Statement of Judiciary Committee Chairman Lamar Smith Full Committee Markup of H.R. 1996, "Government Litigation Savings Act"

Statement of Judiciary Committee Chairman Lamar Smith
Full Committee Markup of
H.R. 1996, “Government Litigation Savings Act”

Chairman Smith: In an ideal situation, parties in civil litigation would follow the Golden Rule, treating one another as they would like to be treated.  In the United States, each party must bear its own attorney’s fees and costs.  This can allow a party with weak legal claims but deep pockets to gain a significant advantage by dragging out the case.  When this happens, rather than the Golden Rule, it may be that “he who has the gold makes the rules,”

And nobody has more gold than the federal government.  If it runs out of money, it just prints more.  The federal government has thousands of lawyers on staff, none of whom bill by the hour.  No person or corporation could ever hope to compete with such overwhelming resources.

To prevent the federal government from abusing its vastly superior litigation resources, Congress adopted the Equal Access to Justice Act.  When the government loses in court, the Act allows a court to order the government to pay the other side’s attorney’s fees and costs if the government’s position was unreasonable.  The Act was meant to be an “anti-bully law” to help small businesses and ordinary American taxpayers defend their rights in litigation against the federal government.

For some time now, Ms. Lummis has been investigating whether the Act is working as it should, and I want to acknowledge her efforts in this regard.  I also want to thank Mr. Coble for his Subcommittee’s diligent consideration of Ms. Lummis’s bill, H.R. 1996, the “Government Litigation Savings Act,” on October 11.

One issue that I hope we all can agree upon is the need for transparency.  American taxpayers have a right to know how much money the federal government is paying out every year in attorney’s fees and costs under the Act.  But no annual reports have been made since Fiscal Year 1994.  This bill restores the reporting requirement and requires an audit of payments since 1995.

The annual reports filed from 1980 to 1994 showed that most awards under the Act were modest sums paid to veterans and Social Security recipients.  This was as it should be.

But whether the Act is still mainly serving its original, legitimate purpose is in doubt.  Certain frequent litigants – particularly 501(c)(3) corporations that enjoy the additional benefit of being exempt from the Act’s net worth limitation – are financing their lawsuits with large awards of attorney’s fees paid under the Act.

These awards often are made in ideologically driven lawsuits, where the organization is trying to advance its policy preferences through litigation.  American taxpayers should not be forced to pay attorney’s fees and costs in these circumstances.

The Act originally capped attorney’s fees at $75 per hour.  This was raised to $125 per hour in 1996.  Times have changed since 1996, and Congress once again should raise the Act’s hourly cap on attorney’s fees.

The Act does allow courts to award attorney’s fees greater than $125 per hour if a “special factor” justifies a higher hourly rate.  But courts appear to be interpreting this exception very loosely by routinely awarding attorney’s fees at much higher rates. 

To prevent the exception from swallowing the rule, the Bill raises the cap on hourly rates in exchange for eliminating the exception.  The Bill also creates a mandatory annual inflation adjustment mechanism, to keep the cap current as the cost of living increases.

In closing, I want to thank Ms. Lummis for her dedication to this issue, and to thank Mr. Coble and the Subcommittee for their consideration of H.R. 1996.