The 9 th US Circuit Court of Appeals overturned a lower court ruling in deciding the charges for non-lawyers such as law clerks and paralegals could be passed along to ERISA clients if the lawyer typically bills those costs separately.
Circuit Judge William Fletcher asserted in his ruling for the appellate court that ERISA counsel could also include litigation expenses such as computerized legal research – “if separate billing for such expenses is ‘the prevailing practice in the local community.'”
According to Fletcher’s ruling, the trustees of several multiemployer benefit funds, including the Construction Industry and Laborers Health and Welfare Trust, sued a group of employers in a Nevada federal court alleging the employers owed delinquent contributions to the funds. The funds won and the employers were ordered by US District Judge Roger Hunt of the US District Court for the District of Nevada to pay the contributions.
As part of that case, the funds requested approximately $55,000 in attorneys’ fees, but Hunt slashed that amount by $29,000 because that portion of the requested fees was performed by non-attorneys. Hunt also threw out requested litigation costs from the fee request.
In rejecting Hunt’s ruling, Fletcher said Hunt had mistakenly ruled under ERISA Section 502(g)(2)(D) that attorneys’ fees are not available to compensate for work performed by non-attorneys. Pointing to a 1989 Supreme Court case, Fletcher noted the high court has ruled that a “reasonable attorneys’ fee” provided for by statute should compensate for work of paralegals, as well as that of attorneys. In that case, the Supreme Court noted that fees for work performed by non-attorneys such as paralegals may be billed separately, at market rates, if that is “the prevailing practice in a given community,” according to the appeals court opinion.
In addition, the appeals court said the lower court erred in refusing to characterize the computer-based legal research expenses as part of “reasonable attorneys’ fees” under ERISA.
The case is Trustees of the Construction Industry and Laborers Health and Welfare Trust v. Redland Insurance Co., 9th Cir., No. 04-16380, 8/30/06. The appellate opinion is here .