Two weeks ago
I discussed sections 28(a), (b), (c), and (e) of the Longshore Act. We considered under what circumstances liability to pay the claimant’s attorney’s fee is shifted to the employer and when the fee is payable by the claimant as a lien on compensation.
Now it’s time to discuss the manner in which the amount of the approved fee is derived. The first thing we notice is that the word “reasonable” figures prominently in the discussion. The approved fee must be “reasonable”, based on consideration of a number of factors, all of which are based on reasonableness.
So, what is a reasonable fee based on? And how do you approve an hourly rate in the “relevant market”, for “necessary” work, to come up with a “reasonable” fee award?
It’s not as easy as it used to be. Up until just a few years ago all that was necessary in approving a fee award under the “abuse of discretion” standard of review was for the adjudicator to cite hourly rates in fee awards in recent Longshore Act cases and the job was pretty much done. Not anymore. Attorney fees have been hotly contested in recent years, and the “relevant market” is no longer simply prior Longshore cases.
First, the burden of proof to support a fee request is on the fee applicant (claimant’s lawyer), and the employer has a reasonable (that word again) time to respond and file objections. The adjudicator, whether the District Director, administrative law judge, Benefits Review Board, or court must then determine a “reasonable” fee that is in line with the prevailing hourly rate in the relevant community for similar services by lawyers of reasonably comparable skill, experience and reputation, that is reasonably commensurate with the necessary work done, and that takes into account the quality of the representation, the complexity of the legal issues involved, and the amount of benefits awarded.
Although the standard for review is “abuse of discretion” and, in fact, there is wide discretion in considering the various factors in evaluating the fee application, the adjudicator must specifically consider all of the evidence submitted by the fee applicant, as well as all objections filed by the employer. As I said, it’s no longer simply a matter of referring to fees awarded in prior Longshore cases.
The question of hourly rates has been a contentious issue in recent years, and the subject of its own “cottage industry” of litigation. As a result, hourly rates have risen for successful claimant attorneys under the Longshore Act over the past five years, mostly due to the broadening of the concept of relevant community.
Remember, fee shifting under the Longshore Act uses the Lodestar method, i.e., hourly rate times work done usually expressed in quarter hour increments. The Supreme Court has identified twelve factors that are relevant to setting reasonable hourly rates under the Lodestar method. Some of the relevant factors are the attorney’s customary fee, the rate he would be paid in non-Longshore cases, the experience, reputation, and ability of the attorney, the novelty and difficulty of the issues in the case, and the amount involved and the recovery obtained. The point is that skilled attorneys must be willing to take on Longshore cases on behalf of claimants, so the hourly rates must be competitive for legal services in the market and commensurate with the attorney’s reputation and ability.
A fee applicant may submit local, regional, or otherwise appropriate, relevant surveys of legal fees, as well as affidavits of other attorneys in the relevant community who are familiar with his skill and experience, affidavits attesting to the prevailing rates in the community for comparable attorneys for similar services, as well as his own affidavit of what fees he charges in other Longshore cases, as well as information with regard to fees he receives in non-Longshore cases. The burden is on the fee applicant to produce evidence that his rates are in line with those prevailing in the relevant community for similar services by lawyers of comparable skill and experience.
If the fee applicant does not provide sufficient evidence to establish his desired market rate, the adjudicator may derive an appropriate market hourly rate based on fee awards in other Longshore Act cases.
In evaluating a fee application, the adjudicator will consider the novelty of the case and the complexity of the issues in relation to the number of hours expended, not the hourly rate.
The prohibition against fee agreements, the use of the Lodestar method as opposed to a percentage of the recovery method, and the specialization of the Longshore market all result in making it difficult to establish a prevailing market rate and to judge the reasonableness of the work done.
There is no uniform standard among the federal circuits as to what constitutes the relevant community or what a reasonable hourly rate is.
Filing a Notice of Controversion, Form LS-207, does not trigger section 28(a) fee liability; the only trigger is “declining” to pay “any” compensation within 30 days of receiving the notice of the claim.
Traditional clerical type duties performed by clerical employees are not compensable (they are considered to be overhead built into the hourly rate), but work done by paralegals and law clerks, travel time, and time spent preparing, and defending if necessary, the fee application, are compensable if reasonably necessary.
The attorney fee is not payable until the case is finally adjudicated, i.e., all appeals are concluded. So the successful attorney sometimes has to wait quite a while to be paid. If it’s an “unreasonably” long time, the fee may be enhanced. The courts have agreed that an adjustment in the amount is an appropriate factor to consider for a reasonable fee in cases of delayed payment. The measure is the delay between the date that the services were rendered and the date that the fee order is issued. Of course, there is no consensus as to how long the delay must be to trigger enhancement. Two years is probably not long enough, seven years is, and somewhere in between is when you start to consider fee enhancement.
The District Directors, Administrative Law Judges, and the Benefits Review Board are not required to do a full blown analysis with regard to each and every fee petition in each and every case, but the analysis will have to be done frequently enough so that the hourly rate is current for each relevant market.
So, anyway, you get the idea, although we’ve barely scratched the surface. The idea is that there should be reasonable fees paid to successful claimant attorneys in Longshore cases, in accordance with the going rates for comparable work in the relevant market and in view of the results achieved. In this way, skilled attorneys will be willing to take on Longshore cases.
ABOUT THE AUTHOR
John A. (Jack) Martone served for 27 years in the U.S. Department of Labor, Office of Workers’ Compensation Programs, as the Chief, Branch of Insurance, Financial Management, and Assessments and Acting Director, Division of Longshore and Harbor Workers’ Compensation. Jack joined The American Equity Underwriters, Inc. (AEU) in 2006, where he serves as Senior Vice President, AEU Advisory Services and is the moderator of AEU's Longshore Insider.