State v. Tocco
In State v. Tocco, 173 Ariz. 587, 845 P.2d 513 (App. 1992) supports a conclusion that courts should use a prevailing market rate methodology to calculate fees for pro bono representation when the pertinent statute authorizes an award of fees.
In Tocco, the trial court in a civil racketeering case used the prevailing market rate to calculate a fee award authorized by A.R.S. 13-2314 for the work of the state's assistant attorneys general. Id. at 589, 590, 845 P.2d at 515, 516.
On appeal, the defendant argued the court erred by failing to calculate the award using an hourly rate based on the salaries of those attorneys. Id. at 591, 845 P.2d at 517.
The Court rejected the defendant's argument, stating:
The trial court here followed the general rule for calculating attorney's fee awards made pursuant to a statute authorizing the recovery of "reasonable" fees. This rule, used particularly in civil rights, antitrust cases and other public benefit cases, provides that prevailing market rates and not the actual costs of legal services are the appropriate measure for an award of reasonable attorney's fees, even when the party being awarded the fees has been represented by salaried government or public non-profit counsel. Id.
The Tocco court also adopted the Seventh Circuit's reasoning in an antitrust case that because the recipient party rather than its attorney is entitled to an award of reasonable attorney's fees, the amount actually paid by the party to the attorney is irrelevant "because 'the determination of what is a 'reasonable' fee is to be made without reference to any prior agreement between the parties.'" Id. at 591-92, 845 P.2d at 517-18.
Finally, the court concluded that use of prevailing market rates is "preferable to extensive judicial scrutiny of private fee arrangements or of the internal economics of the Attorney General's office," would not unduly burden the opposing party, and would encourage enforcement of racketeering statutes. Id. at 592, 845 P.2d at 518.