Opinion ID: 1931095
Heading Depth: 2
Heading Rank: 3

Heading: Attorney's Fees Methodology

Text: We continue our explanation by examining whether, even in light of the § 27-7(k)(1) criteria, the Panel was required to use lodestar to determine an attorney's fees award. That is, we must determine whether lodestar can preempt a similar methodology or scheme set out in a local code. We first note, again, that the American Rule generally applies in Maryland, except when a fee-shifting statute or a contractual provision to the contrary exists. [9] The American Rule is the Maryland common-law rule. Generally, the lodestar rule is one method of calculation when a statute trumps the common-law rule. The Court of Special Appeals determined that the Panel's failure to arrive at an initial lodestar figure was erroneous. That court stated: As we review the Panel's decision, we observe preliminarily that there is no indication how, if at all, the Panel calculated the lodestar before considering the adjustment factors. Calculation of the lodestar, however, is the first step in the lodestar analysis. That fact alone leads us to conclude that the Panel committed legal error in calculating the fee award and that the case must be remanded for a determination of the lodestar. Flaa, 158 Md.App. at 497, 857 A.2d at 612-13. Manor contends, however, that, under the facts of the instant case, instead of a lodestar method, Montgomery County Code § 27-7(k)(1) governs the calculation of any attorney's fees that the Panel may, in its discretion, award in this case. Manor states that under this Montgomery County Code provision, no precise, mathematical, formulaic application of the `lodestar amount' is required since the statute itself ensures that a Panel adhering to the statute will include a determination of reasonable hours in its consideration of reasonable attorney's fees. Manor urges that the Court of Special Appeals was incorrect in holding that its inability to determine whether the Panel first established a lodestar figure, prior to reviewing the factors set forth in the Montgomery County Code, [leads to the conclusion that] the Panel erred as a matter of law. Manor summarizes its argument as follows: Whether we say that the Panel determined the `reasonable hours' by evaluating the `time and labor required' factor of the [§] 27-7(k)(1) factors, or we say that, in computing the lodestar figure the Panel determined that it was reasonable to spend 132 hours on the jurisdictional issue, but then, applying the factors from Friolo and Hensley, determined that no upward or downward adjustment of that number is necessary, the only difference is a matter of semantics. [Alteration added.] Mrs. Flaa, on the other hand, argues to this Court that any award of attorney's fees under civil rights legislation must be comprised of a two-step process: First, the calculating and awarding entity  whether an administrative body or a court  must determine a lodestar, i.e., the product of a reasonable number of hours expended on the case multiplied by a reasonable hourly fee. Next, the calculating and awarding entity may adjust the lodestar-derived figure upward or downward based upon the application of adjustment factors such as those prescribed in Montgomery County Code § 27-7(k)(1) or such as those delineated in Johnson and adopted by Hensley. Thus, according to respondent, the Court of Special Appeals was correct in its finding that the Panel's failure to arrive at an initial lodestar number was a repudiation of the case law, and thus, an error of law, and not simply an option within the discretion of the calculating and awarding entity. Respondent further argues that § 27-7(k)(1) cannot be considered either the functional equivalent or an acceptable substitute for the lodestar method because the § 27-7(k)(1) criteria address only the second, and far less important, part of the lodestar test, i.e., guidelines by which to increase or decrease an already lodestar-calculated attorney's fees award. Thus, according to respondent, the so-called secondary adjustment factors contained in the MCOHR's former fee-shifting provision did not abolish the requirement that the Panel employ the lodestar approach because: (i) the county statute is incomplete on its face in that it does not require the Panel to begin its analysis with a calculation of `reasonable hours times reasonable rate' and is missing important lodestar `adjustment factors'; and (ii) the county statute does not reflect legislative intent to preempt or supersede common law. [10] Our review of the considerable procedural history of this case reveals that Mrs. Flaa did not urge the application of the lodestar approach until such time as she filed her first petition for judicial review in the circuit court. Nevertheless, respondent suggests that Friolo should govern the award of attorney's fees under fee-shifting statutes in Maryland and she urges this Court to extend its Friolo holding, which applied the lodestar method to the fee-shifting statutes invoked in that case, to the matter before us. She observes that her case is a particularly worthy candidate for a lodestar calculation given its civil rights genre and the apparent novelty of its issues. Manor contends that Friolo does not stand for the proposition that attorney's fees can be calculated only upon the calculation initially of a total number of hours multiplied by an hourly rate. Rather, according to Manor, Friolo indicates that, in the absence of other statutory criteria for calculating an attorney's fees award, one must begin with a lodestar figure, i.e., a result obtained by multiplying a number of hours by an hourly rate. In the present case, Manor contends that the presence of the Montgomery County Code § 27-7(k)(1) criteria renders use of the lodestar method unnecessary, and the Panel's application of the Montgomery County Code criteria pursuant to the circuit court's mandate has resulted in a properly-determined discretionary award of attorney's fees. We determine, under the circumstances of the present case, that the criteria of § 27-7(k)(1) are the proper method by which to determine reasonable attorney's fees. Respondent has clearly misunderstood the thrust of our Friolo decision. By virtue of this Court's opinion in Friolo, we did not mandatorily adopt a lodestar approach ... as a matter of Maryland law id. at 520, 819 A.2d at 366, for all situations. Rather, our language articulated in Friolo applied lodestar to Md.Code (1991, 1999 Repl.Vol.), §§ 3-427 and 3-507.1 of the Labor and Employment Article, and indicated a general approval of the approach in conjunction with other fee-shifting statutes that provide for the possible award of attorney's fees, but lack criteria for how to calculate such fees. Friolo, 373 Md. at 504-05, 819 A.2d at 356. Friolo did not preclude the use of criteria other than those found in Johnson; Hensley ; Rule 1.5 of the Maryland Rules of Professional Conduct, or others. In the present matter, the case-specific facts indicate that at the time the Panel elected to make an attorney's fees award, legislative directions existed in Montgomery County Code § 27-7(k)(1), which were required to be considered in arriving at an award amount. Accordingly, these criteria formed the basis of the Panel's award consideration, and in basing its award on these criteria, the Panel did not act contrary to Friolo. Thus, Friolo remains intact as to those cases for which it is applicable. Mandatory legislative criteria, where they exist, for the setting of fee-shifted awards, are entirely appropriate for determining an award of attorney's fees, and in such circumstances, are to be utilized. In such instances where a statute creates the right to fee-shifting and contains criteria for the setting of such fees, the statutory criteria are to be invoked primarily; not as adjustment factors after the determination of some initial, foundational number under a lodestar approach. As a final matter, we note that respondent has observed that Montgomery County has replaced the entirety of Montgomery County Code § 27-7(k)(1) with Montgomery County Code § 27-8(a)(1)(A) which provides simply for the award of reasonable attorney's fees upon a finding of a violation of the County's Human Rights article. Montgomery County's ordinance change is noteworthy only for its prospective effect. The change does not alter the result in this case, as the Panel made its initial attorney's fees determination in 2000, prior to the repeal of Montgomery County Code § 27-7(k)(1), which occurred in 2001.