Richlin Security Service Co. v. Chertoff

Background

A small California business (Richlin Security Service) provided guard services under Government contracts and later faced a Department of Labor order to pay back wages after a misclassification. Richlin sued the Government at the Department of Transportation’s Board of Contract Appeals and won. It then asked the Board to reimburse attorney fees and paralegal charges under the Equal Access to Justice Act (EAJA). The Board limited paralegal recovery to the law firm’s cost and the Federal Circuit affirmed that limitation.

Reasoning

The central question was whether EAJA lets a prevailing party recover paralegal fees at the market rate the client paid or only at the attorney’s internal cost. The Court read EAJA’s phrase “fees and other expenses” together with the provision that awards be based on “prevailing market rates,” concluded paralegal services are like attorney and expert services, and relied on prior decisions (notably Missouri v. Jenkins) that treated paralegal work as part of recoverable attorney fees. The Court rejected the Government’s legislative-history and policy arguments, and held that any cost calculation should reflect the litigant’s perspective and market practice. The result: Richlin prevailed on the fee issue.

Real world impact

A prevailing party that meets EAJA’s other requirements may recover paralegal fees at prevailing market rates from the Government. Agencies and courts should look to market practice when setting awards, subject to statutory limits (including the $125-per-hour cap for attorney or agent fees unless adjusted). The case was reversed and remanded for further proceedings consistent with this ruling.