Florida may have one of the most generous attorney-fee mechanisms in the country, sometimes resulting in plaintiff’s fees that are several times greater than the amount of damage awards.
It’s enough to drive property insurers crazy – or toward the brink of insolvency. Insurance industry groups now hope Florida’s much-criticized attorney fee-multiplier rule will be high on the agenda at next week’s special legislative session.
In the meantime, a South Florida appeals court this week landed a blow against what some have called oversized fees, finding that experts and trial judges must follow the rule precisely and must weigh specific, comprehensive evidence before allowing the “lodestar” factors and fee multipliers.
In Certain Underwriters at Lloyd’s London vs. Roniel Candelaria and Amelia Padura, Florida’s 3rd District Court of Appeal on Wednesday found that a circuit court judge had erred in granting more than $652,200 in plaintiffs’ attorneys’ fees and costs on a $52,000 verdict in a property insurance claim that arose from Hurricane Irma. The appeals court knocked the fee down to about $169,800, based largely on the testimony of an expert witness hired by Lloyd’s of London in the case.
The court remanded the case to the trial court with instructions to reduce the fees and amount of billable hours to 480, essentially saving Lloyd’s some $482,200 in fees and costs to opposing counsel.
The ruling comes seven months after the same court made a similar decision in Citizens Property Insurance vs. Casanas, striking down a fee that was four times the amount of the claim settlement.
But the opinions may not indicate that courts are rethinking the fee system altogether. In the Lloyd’s case, the panel of appellate judges focused on the fact the expert witness for the insureds and the Miami-Dade trial judge, Martin Zilber, had not fully examined the attorneys’s hours and work product, and had based their numbers on seemingly arbitrary factors.
“I don’t know if this shows that the courts are looking differently at the fees. They’re just applying the law as it is written,” said Michael Sastre, the Miami attorney who represented Lloyd’s in the appeal.
The initial request for fees was much higher. But the claimants’ own expert witness testified at an evidentiary hearing that out of “an abundance of caution” he decided to reduce the amount of hours by 7.5%. The trial judge went even further and hacked the plaintiffs’ attorneys’ hours by 15%.
Despite that, and using the lodestar factor and a multiplier of 1.8, the trial judge landed on a fee that was almost 13 times higher than what a jury had awarded on the claim. (Lloyd’s had agreed to pay just $2,033 on the initial claim, noting that some alleged damage was not covered by the policy, including pre-existing damage to the roof.)
The appellate judges sided with the Lloyd’s expert, Ron Kammer, a Miami insurance attorney who testifies on the reasonableness of attorneys fees in about five case a year. Unlike the plaintiffs’ expert and the trial judge, Kammer made an exhaustive review of the lawyers’ billed hours, work products and other records, he and the court explained.
“I did a line-by-line, side-by-side comparison of the work performed versus the billing entries and the time charged,” Kammer said Thursday.
He also looked at the claimant firm’s start and stop times on depositions and studied published surveys showing the going rates for South Florida attorneys with similar years of experience and similar expertise in that area of the law.
Kammer’s conclusion: The lodestar factor and the multiplier were not needed and the attorneys had billed too many hours to begin with. The appellate court agreed.
“The trial court erred in its determination of the lodestar amount, as such an award was not supported by competent substantial evidence and involved an arbitrary, across-the-board cut, indistinguishable in all relevant respects from this court’s recent decisions…” reads the 3rd DCA opinion, written by Judge Kevin Emas.
The lodestar and the multiplier mechanism have long been a thorn in the side of Florida insurers. Federal courts adopted the lodestar factor decades ago and Florida courts adopted their own formula in 1985. It essentially seeks to provide attorney compensation based on reasonable hourly rates and a reasonable amount of time invested in the case.
But Florida also allows a multiplier of 1.1 to 2.5, to encourage law firms to take on difficult cases or those in which other firms are hard to find, or the plaintiff won’t be able to pay a retainer fee. A 2017 decision by the Florida Supreme Court upheld the multiplier method, as long as certain criteria are met.
That effectively “opened the floodgates” and has drastically inflated most plaintiffs’ fees, said Mark Friedlander, director of corporate communications for the Insurance Information Institute. He spoke Thursday in a webinar hosted by the financial rating firm AM Best.
“That’s why we’re seeing such heavy expense pressures on insurers and why some insurance companies are going out of business,” he said.
While other states have adopted various methods of awarding plaintiffs’ legal fees, Florida’s seems to be one of the most generous methodologies in the country, Tampa insurance attorney Matthew Lavisky has blogged. “The lure of a large attorney fee award has spawned the very litigation that the fee-shifting statute was intended to avoid,” he wrote.
Friedlander and others in the insurance industry now hope Florida lawmakers next week will rewrite the attorney fee rules and do away with the multiplier. But he said in the webinar that word from some Tallahassee legislators is to not expect a complete package of reforms from the five-day session.
“They’ve said don’t expect major changes,” Friedlander said. “I guess we have to look at the special session as a first step toward stability.”
While Florida courts have often awarded huge plaintiffs fees – and have sometimes struck them down – the judges are simply following statutes and court precedent, said Sastre, the Lloyd’s defense attorney.
“The Legislature is the one that has to formulate reasonable fee methodologies,” he said.
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