In an important ruling on attorneys' fees, the Supreme Court on Wednesday held that judges can enhance attorneys' fees for superior performance--but only in "extraordinary circumstances."
According to the majority, the facts of the case before them did not meet that standard. In Perdue v. Kenny, trial lawyers helped lead a class of 3,000 Georgia children to a victory that would reform the state's foster care system. A federal district judge awarded those lawyers $6 million in attorneys' fees using the lodestar method (hours times local hourly market rate), and then added on a $4.5 million bonus for "extraordinary" results that the lawsuit achieved and for rare "skill, commitment, dedication and professionalism" on the part of the attorneys.
"After 58 years as a practicing attorney and federal judge, the Court is unaware of any other case in which a plaintiff class has achieved such a favorable result on such a comprehensive scale," the district judge commented on their performance.
But Justice Samuel Alito wrote for the court that the award was "essentially arbitrary" and lacked proper justification. "Why, for example, did the court grant a 75 percent enhancement instead of the 100 percent increase that respondents sought?" he said. "And why 75 percent rather than 50 percent or 25 percent or 10 percent?"
It is essential that the judge provide a reasonably specific explanation for all aspects of a fee determination, including any award of an enhancement. Unless such an explanation is given, adequate appellate review is not feasible, and without such review, widely disparate awards may be made, and awards may be influenced (or at least, may appear to be influenced) by a judge's subjective opinion regarding particular attorneys or the importance of the case. In addition, in future cases, defendants contemplating the possibility of settlement will have no way to estimate the likelihood of having to pay a potentially huge enhancement.
Read the opinion: http://www.supremecourt.gov/opinions/09pdf/08-970.pdf
Read the full story from the Atlanta Journal-Constitution: http://www.ajc.com/health/u-s-supreme-court-480979.html