Phillip E. Mudrich v. Department of the Navy, MSPB No. DC-0432-01-0147-X-1, September 20, 2002.

The parties entered into an oral agreement settling the appellant's appeal during a pre-hearing teleconference with the MSPB administrative judge (AJ). The AJ found that the agreement was lawful on its face, understood by the parties, freely entered into, and therefore enforceable by the Board. Accordingly, the AJ dismissed the appeal as settled. Several days later, the parties executed a written agreement based on the oral agreement which provided that the agency agreed to pay reasonable attorney fees.

The appellant submitted a request to the agency for a total of $33,837.50 in attorney fees. He sought $125.00 and $150.00 for consultation with two attorneys. He requested $33,562 in fees (134.25 hours at $250.00) billed by his designated representative during the agency removal process and the Board proceedings.

In a letter to the appellant's designated representative, the agency stated it would pay no more than $10,400.00 in attorney fees (52 hours at $200 per hour). The agency provided a line-by-line response to the appellants' attorney's time sheets indicating its reasons for denying or reducing the amount of fees requested for each item. The agency refused to pay the initial consultation fees, stating that "your client paid these amounts and since you did not incur these expenses, the Agency finds that you are not entitled to compensation for them.

The appellant filed a petition for enforcement with the Board's Regional Office alleging that the agency had refused to pay reasonable attorney fees pursuant to the settlement agreement. In an August 13, 2001, Recommendation, the AJ granted the petition and determined that the appellant was entitled to reasonable attorney fees in the amount of $18,375.50, i.e., 73.5 hours at an hourly rate of $250. The AJ found that the appellant's designated representative's hourly rate of $250 was reasonable, but reduced many of the hours claimed by the representative. The AJ also found that the appellant was not entitled to the fees incurred by consulting with two other attorneys because the appellant had not shown that an attorney-client relationship had existed with those attorneys pursuant to which counsel rendered legal service on the appellant's behalf in connection with a Board proceeding.

The case was then forwarded to the full Board. Where the parties have entered their agreement into the record for enforcement purposes and bring matters before the Board for determination of the reasonableness of the fee award, the parties will be bound by the Board's standard of reasonableness. The standard adopted by the Board begins with an analysis of two objective variables: the attorney's customary billing rate and the number of hours reasonably devoted to the case. The "lodestar" amount which results from the product of those variables may then be adjusted for other factors, so long as those factors are not reflected in the hourly rate. For example, an administrative judge may cut hours for duplication, padding, or frivolous claims, and impose fair standards of efficiency and economy of time. However, the reasons for a reduction must be carefully explained, and cannot be conclusory, or "verge on nit-picking."

In this proceeding, to enforce the provision in the settlement agreement, the Board held that the appellant can recover "consultation" fees for a conference with a lawyer who ultimately was not retained, yet fees were "incurred" because the appellant believed he was consulting a lawyer in that capacity and manifested his intention to seek legal advice. Applying the statutory "reasonableness" standard and the lodestar method, which the Board found the parties intended under the settlement agreement, the Board awarded 4 hours for work prior to the issuance of the agency's final decision; 8 hours for research related to the preparation of the Board appeal form; 5 hours for work the day of filing; and 8 hours for document preparation (reduced from claimed 13). The Board did not disturb the administrative judge's award of just 5 hours for a 17-day period working out written details of an oral settlement agreement, crediting the agency's claim that there was little in dispute by that time.

The Board concluded that the appellant was entitled to a total of $25,750 in fees (103 hours at $250 per hour) for work by his designated attorney. In accordance with the AJ's recommendation, the agency had paid $18,375. Consequently, in order to be in compliance with the "reasonable attorney fees" provision of the parties' settlement agreement, the Board found the appellant was entitled to an additional $7,500.00 in attorney fees. In addition, the appellant was entitled to reimbursement of the $125 he paid for the initial consultation with an attorney.

Accordingly, the Board ordered the agency to pay an additional $7,375.00 in fees to the appellant's attorney and $125.00 to an attorney for consultation fees. The agency was ordered to submit to the Clerk of the Board, within 20 days of the date of the Opinion and Order, proof of payment. If evidence of compliance was not received, the agency was ordered to show cause why sanctions, pursuant to 5 U.S.C. § 1204(a)(2) and (e)(2)(A) and 5 CFR 1201.183(b), should not be imposed against the agency's Employee Relations Specialist, as the official responsible for compliance with the Board's final decision.