Opinion ID: 1345017
Heading Depth: 2
Heading Rank: 2

Heading: Failure to Use a Multiplier

Text: The Commission further argues that the number of hours times the hourly rate of each attorney equals a reasonable attorney fee and that it correctly refused to increase that amount by a multiplier. Petitioners argue that the Commission had to increase the total fee by a multiplier to account for their risk of nonpayment, the results they obtained, the complexity of the case, the burdens undertaken, the efficiency of service, and the delay in compensation. They argue that the Stewart decision established the law of the case, specifically finding that all these factors were present and thus mandating the application of a multiplier. As stated above, we consider five factors in awarding a multiplier: (1) the quality of work performed, (2) the contingent nature of the case, (3) the plaintiff's burden, (4) the risks assumed, and (5) delay in payment. The Commission made no findings of fact on the quality of work performed, but it did, by implication, account for the quality of petitioners' work in large measure when it approved the hourly rates petitioners requested. The record reflects that the rates Barker and Flynn requested rank among the highest in Salt Lake City. They can charge such amounts in part because of the overall quality of their work as evidenced by their reputations. In considering use of a multiplier, we do not intend to reward them twice for the same quality. Instead, when considering whether to award a multiplier for the quality of the work performed, we must consider whether the quality of work in this specific case exceeded the quality of work these attorneys usually produce. Lindy, the case originating the lodestar method, suggests the following considerations in making this determination: 1. The result obtained ..., evaluated in terms of (a) the potential money damages available to the class member, i.e., a comparison of the extent of possible recovery with the amount of actual verdict or settlement; (b) the benefit  monetary or nonmonetary  conferred on the class.... 2. An evaluation of the professional methods utilized in processing the case,  rewarding the use of efficient methods to expedite the case and penalizing the use of methods the predominant purpose of which was to delay or obstruct the proceedings. Lindy, 540 F.2d at 118. Although the second consideration has no particular relevance to this case, the first provides useful insight. Petitioners' advocacy resulted in a refund to ratepayers of $4,630,164, including interest. Considering that even when this court disposed of the Stewart case in 1994, we still did not know whether the ratepayers would receive any money, Stewart, 885 P.2d at 783, this result is quite remarkable. In addition to monetary benefits, the ratepayers received nonmonetary, permanent benefits in that USWC is precluded from seeking excessive rates well into the future, thus eliminating the need for further or continued litigation. Given these extraordinary results, petitioners are entitled to additional monetary recognition for the quality of their work. The Commission failed to recognize these results. Therefore, its decision not to award a multiplier should be disregarded. To determine the contingent nature of the case, Lindy suggests that we evaluate the last three factors: the plaintiff's burden, the risks assumed, and the delay in payment. Lindy, 540 F.2d at 117. At the outset, we note that the Commission deemed the initial pro bono nature of petitioners' relationship with their clients to militate against the use of a multiplier, because petitioners did not really expect to receive payment. Whether the attorneys provided their services pro bono, at a discount, or at full market rate does not effect a determination of reasonable attorney fees. See Blum v. Stenson, 465 U.S. 886, 895, 104 S.Ct. 1541, 1547, 79 L.Ed.2d 891 (1984); Ramos v. Lamm, 713 F.2d 546, 551 (10th Cir.1983). Although both these cases concern a federal civil rights statute, the rationale that justifies their findings is the same: The rule instructs courts to consider the market rate for legal services, not to reduce the rates for pro bono services or reduced costs. See id. Holding otherwise would only discourage lawyers from taking such cases pro bono in the future. To the contrary, we wish to encourage the kind of public service performed by Barker and Flynn in taking this case despite the huge time commitment and significant risk of nonpayment. The Commission misunderstood the law on this point. Therefore, this aspect of its decision merits no deference. Looking next at the question of petitioners' burden, we reiterate that the Stewart case involved novel and difficult questions. [6] It lasted six years, required a writ of review to the state supreme court (which took two years to decide), and included only the slightest possibility of payment. Petitioners deserve the application of a multiplier to account for the burdens this history reflects. Moreover, in evaluating the risks assumed, the uncertainty of payment in this case was very high; its availability was a question of first impression. In addition, petitioners had agreed to represent the ratepayers pro bono and thus could not even rely on payment contingent upon their success in court. Thus petitioners undertook significant financial risks. Traditional contingency fee arrangements provide us with some guidance in this case, in that the burdens and risks to counsel in contingency cases are similar. Two of petitioners' affiants contend, and respondents do not contradict, that contingency fee cases in Utah requiring appeal usually set the fee at forty percent of the recovery. By using a percentage, the contingency fee arrangement accounts for results obtained and the amount involved, as required by Cabrera, in addition to the factors of risk and delay in payment. Finally, Flynn and Barker should receive some additional amount to account for the lost use of the money they would have received at the end of the case in normal contingency circumstances. In an ordinary contingency case, the percentage recovery is designed to account for the lost use of income during the course of the case. Contingency contracts, however, need not consider the extra time required in this case to settle attorney fees, and some compensation is due petitioners for the value of that loss. To calculate what a contingency fee would have been in this case, we take forty percent (the percentage generally charged in contingency fee cases where there is an appeal) of the $4,630,164 recovery generated by Barker and Flynn, which equals $1,852,065.60. As stated above, Flynn worked 1607.25 hours at $250 an hour, totaling $401,812.50. Barker worked 451 hours at $175 an hour, totaling $78,925. Thus petitioners' time alone is worth $480,737.50. We award a multiplier to take into consideration delay of payment, risk, quality of work, contingency, and the plaintiff's burden. However, when the common fund is quite high, as in this case, the percentage recovery should be reduced. See Court Awarded Attorney Fees, 108 F.R.D. at 256; see e.g., In re Agent Orange Product Liability Litigation, 611 F.Supp. 1296 (E.D.N.Y.1985) (awarding over $10,000,000 in attorney fees, less than six percent of common fund). Therefore, although a multiplier of four would more closely approximate the contingency arrangement, a multiplier of 2.5, equaling $1,201,843.75, is more appropriate given the size of the fund. In light of the Cabrera factors, we hold that $1,201,843.75 represents a reasonable attorney fee in this exceptional case.