THE $796.00 PER HOUR FEDERAL JOB
Did you know that the feds routinely pay up to $796.00 per hour for some work? It is not for the President’s work. Obama only gets $200 an hour calculated against a work year of 2087 hours. It is not the person at the GS-15, Step 10 level. S/he only gets about $79.00 an hour. It is not even the CEO’s of the most sophisticated private technology companies in the world who assist the feds through outsourcing to place rockets on Mars, create unimaginably complex security software, or cure Ebola. Under law they can only bill their time at about $370 an hour. Stumped?
It is a lawyer who graduated from law school more than 20 years ago and now represents employees in suspension cases, overtime claims, and any other back pay dispute. While we are delighted for these lawyers, Fedsmill is addressing this issue because we are very worried that LR practitioners, particularly union attorneys, are sitting atop (and blissfully ignoring) a rapidly pressurizing volcano.
The Back Pay Act provides that attorneys are entitled to “reasonable attorney fees” when they overturn an unjust and unwarranted personnel action and the employee gets back pay. That could involve something as significant as a removal or as comparatively small as denying an employee an hour of overtime pay. Rather than fight constantly over precisely what reasonable means, the Department of Justice has issued a table offering an explanation of what it is willing to accept as reasonable. DOJ has decided that reasonableness need have nothing to do with the lawyer’s expertise or complexity of the case; it simply turns on how many years it has been since the lawyer left law school. (Yes, we see the hypocrisy of DOJ using seniority rather than a measure of the attorney’s skill or even the complexity of the work, but that is for another article.) The DOJ pay scale is called the Laffey Matrix, and is used primarily for setting attorney fee rates in the Washington, DC area. If you page through FLRA decisions you will see that the Authority has frequently accepted an arbitrator’s decision to use the matrix to decide what is reasonable. Moreover, the Authority has allowed union employed attorneys, whose total compensation might cost the union $100 an hour in wages and benefits, to be reimbursed the full Laffey Matrix rate, e.g., seven times the actual cost to the union. All the union needs do is place the money in a legal defense fund and pledge to use it only for employee legal representation.
Under the 2015 updated edition of the matrix, DOJ offers that if a lawyer has been practicing for more than 20 years and is currently practicing in the DC area it is reasonable to pay the attorney $796 for each hour s/he legitimately put into the case. That would include time preparing for the hearing, the hearing itself, post-hearing briefs, and any appeals of the decision. So, if an attorney represented an employee in an arbitration or ULP and won a single hour of retroactive overtime pay, which for purposes of argument let’s assume amounts to a $70.00 check, the attorney arguably would be entitled to $39,800. in attorney fees if s/he worked 50 hours on the case. Again, congratulations to the legal profession on that hourly wage. No wonder law schools were overflowing with students.
But sooner or later some crusading member of Congress or an anti-union zealot is going to focus on that windfall with devastating results for federal employee unions and not so good results for the agencies. The simple hourly wage number is too eye-catching for someone looking to make a splash and perhaps pass an amendment to the Back Pay Act which lowers if not abolishes the entitlement to fees. After all, the normal rule in America is that each party pays its own fees. Congress normally only authorizes the government to pay fees when it believes there is a significant public interest in enforcing a particular law, such as the Civil Rights Act or the Fair Labor Standards Act. Given the climate on the Hill, it is unlikely that a majority would find federal employee personnel rights worthy of the same consideration.
While you may think we are about to blame unions and attorneys for this potential eruption, we are not. How could we? DOJ all but invited them to claim these amounts. We blame management. Why haven’t agencies bargained their own attorney fee scales and rules? Nothing in the law bars that. Federal courts, FLRA and MSPB have all said that under law it is reasonable for union-employed attorneys to claim market rates such as the Laffey Matrix reflects, but not one of them has said that is the ONLY definition of reasonable or that an agency cannot negotiate its own scale. For example, there is a small mountain of data on the Internet about the average earnings in the legal profession. One such study reports that even the top lawyer in a firm of 50 or fewer attorneys averages only $343 an hour. Most unions have no more than 50 attorneys on staff. That would be wonderful evidence for management to put on the bargaining table to demand more reasonable dollar figures than DOJ is willing to pay. Let’s remember here that the DOJ typically deals with very complicated cases tried through the procedural morass of the court system, e.g. an anti-trust accusation or contract fraud by government suppliers. Most would agree those are more demanding on a lawyer than just about anything a federal employee might take to arbitration—short of a removal for unacceptable performance with 50-plus specifications of subpar work by a scientist or accountant might be as challenging. In fact, often these federal employee arbitrations are presented and won by non-attorneys working as chief stewards or union staff, which calls into question the need for legal skills altogether.
If an agency demands restrictions on fee payments to union attorneys it is going to have some very good arguments. First, as noted earlier, reimbursement under the Laffey Matrix often compensates the union several times more than it actually pays its staff attorney. Second, while a legal defense fund satisfies the FLRA and courts, in reality it enables the union to divert dues money away from legal expenses to pay for other costs such as convention banquets, real estate investments, salaries of non-attorneys, organizing, etc. Some would argue that is a ruse. Moreover, even if the legal defense fund uses the excess money to pay the salaries of the attorneys who worked on cases they lost that raises a question of whether fees earned under the Back Pay Act, which limits payments to where the attorney is the prevailing party, can be used to cover costs when the attorney lost the case.
Third, the complexity of the legal work and the skill level of the attorney replace simple seniority. As we understand the DOJ matrix, it is reasonable for an attorney who has been practicing employment law for 20 years to claim $796 an hour even if s/he is doing his first FLSA case. In contrast, an attorney only four years out of school would get $400 less an hour even if she has done a dozen FLSA cases. That is nonsensical. Fourth, there is something cockeyed about paying a union attorney more per hour than the parties pay the arbitrator. If an arbitrator charges $1,500 a day that is a $187.50 hourly rate—not $796. Fifth, if the union represents employees across the country, one of its attorneys in a small city might only be entitled to $250 per hour for an overtime denial case while the same case done in Washington, DC where the Laffey Matrix is often used would earn another attorney in the same union nearly $800 an hour. Why should an agency pay such different rates for the same work?
Agencies should be going to the bargaining table with proposals that address the following:
- The level of documentation detail required to substantiate a claim for fees,
- What is and is not to be considered legal work,
- A fee scale that at a minimum takes into account the complexity of a case and limits reimbursement to the time spent on the issues won,
- A demand that the union waive its right to fees or at least agree to dollar caps tied to the union’s actual cost or even the arbitrator’s fee, which typically will still be twice what a union pays a staff attorney, and
- If the agency does pay more than the actual cost of the attorney’s time to the union that the union produce the records of the Legal Defense Fund for periodic agency review or audit.
As we said above, the law entitles attorneys who win back pay for federal employees to “reasonable” fees, but reasonable is a very broad concept. Courts have accepted the DOJ Laffey perspective as one example of reasonable, but nothing bars other agencies from insisting that reasonable also includes the actual costs to the union of the attorney’s time. Bargaining should determine where between those two poles the figure should be set. Unions will push back against any agency bargaining demand pointing to MSPB, FLRA and court decisions largely because it would not be fair to give private attorneys working for firms what lawyers call “market rate” fees under the Laffey Matrix, but deny them to unions. However, if the matter goes to the FSIP the agency will likely put great emphasis on the fact that private attorneys are not guaranteed an annual income as salaried attorneys are nor do they need to be incentivized to represent federal employees rather than pursue more lucrative areas of law. Union attorneys have already chosen employee representation as their exclusive lone of work.
This article is not motivated by a desire to do away with fees. Just the opposite. We support the granting of attorney fees, but we see building evidence that this golden goose is wandering dangerously close to the spinning wood chipper of politics. The parties, but particularly the agencies, need to think defensively about this provision of law and minimize the obvious reasons why the average person would consider a $796 hourly wage to do any federal work absurdly excessive.