California Appellate Court Rules that Firm Size Alone Should Not Control Plaintiff’s Recovery of Attorneys’ Fees

Posted on October 8th, 2014 by Legal Fee Advisors

In a September 2014 decision, Save Our Neighborhood Group v. City of Lancaster (AV California, LLC), a California appellate court declared that the trial court abused its discretion in relying solely on law firm size to calculate the plaintiff’s award of attorneys’ fees.

In this case, the plaintiff Save Our Neighborhood Group (SONG), a non-profit organization, had challenged the City of Lancaster’s plan to change the zoning designation so that another corporation, AV California LLC, could build a shopping center on a vacant lot in a city area that was zoned for residential use only.  After SONG prevailed on this matter at the trial court level, the plaintiff moved to collect attorneys’ fees as a private attorney general pursuant to Code Civ. Proc., Section 1021.5.  The City of Lancaster then entered into a separate settlement agreement with SONG, which the trial court was aware of when it ruled that SONG would receive attorneys’ fees from AV California as well.  The court used a “lodestar amount” to determine the amount of attorneys’ fees SONG was to receive.  This amount is “the number of hours reasonably expended multiplied by the reasonable hourly rate.”[1]  In calculating the reasonable hourly rate, the trial court focused solely on the fact that the firm SONG used was a small one, without considering that attorneys with comparable experience in land use and environmental law typically charge a higher hourly rate than the a typical small firm attorney.  The appellate court stated that this was an abuse of discretion on the part of the trial court, holding that “firm size is not properly the sole basis for fixing the rate.”[2] The appellate court then reversed the trial court’s order fixing the amount of attorneys’ fees.[3]

This case shows how important it is for trial courts to consider all the relevant factors in each case when calculating an award of attorneys’ fees.  The standard for calculating the reasonable hourly rate for the lodestar calculation  is the “hourly rate prevailing in the community for similar work,” yet here the trial court chose to ignore the type of law involved in this case, and simply focused on the size of the firm that the plaintiff retained.[4]  While the size of the firm might be relevant in terms of ability to efficiently staff cases with the right number of partners, associates, paralegals, etc…, this case demonstrates that, even though the appellate court must be highly deferential to the trial court regarding the amount of attorneys’ fees awarded, if trial courts take such a one-sided view with respect to the lodestar calculation, they will be overturned.

M. Connelly
Legal Fee Advisors © 2014

[1] Save Our Neighborhood Grp. v. City of Lancaster, No. B242866, 2014 WL 4370857 (Cal. Ct. App. Sept. 4, 2014) (unpublished).

[2] Id. at 18.

[3] Id.

[4] Id. at 15.

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