(Article from Insurance Law Alert, November 2017)
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The Florida Supreme Court ruled that use of a contingency fee multiplier in awarding attorney’s fees is not limited to “rare and exceptional” circumstances, but rather may be applicable based on various case-specific factors. Joyce v. Federated Nat’l Ins. Co., 2017 WL 4684352 (Fla. Oct. 19, 2017).
In a dispute between homeowners and a property insurer, the parties agreed that the homeowners were entitled to recover reasonable attorney’s fees pursuant to Florida statutory law. Following a fee hearing, a Florida trial court awarded the homeowners $76,300 based on a two-step process. First, the court calculated the “lodestar” amount, based on reasonable rates and billable hours. Second, the court applied a contingency fee multiplier of 2.0 to the lodestar amount, based on the following factors: the need of a multiplier to obtain competent counsel in the relevant market; counsel’s inability to mitigate the risk of non-payment in any way; the amount of money involved in the dispute; the complexity of the case; the results obtained; and the type of fee arrangement between plaintiff and counsel.
An intermediate appellate court affirmed the lodestar calculation, but reversed the trial court’s use of a contingency fee multiplier. The appellate court reasoned that the lodestar approach includes a strong presumption that the lodestar amount is a “reasonable fee” and that a multiplier may be used only in “rare and exceptional” cases. The Florida Supreme Court reversed.
The Florida Supreme Court ruled that there was no basis in Florida law for the “rare and exceptional” standard. Rather, trial courts may utilize a multiplier based on specific factual findings, including whether the relevant market requires a multiplier to obtain competent counsel, whether the attorney could mitigate the risk of non-payment, and the fee arrangement between plaintiff and attorney. The court expressly declined to adopt the reasoning set forth in two United States Supreme Court cases that rejected contingency multipliers under federal fee shifting statutes.
Notably, the court emphasized that courts are not required to use a multiplier, and when they do, evidence must be presented to justify its use. Additionally, the court explained that use of multiplier must be consistent with the purpose of the fee authorizing statute at issue, citing a case in which the Florida Supreme Court rejected a multiplier as inconsistent with an offer of judgment statute.