contingency fee multiplier

Incentive for Taking Case on Contingency – the Contingency Fee Multiplier

Posted by David Adelstein on August 26, 2018
Trial Perspectives / Comments Off on Incentive for Taking Case on Contingency – the Contingency Fee Multiplier

A recent appellate decision came out regarding contingency fee multipliers–the incentive for taking a case on contingency.  

I included a thorough discussion on the requirements establishing a contingency fee multiplier here.  Check out this discussion that goes into establishing reasonable attorney’s fees and then the contingency fee multiplier.

Notably, in this case, the appellate court affirmed that the elements associated with establishing an entitlement to a contingency fee multiplier are as follows:

(1) whether the relevant market requires a contingency fee multiplier to obtain competent counsel (i.e., whether there are attorneys in the relevant market and would have taken the case on contingency absent the availability of the multiplier);

(2) whether the attorney was able to mitigate the risk of nonpayment in any way; and

(3) whether any of the factors set forth in Rowe (the reasonable attorney’s fees factors) are applicable, especially, the amount involved, the results obtained, and the type of fee arrangement between the attorney and his client.  This is looked at through the lens of the counsel at the time the counsel takes the case, and not with the benefit of hindsight.

There are a number of reasons for an attorney to take a matter on contingency.  While there is certainly a risk, there is also the prospect of an award, and with the contingency fee multiplier, the incentive is that a multiplier could be added to reasonable attorney’s fees to increase the amount of awarded fees. 

 

Please contact David Adelstein at dadelstein@gmail.com or (954) 361-4720 if you have questions or would like more information regarding this article. You can follow David Adelstein on Twitter @DavidAdelstein1.

 

 

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The Contingency Fee Multiplier is NOT just for the Rare and Exceptional Dispute

Posted by David Adelstein on October 19, 2017
Trial Perspectives / Comments Off on The Contingency Fee Multiplier is NOT just for the Rare and Exceptional Dispute

In a great victory for those handling difficult contingency fee disputes (particularly contingency fee disputes dealing with economic damages, such as me), the Florida Supreme Court held that the contingency fee multiplier is not to be applied only in the rare and exceptional case. Oh no! Had the Court entered such a ruling, this would have virtually eliminated the application of the contingency fee multiplier. Boo!  This multiplier is important as it incentivizes those attorneys that handle difficult contingency fee cases by adding a multiplier on the reasonably determined attorney’s fees. (For example, if the Court determines that an attorney’s reasonable attorney’s fees are $35,000, the Court can order a multiplier of 2, meaning the attorney’s fees would be $70,000). As they say, with risk comes reward!

In what I think to be noteworthy language regarding the contingency fee multiplier, the Court pronounced:

[T]he contingency fee multiplier provides trial courts with the flexibility to ensure that lawyers, who take a difficult case on a contingency fee basis, are adequately compensated. We also do not agree that the contingency fee multiplier encourages “nonmeritorious claims” and would, instead, posit that solely because a case is “difficult” or “complicated” does not mean that the case is nonmeritorious. Indeed, without the option of a contingency fee multiplier, those with difficult and complicated cases will likely be unable or find it difficult to obtain counsel willing to represent them.

***

The point being, the lodestar amount, which awards an attorney for the work performed on the case, is properly analyzed through the hindsight of the actual outcome of the case, whereas the contingency fee multiplier, which is intended to incentivize the attorney to take a potentially difficult or complex case, is properly analyzed through the same lens as the attorney when making the decision to take the case. We disagree that the possibility of receiving a contingency fee multiplier leads to a “windfall.” … While the attorney for the insurer charges and receives an hourly rate regardless of whether the defense is successful, the insured’s attorney bears the risk of never being compensated for the number of hours spent litigating the case. This risk, among other factors, is what entitles the attorney to seek, and the trial court to consider, the application of a contingency fee multiplier.

Joyce v. Federated National Ins. Co., 42 Fla.L.Weekly S852a (Fla. 2017).

Please contact David Adelstein at dadelstein@gmail.com or (954) 361-4720 if you have questions or would like more information regarding this article. You can follow David Adelstein on Twitter @DavidAdelstein1.

 

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