The U.S. wins.
Not too surprising. But what is perhaps surprising is the underlying issue: whether attorney fee awards under the Civil Asset Forfeiture Recovery Act (CAFRA) are payable to the attorney or the client.
The usual rule is that attorneys fees are payable to the client, in part because most fee-shifting statutes say that fees are recoverable by the prevailing party, and in part because the Supreme Court has said so. But a few statutes provide fee awards to the "attorney" in the proceeding. So how should one read a statute like the CAFRA, which contains neither of these provisions and instead simply says that the U.S. is liable for fees without directing (implicitly or otherwise) to whom those fees should flow?
The Ninth Circuit, in an opinion written by Judges Hawkins and Clifton, say they go to the client. This seems reasonable to me. That's the prevailing rule, and there are a decent number of arguments to support it.
Judge Berzon dissents, arguing that district courts should have discretion to award them to either clients or attorneys on a case-by-case basis. This seems plausible as well, though ultimately I find the majority's view more persuasive.
The Ninth Circuit's holding also seems to me to avoid deadweight losses. The principal reason it matters who you pay the fees to is because in many cases (including many cases under CAFRA), the party owes the government lots of money already, so if the fee award goes to the client, it gets taken right back in payment of the debt. Judge Berzon argues that this is a bad thing, and I see her point, but it seems to more more of a good thing.
For example, take a debtor who owes the government $200,000 and who alleges that $100,000 was illegally seized. If the debtor has no intention of ever paying the debt (or no realistic ability), it's probably best -- or at least most efficient -- to just leave things be. Sure, they could get back the $100,000, but the government would just take it back to satisfy the $200,000 debt. Litigation would be a deadweight loss.
If a fee award was payable to the client, there'd be no incentive to sue in such settings. Even if the client got a $50,000 fee award, the government would still claw the whole thing ($100,000 + $50,000) back. But if the attorney might get the fee, now there's an incentive to sue: even though the client won't get any money, the attorney will. An attorney-sponsored suit like that has some value (e.g., deterring misconduct and putting a more accurate value on the debt), but in most cases, I think, not enough to justify the transaction costs.
So the majority's bright-line rule may properly limit litigation to cases in which it matters: in which getting the forfeited assets and/or attorneys fees might obviate the debt or reduce it to a sum that might actually be paid. That seems like a reasonable objective. For that reason, I'm more inclined to support the majority's view than Judge Berzon's. Notwithstanding the latter's decent arguments to the contrary.
