Calculating Fees of Special Masters

Special masters have been widely used in all phases of complex litigation, particularly in institutional reform cases. Too little attention, however, has been given to the question of how the fees of special masters should be fixed. This Article briefly reviews the history of the compensation of masters in England and in state courts. The Article then focuses on the regulation of masters\u27 fees in the federal courts, with particular attention to the appropriateness of the standards used in institutional reform litigation. The Article suggests modifications to those standards to achieve better balance between the needs of special masters for fair, adequate, and sure compensation, and the interests of the parties and of the judicial system in receiving services at a reasonable cost. The Article discusses four judicial standards for setting masters\u27 fees: first, unbounded discretion of the trial court; second, application of a test, developed by the Supreme Court in 1922, that compensation should be liberal but not exorbitant ; third, basing the fee on one-half of the prevailing rates for commercial attorneys; and fourth, basing the fee on some variation of the lodestar method of setting attorney\u27s fees. This Article proposes that courts adopt the lodestar method, with appropriate modifications to suit the case of special masters. The Article concludes that courts should consider a variety of factors that might affect the lodestar, such as preclusion of other employment, time limits imposed, results obtained, desirability of the position, fee awards in similar cases, delays in payment, and professional responsibility considerations