid that kind of wild shift in hourly fees by bargaining an article or MOU that touches on all the same issues. Good luck and let’s hope Chuck, Darrell, and Rush keep their noses out of this.
P.S. We have drafted an attorney fee proposal reflecting much of what we explained above. If you would like a copy, simply send us an email request. Be sure to identify that you want a copy of the draft proposal.