NY Courts Split Keeps Legal Aid Attorneys Unsure of Pay for Work

This article was originally published in Bloomberg Law. Read it here.

Calls for the New York high court to finally end a long-time New York state circuit split—over when and whether legal aid attorneys representing low-income New Yorkers can be paid by the state—were bolstered by a new Manhattan appellate court opinion.

The ruling from the court earlier this month said that, in certain cases, attorneys’ fees should be awarded to plaintiffs who “prevail” in lawsuits against state agencies, even if a judge hasn’t rendered a decision on the merits of the case.

Without this permission, legal aid attorneys whose pay has often not kept up with inflation or private practice salaries are asked to continue to work with little assurance they’ll ultimately be paid. Legal aid providers say the split disincentivizes attorneys to act as private attorneys general and hold state agencies accountable.

Nevertheless, three other appellate courts in the state have rejected such payments that would be approved under the “catalyst theory” doctrine that applies to low-income petitioners suing under the state’s Equal Access to Justice Act.

“It’s leading to a point in which the Court of Appeals will have to step in and resolve this split in the appellate divisions,” said Housing Works Senior Staff Attorney Armen Merjian.

Appellate Split

The state argued before the First Appellate Department that the term “prevailing party” has “a well-settled legal meaning that is tied to obtaining court-ordered relief.”

But the court, in its opinion issued April 3, declined the state’s “invitation to overrule” its precedent and affirmed a lower court decision upholding a $15,000 attorneys’ fee award.

Plaintiff Lucia Jaquez sued the state’s Office of Temporary and Disability Assistance to get reimbursed for disability benefits she claimed had been wrongfully seized by New York City. Before the judge could make a decision, the state reversed its initial decision siding with the city and ordered Jaquez to be reimbursed—a move the First Appellate said qualified her to be considered a prevailing party under catalyst theory.

The First Appellate judges said they “respectfully disagree” with the state’s other three intermediate appellate courts that have refused to grant attorneys’ fees to plaintiffs under the catalyst theory. In some of those cases, the appellate courts have cited a 2001 US Supreme Court decision that upended reliance on catalyst theory in federal Equal Access to Justice Act cases.

The New York legislature’s intent in enacting the state-level Equal Access to Justice Act in 1989 was to incentivize “socially beneficial litigation and help expand access to justice for plaintiffs who can’t hire private lawyers,” said Danielle Tarantolo, director of the New York Legal Assistance Group’s special litigation unit. She was one of the attorneys who represented Jaquez.

Not following the catalyst rule is contrary to the purpose of the law, she added.

The state Court of Appeals in 2015 declined to weigh in on whether catalyst theory applied statewide, and there’s currently no legislative effort on the matter, said Saima Akhtar, senior attorney at the National Center for Law and Economic Justice.

The Supreme Court earlier this year also ruled that plaintiffs in civil rights cases are never entitled to attorneys’ fees when they get a preliminary injunction that’s later found moot against the government because no court has conclusively resolved the claims.

The New York courts aren’t bound by what the Supreme Court does, said John Simpson, partner at Duane Morris LLP. In New York, the issue “ultimately boils down to legislative intent,” he added, noting that the Supreme Court’s 2001 decision was based off of the federal access-to-justice law.

Attorney Retention

The lack of recognition of catalyst theory could have an impact on the attorney-retention crisis in the state, the National Center for Law and Economic Justice and other legal aid groups said in an amicus brief filed in favor of Jaquez.

Lower salaries make it increasingly difficult for organizations to retain mid-level attorneys and bring in senior attorneys who make the switch from private practice, Akhtar explained. There’s also a “concerning misperception” that legal aid work is “somewhow less valuable” because the clients are lower-income.

“If there were a circumstance in private practice where a private-pay attorney negotiated rather than litigated a solution to a case, that private attorney would still expect to get paid,” Akhtar said.

The decision of whether catalyst theory should be applied statewide shouldn’t be left up to the legislature, as that has “proven over and over again to be unworkable,” Merjian said. “We can’t constantly legislate around everything.”