California Appellate Court Denies Lodestar Multiplier to Attorney in Divorce Case
Posted on December 17th, 2014 by Legal Fee Advisors
In a June 2014 decision, an attorney in a divorce action who did not have a fee agreement in writing with his client was not allowed to use a lodestar multiplier for his fee award.
This case involved an attorney who represented his client in two divorce cases. The attorney claims that he initially told his client that she would be charged $1,000 per hour for his time, to be paid monthly, but this alleged oral fee agreement was never put into writing. [1] However, the client never paid the attorney any fees during the course of these two cases. Later, she told him that she was refusing to pay his fees, denying that she had agreed to pay the $1,000 per hour rate.[2] In addition, the attorney claimed that he spent 300 hours on the first divorce action and 1,500 hours on the second action, but failed to keep detailed records as to this billable time.[3] For example, the attorney did not keep daily time records, but only estimated his time for the case’s most important tasks, and never kept records for smaller tasks such as phone calls.[4] The trial court awarded the attorney $7.8 million in attorney’s fees through the use of a lodestar multiplier on the attorney’s fees for the second divorce action. The appellate court rejected the use of the lodestar multiplier. The court accepted the client’s claim that the trial court should not have used the lodestar adjustment method in a case that does not involve a fee-shifting statute, contingent risk of non-payment to the attorney, or enforcement of an important public right or policy.[5] Since the present case did not involve any of these scenarios, the use of a lodestar multiplier was not appropriate. Furthermore, the court also did not want to award the attorney for his blatant violations of the Business and Professions Code, which requires that the attorney’s original fee for service agreement with the client be in writing.[6]
This case demonstrates the importance of accurate and detailed attorney recordkeeping in the billing context. The attorney in the Chodos case failed at this on several levels. First, he failed to obtain a signed written agreement of the terms of his representation of the client. If he had gotten this, there would have been no question of the rate that was initially agreed upon. The lodestar multiplier is not meant to be used for cases like this where the fee agreement was not contingent, so attorneys cannot rely on that method to fix their own recordkeeping errors. The attorney’s records of his billable time were also extremely below the acceptable standards for attorney billing. Accurate records of the attorney’s time would have made the court’s job of calculating his fees so much easier and far more accurate. The result of this decision exemplifies how important it is for attorneys to make sure that their bills and timekeeping procedures are transparent, fair and accurate from the outset of the case.
For more information on how Legal Fee Advisors can help companies create transparency and accuracy in legal billings, please contact David Paige at dpaige@legalfeeadvisors.com.
M. Connelly
Legal Fee Advisors © 2014
[1] Chodos v. Borman, 227 Cal. App. 4th 76, 173 Cal. Rptr. 3d 266 (2014), as modified on denial of reh’g (July 9, 2014), review denied (Oct. 22, 2014)
[2] Id.
[3] Id. at 84.
[4] Id.
[5] Id. at 92.
[6] Id. at 101.