Attorneys’ Fees:  The “Hidden Costs” of Discrimination and Wage and Hour Litigation

June 12, 2024

Almost 20 years ago I published an article in the Nassau Lawyer regarding the often overlooked additional costs of defending litigation where, by statute, the prevailing party is entitled to attorneys’ fees and costs. I called them “hidden” because many clients do not appreciate the fact that, even the most marginal claims where damages may be very minimal, they come with a cost if the plaintiff is successful that seem astounding when they accompany an award of attorneys’ fees.

A reminder of this comes from the recent case of Caltenco v. G.H. Food, Inc., 224 WL 1338784 (2d Cir. March 29, 2024). In this case, the Second Circuit sustained the District court’s award of $113,225.88 in attorneys’ fees and $10,869.34 in costs in an FLSA overtime action where the plaintiff was only awarded $7,682.20. While this writing will explain the “Lodestar” calculation used by courts to determine the appropriate amount of fees to award where a fee-shifting statute exists, it is important to note the words of the Second Circuit that explain, succinctly, how courts will proceed when awarding fees:

Our precedent is clear that fee awards in wage and hour cases should encourage members of the bar to provide legal services to those whose wage claims might otherwise be too small to justify the retention of able, legal counsel. In order to advance Congress’s goals under the FLSA to ensure a “fair day’s pay for a fair day’s work” the law cannot be read to impose a proportional limitation based on the perceived complexities of the litigation. Indeed, in FLSA cases “we have repeatedly rejected the notion that a fee may be reduced merely because the fee would be disproportionate to the financial interest at stake in the litigation.”

Moreover, costs associated with attorneys’ fees awards have grown as the awards made by the court for per hour work have grown. In another recent cause Braun v. Heights Realty Advisors LLC, 2024 WL 640156 (E.D.N.Y. 2024) the court awarded attorneys’ fees based on a rate of $500 per hour for the firm’s senior partner and $350 an hour for a senior associate. While this is generally at the high end of an hourly fee award, it is not at all unusual in wage and hour cases, as well as discrimination cases under Title VII and actions under 42 U.S.C. § 1983 against state actors, for the court to award fees of at least $400 per hour for senior associates/partners. While one does not need to remind a client about the cost of litigations for their own attorney, the client often needs to be reminded of the outsized cost associated with a losing effort when balancing continuing the litigation against the possibility of settlement—as distasteful as it might be for the client to consider. Attorneys’ fees in such cases take on a life of their own often dwarfing the value of the plaintiff’s claim making settlement less and less likely as they expand to unfathomable amounts. The client needs to be reminded—over and over—so the proper business decision can be made sooner rather than later during the course of the litigation.