MICHAEL D. MARCUS’S MEDIATION MESSAGE NO. 99
FEE APPLICATIONS AND MULTIPLIERS
The very recent opinion of Chodos v. Borman (Second Appellate District, Division Five, June 18, 2014) 2014 Cal.App. LEXIS 529; B252446 has an interesting discussion on the application of multipliers in fee applications by prevailing attorneys.
Hillel Chodos (Attorney) represented the wife, without a written fee agreement, in two divorce cases and a related Marvin action. He originally told the client he would charge her $1,000 an hour for his time. Attorney valued the client’s ultimate settlement at a tax-free $26 million and claimed he had spent 300 hours on the first divorce case, 1,500 hours on both the second divorce case and the Marvin action and that the reasonable value of his services was $9 million. Attorney called a family law expert at trial, which he is not, to opine that Attorney was entitled to a multiplier of six for his efforts. The trial court instructed the jury it could use a lodestar adjustment method, including an enhancement or multiplier, in calculating a reasonable fee. The jury awarded Attorney $300,000 for his work on the first divorce case based on the $1,000 hourly rate. On the second divorce case and the Marvin action, the jury found that Attorney had expended 1,500 hours, his reasonable hourly rate was $1,000, and that the hourly rate should be increased to $5,000 using a multiplier of five, for a fee of $7.5 million and a total fee award of $7.8 million.
The appellate court reversed the judgment and returned the matter back to the trial court with instructions to enter judgment for $1.8 million, with certain minor adjustments. It explained that the recognized rationale of applying a multiplier to a lodestar sum to “compensate a skilled attorney who voluntarily assumes a contingent risk of nonpayment at the outset of his or her representation” did not apply since Attorney was charging client $1,000 an hour or, at a minimum, the reasonable value of his services, regardless of the outcome. The court also found that the instant family law matters “were not the type of constitutional or public interest cases that require an exceptionally skilled attorney to assume the risk of representation.” Finally, the court held that awarding Attorney a substantial premium on his attorney fees would, in effect, reward him for his violations of Business and Professions Code sections 6147 and 6148, which require written contracts for contingency matters and cases in which fees shall exceed $1,000.
MDM’s observations: The application of multipliers to lodestar amounts in fee applications remains a viable option; Chodos v. Borman only discourages their use when an attorney’s payment of fees is not contingent upon the success of the case and the underlying case is unremarkable. The opinion also appears to frown upon multipliers when the lodestar, itself, is already substantial.
Judge Michael D. Marcus (Ret.)
ADR Services, Inc.
1900 Avenue of the Stars, Suite 250
Los Angeles, California 90067
Copyright Michael D. Marcus, June 2014