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Federal judge criticizes DOJ's fee agreement with BigLaw firm, says the amount is unreasonable

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A federal judge in Washington, D.C., has questioned the U.S. Department of Justice’s agreement to pay more than $212,000 in fees and expenses to Arnold & Porter Kaye Scholer to settle a case over the exclusion of New York residents from trusted traveler programs.

U.S. District Judge Richard Leon of the District of Columbia said the government appeared ready to dispose of the case as quickly as possible after the U.S. Department of Homeland Security admitted making incorrect statements in the case. and Law360 have coverage.

The DHS had argued that it was unable to verify whether individuals were eligible for the trusted traveler programs because New York state restricted immigration officials’ access to motor vehicle records. DHS officials said New York was unique in restricting the access but later admitted that several states have similar restrictions.

“It is not every day the Department of Justice and their clients have to confess to written and oral misrepresentations on the record in a high profile case! It would appear that Arnold & Porter simply capitalized—unfortunately at the taxpayer expense—on the government’s apparent desire to dispose of the case as quickly as possible,” Leon wrote in a Nov. 17 decision.

In the settlement, the federal government allowed New York residents to participate in the program and agreed to pay legal fees to Arnold & Porter, which represented plaintiffs challenging the program on a pro bono basis. The fees will go to the law firm’s charitable foundation.

Leon said he would not incorporate the settlement agreement in a final dismissal order because he found the attorney fees to be unreasonable. Incorporating the settlement agreement in the dismissal order allows the court to maintain jurisdiction to enforce the agreement.

Two partners and six associates billed time on the matter. Leon said the case spanned only six months and included only one substantive motion. He concluded that two partners and two associates would have been sufficient. Leon also said it was unreasonable to charge Arnold & Porter’s standard corporate rates in a case in which taxpayers will be footing the bill.

Fees for four lawyers using a different fee standard used by the U.S. attorney’s office would yield a bill of more than $82,000, Leon said.

“The court believes the Department of Justice should have been more aggressive in protecting the public fisc,” he said.

The Arnold & Porter Foundation is a tax-exempt charitable organization that provides scholarships to underrepresented law students, funds fellowships for recent law school graduates at tax-exempt organizations, and awards grants to other charitable and educational organizations, Leon said in a footnote.

“While I commend Arnold & Porter’s charitable intentions, for which they undoubtedly receive much favorable public recognition,” Leon wrote, “this is irrelevant to a judicial analysis of whether the fees in a case like this are, in fact, fair and reasonable, and thus ‘proper.’ Indeed, there was a time earlier in my career when pro bono literally meant pro bono and not a penny would be collected for the time expended.”

R. Stanton Jones, one of the Arnold & Porter attorneys on the case, told Law360 that it was illegal for the federal government to try to deny participation in the program to New Yorkers in retaliation for refusal to participate in immigration enforcement.

“It was dishonest for the federal government to try to deceive federal courts about the basis for their illegal conduct,” Jones told Law360. “And it made sense to resolve the lawsuit through a settlement rather than expend additional time and resources litigating the government’s deceit.”

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