Small Firm Lawyers Can Charge Big Rates, Appeals Court Finds (1)

A federal judge was wrong to slash an attorney fee award based on the small size of the law firm that received it, an appeals court ruled Tuesday.

The US Court of Appeals for the Ninth Circuit said it was wrong for the judge to decide that it was “simply unreasonable to award big law rates to a four-person firm.” The Gaw Poe law firm had sought a nearly $7.7 million based on its prevailing billing rates and its success in the case.

“First-rate attorneys who prevail in litigation are entitled to receive fees commensurate with their skill, experience, and reputation, even if their clients are mom-and-pop businesses that don’t have Fortune 500 budgets to hire big law firms to represent them,” the ruling said.

Gaw Poe, a small California law firm made up of Big Law ex-pats, was awarded $3.1 million in August following a successful case brought against the maker of Clear Eyes drops, Prestige Brands Holdings Inc. The case alleged violations of the Robinson-Patman Act, an antitrust law prohibiting price discrimination, based on how it allowed Costco to sell the product.

US District Judge Michael Fitzgerald rejected the law firm’s fee request. The appeals court in its decision rattled off a litany of famous lawyers who toiled in small firms, including Abraham Lincoln, Clarence Darrow, and Thurgood Marshall.

“History reminds us that brilliance at the bar is not measured by the number of associates a lawyer commands,” the appeals court said.

The ruling instructed the district court to calculate the new fee award based on the billing rate for “third-quartile” litigators in Los Angeles from 2023, which is similar to what Gaw Poe had originally proposed.

The court’s rejection of the jury verdict challenge was most important but the law firm is “very grateful” for the fee clarification, said Mark Poe, the lead plaintiff lawyer, in an email.

“Our Big Law opponents constantly argue that despite winning, we should be awarded lower rates than they were paid for their own efforts,” he said.

The case is: LA International Corp., et al. v. Prestige Brands Holdings, Inc., et al., C.D. Cal., 24-5227, 2/24/26.