What policies would you institute in your Hawaii law firm based on the Blair v. Ing decision?

Blair v. Ing (2001)

In this case, plaintiffs-appellants Leslie Blair and Laura Bishop (Plaintiffs) sued defendant/cross-claimant appellee Thomas Thayer for professional negligence and breach of implied contract. Plaintiffs claimed that Thayer, an accountant, had breached a duty to them as intended third-party beneficiaries to an agreement between their mother, Joan Hughes, and Thayer for the preparation of the estate tax return for decedent Lloyd Hughes. After the trial court granted Thayer's motion to dismiss the complaint, Plaintiffs appealed. On February 27, 2001, this court upheld the dismissal in favor of Thayer because: (1) Thayer was alleged to have been hired to prepare tax returnsnot to give estate planning advice and, thus, Plaintiffs were merely incidental beneficiaries; and (2) as merely incidental beneficiaries, Thayer owed Plaintiffs no duty. Blair v. Ing, 95 Hawaii reconsideration denied, Hawaii (2001). Thayer then filed request for compensation for necessary expenses and attorneys' fees pursuant to Hawaii Revised Statutes, (1) and Hawaii Rules of Appellate Procedure (2000).

In his motion, Thayer requests reimbursement of attorneys' fees in the amount of $21,570.00, general excise tax in the amount of $898.82, and costs in the amount of $756.92, for a total request of $23,225.74. (In its discussion, the court found that Thayer was entitled to fees and then discussed the appropriateness of awarding Thayer's request for paralegal fees.) B. Reasonableness of the Fees In his motion, Thayer requests $21,570.00 for attorneys' fees incurred in this appeal. Plaintiffs oppose those fees that are attributable to "legal assistants," arguing that "[n]othing in the statute purports to allow paralegal or secretarial fees." This court has never directly addressed whether paralegal or other non-attorney fees are allowable as part of a "reasonable attorneys' fees" award. In Missouri v. Jenkins, 491 U.S. 274 (1989), the United States Supreme Court upheld compensation awarded for the work of law clerks and paralegals under the Civil Rights Attorneys' Fees Act, 42 U.S.C. 1988, which provided for "a reasonable attorney's fee as part of the costs." Id. at 288. Further, the Supreme Court recognized the "increasingly wide-spread custom of separately billing for the services of paralegals and law students who serve as clerks" and determined that "the prevailing practice [of] bill[ing] paralegal work at market rates [including paralegal fees in a fee request] is not only permit-ted by [the statute], but also makes economic sense." Jenkins, 491 U.S. at 287-88 (citations omitted). The Supreme Court explained that, "[b]y encouraging the use of lower cost paralegals rather than attorneys wherever possible, permitting market-rate billing of paralegal hours, encourages cost-effective delivery of legal services[.]" Id. at 288 (citations and internal quotation marks omitted). A number of other states are in accord. See, e.g., Cline v. Rocky Mountain, Inc., 998 P.2d 946, 950-51 (Wyo. 2000); Barker v. Utah Pub. Serv. Comm'n, (Utah 1998); Taylor v. Chubb Group of Ins. Cos., (Okla. 1994); First NH Banks Granite State v. Scarborough, 615 A.2d 248, 281 (Me. 1992); Continental Townhouses East Unit One Ass'n. v. Brockbank, (Ariz. Ct. App. 1986) [hereinafter, Continental Townhouses]; Gill Sav. Ass'n v. International Supply Co., Inc., (Tex. Ct. App. 1988).

In Continental Townhouses, the Arizona Court of Appeals stated: Lawyers should not be required to perform tasks more properly performed by legal assistants or law clerks solely to permit that time to be compensable in the event an attorneys' fees application is ultimately submitted. Requiring such a misallocation of valuable resources would serve no useful purpose and would be contrary to the direction to interpret the Rules of Civil Procedure to serve the "just, speedy, and inexpensive determination of every action." Instead, proper use of legal assistants and law clerks should be encouraged to facilitate providing the most cost-effective legal services to the public. If compensation could not be obtained for legal assistant and law clerk services in appropriate cases, the fee-shifting objective of [mitigating the burden of the expense of litigation] would also not be accomplished. 733 P.2d at 1127 (internal citations omitted) (empha-sis added). The Arizona court then proceeded to comment on the billing of paralegals on a separate fee basis, as opposed to including the "costs" of paralegals within an attorney's hourly billing rate: It also cannot be assumed legal assistant services are automatically included in lawyers' hourly billing rates as a standard law office operating expense. Instead, such services are often itemized and billed separately. Moreover, lawyers should not be required to inflate their hourly rates to include legal assistant time as a general overhead component. Doing so would make fair allocation of the cost of such services impossible, since some clients and matters may require a much higher pro-portion of legal assistant and law clerk services than others. Id. at 1127-28. Based on the foregoing authority, we hold that, in appropriate cases, a request or award of attor-neys' fees may include compensation for separately billed legal services performed by a paralegal, legal assistant, or law clerk [hereinafter, collectively, legal assistant]. In discussing the categories of persons and tasks that should be considered under the term "legal assistant" for purposes of attorneys' fees applications, the court in Continental Townhouses held that, in order to be included within an attorneys' fee award, the work performed by the legal assistant must be legal work, supervised by an attorney, and the fee application must contain enough details to demonstrate to the court that these requirements have been met. Id. at 1128. We agree and, therefore, hold that the reasonableness of legal assistant fees be reviewed on a case-by-case basis for the value of services rendered and that an award of such fees be limited to charges for work performed that would otherwise have been required to be performed by a licensed attorney at a higher rate. See id.; Taylor, 874 P.2d at 809. Such a holding is consistent with the purpose of encouraging cost-effective delivery of legal services. See Jenkins, 491 U.S. at 288. In his fee request, Thayer has asked for the following compensation for "legal assistants": Sandy Takenaka (1.4 hours $50.00 = $70.00) Patty Yukawa (2.6 hours $50.00 = $130.00) Kevin Chang, Esq (3.9 hours 25.00 = $97.50) We analyze the tasks performed by each in turn. The worksheets submitted with respect to Ms. Takenaka document short telephone calls to clients regarding depositions and the transmission of docu-ments to the court. Every one of the services performed were services ordinarily considered secretarial and would not "otherwise have had to have been per-formed by a licensed attorney at a higher rate." Thus, none of the services performed by Ms. Takenaka are compensable in the attorneys' fees award. Accordingly, we deny the $70.00 requested for fees associated with tasks performed by Ms.Takenaka. The worksheets submitted with respect to Ms. Yukawa document the following: 8/24/99 Preparation of record on appeal at Supreme Court Clerk's Office 6/27/00 therein. A copy of the index is thereafter provided to all parties to the appeal. See HRAP 11(b) (2000). Thus, Ms. Yukawa could not have "prepar[ed]" the record on appeal. Consequently, the request of 2.6 hours is denied. The worksheets submitted with respect to Mr. Chang document the following: 6/21/00 Retrieve cases and articles on third party beneficiary and accountant liability issues. Search all West General Digest 36 + account liability 6/26/00 Shepardize Plaintiffs cases retrieve any pertinent negative history. Make sure we have copies of all our cited cases. Go to First Circuit Court retrieve Storm case. Go to Supreme Court retrieve accountant case. Shepardize our cases on Keycite. Go to Supreme Court and retrieve all our missing cases from outside our jurisdiction Total 197 1.7 hours 4 hours 1.8 hours 3.9 hours 2.6 hours (Emphasis added.) We note that the record on appeal is actually prepared by the clerk of the court or agency from which the appeal is taken prior to being transmitted to the supreme court. See Hawaii Rules of Appellate Procedure (HRAP) Rule 11(a) (2000) (providing that "[e]ach appellant, shall comply with the provisions of HRAP Rule 10(b) (2000) [designating the composition of the record on appeal] and shall take any other action necessary to enable the clerk of the court to assemble and transmit the record"). In preparing the record on appeal, the clerk of the court or agency consecutively numbers the court or agency file and prepares a numbered index of all the pages The nature of the work performed by Mr. Chang is clearly of a legal nature. Legal research, including Shepardizing cases, is a task that would undoubtedly have been performed by a licensed attorney at a higher rate, in the absence of Mr. Chang's services. Thus, the tasks performed by Mr. Chang are compensable. No other challenges to the attorneys' fees request have been raised. Accordingly, we grant the amount of $21,370 as reasonable attorneys' fees, which includes fees charged for legal assistant services, in this appeal. (The remainder of this case is omitted.)