The Equal Access to Justice Act - Essential Requirements

The Equal Access to Justice Act (EAJA) was enacted back in 1980 to allow individuals and companies to obtain representation in cases against the Government in the event they are successful. This applies to appeals by contractors to the ASBCA (Armed Services Board of Contract Appeals) and other boards and courts.

To be eligible, individuals must show that their net worth is less than $2 million and businesses must demonstrate that their net worth does not exceed $7 million and employed fewer than 500. That part is simple to demonstrate. Not so with another requirement - the "not substantially justified" requirement. Contractors must demonstrate that the Government's position in the dispute was not substantially justified.

Once that bar is crossed, contractors are limited to "reasonable" costs including attorney fees. However, attorney fees are statutorily limited to $125 per hour. Interestingly, the hourly rates for other "experts" involved in the appeals are not statutorily capped. Such costs only be deemed reasonable and reasonableness is determined, in cases before the ASBCA, by the Judge.

Not only are the costs incurred in prosecuting the appeal reimbursable under EAJA provisions, but also costs incurred in preparing the application for EAJA reimbursements. Again, the preparation costs must be reasonable and commensurate with the amounts requested.

Sometimes the Judge will make the determination as to what is reasonable. Other times, the Judge will request an audit of the claimed costs - particularly where the amounts are significant or where assurance is needed as to the propriety of amounts claimed.

Contractors that prevail in an ASBCA case should consider whether some of the costs of pursuing the case can be recovered under EAJA provisions.

See "The Equal Access to Justice Act (Briefly)" and "Contractor Asks For $706 Thousand EAJA Reimbursement - Receives $412 Thousand" for more background and illustration on how EAJA provisions are applied.

Contractor Asks For $706 Thousand EAJA Reimbursement - Receives $412 Thousand

The Equal Access to Justice Act (EAJA) awards attorneys' fees and litigation expenses to eligible individuals (and contractors) who are parties to litigation against the Government. There are several qualifications a party must meet to be termed "eligible". They must have a net worth of less than $2 million (or less than $7 million and less than 500 employees). They must be the prevailing party in the litigation. And, the Government's position was not substantially justified (see The Equal Access to Justice Act - Briefly for more details). The EAJA is a significant benefit to Government contractors who, for lack of resources, might not be able to pursue valid and legitimate claims against the Government.

A recent ASBCA decision illustrates how the amount of the award is determined. Optimum Services, Inc. (OSI) was the prevailing party in a dispute with the Army Corps of Engineers involving differing site conditions. The case was decided for OSI and afterwards, OSI applied for EAJA fees and other expenses. The Government agreed that EAJA fees were due. The Government acknowledged that OSI was the prevailing party and did not dispute OSI contention that its position was not substantially justified.

OSI submitted an itemized listing of EAJA expenses including attorney fees, legal assistant fees, reproduction, travel costs, transcripts, telephone, courier, postage, trial exhibits, expert witness fees, expert witness travel expenses, and fact witness expenses. Together these expenses totaled $717 thousand (later revised downward to $706 thousand).

The ASBCA decision details how the Board considered each of the claimed expenses and ultimately it determined an amount due of $412 thousand. The primary reason for the reduction related to the statutory limit on attorney fees of $125 per hour. While OSI claimed attorney fees in excess of $400 per hour, it was only reimbursed $125 per hour.

While the EAJA helps recover litigation expenses, it won't cover everything as illustrated by this case. Here, the contractor still had to absorb $300 thousand and prospects that large could have a deterrent effect on small businesses pursuing claims against the Government. Alternatively, they could look for legal representation charging $125 an hour but good luck finding those.

The Equal Access to Justice Act (Briefly)

The Equal Access to Justice Act (EAJA) awards attorney's fees and litigation expenses to eligible individuals who are parties to litigation against the Government. An eligible party may receive an award when it does not exceed the size limits set by the Act (net worth of $2 million or less or net worth of $7 million or less with 500 employees) and can show it is a "prevailing party"

The EAJA is a statutory exception to the standard American practice in which prevailing litigants bear the burden of paying their own attorneys' fees. Congress enacted EAJA as a fee-shifting statute to let private litigants recover certain costs associated with litigation against the Government.

The EAJA addresses the concerns of Congress over access to the courts for individuals. Congress's intent in promulgating EAJA was to provide a means to prevent individuals, as well as small business concerns, from being deterred by potential costs of litigation from seeking redress for allegedly unreasonable government action.

Eligibility under EAJA is only the first step in successful application for costs and attorney fees. Under EAJA, an eligible party must also meet certain threshold requirements before a court will order reimbursement of their litigation costs.

What are these threshold requirements? The EAJA provides that attorneys' fees and certain costs associated with litigation, incurred by a prevailing party in either an agency (e.g. ASBCA) or court adjudication against the Government, may be recovered unless the position of the Government is "substantially justified" or unless special circumstances make the award unjust.

What does "substantially justified" mean? The term "substantially justified" means justified to a degree that could satisfy a reasonable person. Even though a position taken is not correct, it can still be substantially justified if a reasonable person could think it correct, that is, if it has a reasonable basis in law and fact. In this case, the Government bears the burden of proving that its position was substantially justified.

The EAJA is a significant benefit to Government contractors who, for lack of resources, might have a valid and legitimate basis for raising a claim against the Government.