01-1784 People Who Care, et al. v. Rockford Board of Education

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“The district court directed that interest would accrue (and be compounded) from the thirtieth day after the services generating a claim for fees were rendered. Bearing in mind that the purpose of a fee award is to reimburse the plaintiff for the cost he would reasonably incur if he purchased legal assistance in the market…, we think the proper approach to the calculation of interest requires consideration of prevailing practices in the legal-services market. This follows from the ‘market mimicking’ approach, orthodox in this circuit, to computing the fee award. The idea is to ‘estimate the terms of the contract that private plaintiffs would have negotiated with their lawyers,’ In re Synthroid Marketing Litigation, supra, 264 F.3d at 718 (emphasis added), and if such a contract, express or implied, would provide for interest, the fee award should include interest, or some equivalent adjustment, as in Ohio-Sealy Mattress Mfg. Co. v. Sealy Inc., 776 F.2d 646, 662-63 (7th Cir. 1985). So if the prevailing practice is that lawyers either are paid on the thirtieth day after rendering their services or charge interest beginning on the thirty-first day, then the district court’s order was proper. But not only is there no evidence of this; it obviously is incorrect. Lawyers rarely bill their clients within days of rendering services in an ongoing suit, receive payment within thirty days of that rendition, or charge interest for payment after thirty days… No doubt if the client refused to pay or delayed unreasonably in paying, the lawyer might decide to charge interest; and if he had to sue to get paid, he would certainly do this, and would thus seek an award of prejudgment interest. But the plaintiffs here are seeking interest as a matter of course rather than as a penalty for bad faith, obduracy, or foot-dragging.

“The award of interest was especially unjustifiable because the plaintiffs did not bill the defendant for their 1997 attorneys’ fees until 1999. Imagine the response of a client in the market who received a bill more than a year after the rendition of the services covered by it and was told that he owed not only the amount of the bill but compound interest for every month but one since the services were rendered.”

Affirmed in part, reversed in part, and remanded.

Appeal from the United States District Court for the Northern District of Illinois, Mahoney, Mag. J., Posner, J.