In Blum v. Stenson, 465 U.S. 886 (1984), the United States Supreme Court considered, in a civil rights action, "whether it was proper for the trial court to use prevailing market rates in awarding attorney's fees to nonprofit legal services organizations," or whether attorney's fees should be "calculated according to the cost of providing legal services." 465 U.S. at 892, 896.
Rejecting the contention that attorneys with the Legal Aid Society of New York should be limited to recovering attorney's fees for the actual "cost of providing legal services," id. at 892, the Supreme Court concluded that "reasonable fees" "are to be calculated according to the prevailing market rates in the relevant community, regardless of whether plaintiff is represented by private or non-profit counsel." Id. at 895.
The Court recognized the difference between the lodestar method applied in statutory fee cases and the percentage method as applied to the common fund doctrine:
"Unlike the calculation of attorney's fees under the 'common fund doctrine,' where a reasonable fee is based on a percentage of the fund bestowed on the class, a reasonable fee under Section 1988 reflects the amount of attorney time reasonably expended on the litigation." Id.
The Court concluded that the appropriate measure of a reasonable attorney's fee should be based on "the prevailing market rates in the relevant community...." See id. at 895.
In so doing, the Court recognized the difficulty of determining the market rate for attorneys.
However, it noted that the rates charged in private representations could provide relevant comparisons, stating:
"In seeking some basis for a standard, courts properly have required prevailing attorneys to justify the reasonableness of the requested rate or rates. To inform and assist the court in the exercise of its discretion, the burden is on the fee applicant to produce satisfactory evidence-in addition to the attorney's own affidavits-that the requested rates are in line with those prevailing in the community for similar services by lawyers of reasonably comparable skill, experience and reputation. A rate determined in this way is normally deemed to be reasonable, and is referred to-for convenience-as the prevailing market rate." (Id. at 895 n.11.)