No Fees Allowed: Third Circuit Slams the Door on Attorney-Fee Restitution Under the MVRA

The Third Circuit has issued an important restitution decision that significantly narrows the scope of recoverable losses under the Mandatory Victims Restitution Act (“MVRA”). In United States v. Abrams, the Court held that attorneys’ fees may not be included in restitution orders, even when those fees were incurred by victims while cooperating with the government’s criminal investigation.

The Case

Appellant Abrams was convicted of an extensive fraud scheme arising out of a clean-energy startup. The district court ordered restitution totaling more than $1 million to defrauded investors. After post-sentencing briefing, the court amended its judgment to include nearly $100,000 in attorneys’ fees incurred by victims during their participation in the government’s investigation and prosecution. On appeal, Abrams challenged only the fee component of the restitution order.

The Holding

The Third Circuit affirmed the convictions and the underlying restitution award, but vacated the portion of the restitution order awarding attorneys’ fees. The Court held that 18 U.S.C. § 3663A(b)(4) does not authorize restitution for legal fees, rejecting the government’s reliance on the statute’s residual phrase permitting restitution for “other expenses incurred during participation in the investigation or prosecution.”

The Court’s Reasoning

The MVRA allows restitution for “lost income and necessary child care, transportation, and other expenses” incurred during participation in a criminal investigation or prosecution. Applying traditional tools of statutory interpretation, the Court concluded that the enumerated items reflect modest, attendance-related out-of-pocket costs, such as missing work to meet with investigators or travel to court. Attorneys’ fees, by contrast, are fundamentally different in nature and scale, involving professional advocacy rather than incidental participation. The Third Circuit also noted that Congress expressly authorized restitution for certain professional services elsewhere in the MVRA (e.g., medical and rehabilitative services), underscoring the absence of any similar authorization for attorneys’ fees.

Breaking from Other Courts

In reaching its decision, the Third Circuit expressly abrogated prior Middle District of Pennsylvania decisions that had allowed restitution to include attorneys’ fees. Additionally, in declining to permit restitution for attorneys’ fees, the Third Circuit expressly rejected the approach taken by the Second Circuit, which has allowed recovery of such fees under the MVRA’s residual clause. Other circuits have addressed the issue only indirectly, assumed the availability of fees without deciding the question, or resolved cases on plain-error grounds. This emerging divergence among the circuits, particularly between the Third and Second Circuits raises the possibility that the Supreme Court may ultimately be called upon to resolve the issue.

Why This Matters

After Abrams, the rule in the Third Circuit is clear: MVRA restitution covers direct losses and incidental participation costs, but not attorneys’ fees. Courts may not use the statute’s residual language to shift victims’ legal bills onto criminal defendants.