Court Opinion

ID: 9431126
Source: CourtListenerOpinion
Date Created: 2023-08-02 23:31:22.879464+00
Date Added: 2024-06-11T17:20:20.761983
License: Public Domain

*735Justice Blackmun,
with whom
Justice Brennan, Justice Marshall, and Justice Stevens join, dissenting.
In enacting fee-shifting statutes, Congress stressed that the fee awarded must be “adequate to attract competent counsel, but . . . not produce windfalls to attorneys.” S. Rep. No. 94-1011, p. 6 (1976). Today, a plurality of the Court ignores the fact that a fee that may be appropriate in amount when paid promptly and regardless of the outcome of the case, may be inadequate and inappropriate when its payment is contingent upon winning the case. By not allowing an upward adjustment for a case taken on a contingent basis, the plurality undermines the basic purpose of statutory attorney fees — ensuring that “private citizens . . . have a meaningful opportunity to vindicate the important Congressional policies which these laws contain.” Id., at 2.1
I
A
In the private market, lawyers charge a premium when their entire fee is contingent on winning. The Canons of Professional Ethics of the American Bar Association, as first promulgated in 1908, recognized that “[i]n determining the amount of the fee, it is proper to consider ... (5) the contingency- or the certainty of the compensation.” Canons of Ethics § 12, 33 A. B. A. Rep. 575, 578 (1908). The ABA Model Code of Professional Responsibility, originally promulgated in 1969 and subsequently adopted by nearly every State, see Nix v. Whiteside, 475 U. S. 157, 167, n. 4 (1986), likewise provides that one of the “[fjactors to be considered” *736in determining a reasonable fee is “[w]hether the fee is fixed or contingent.” Model Code of Professional Responsibility, DR 2-106(B)(8) (1980). The ABA’s most recently formulated ethical, standards, the ABA Model Rules of Professional Conduct, adopted in 1983, continue to reflect a consensus among lawyers that “whether the fee is fixed or contingent” is one of “[t]he factors to be considered in determining the reasonableness of a fee.” Model Rule 1.5(a) and 1.5(a)(8).
The premium added for contingency compensates for the risk of nonpayment if the suit does not succeed and for the delay in payment until the end of the litigation — factors not faced by a lawyer paid promptly as litigation progresses. See Clermont & Currivan, Improving on the Contingent Fee, 63 Cornell L. Rev. 529, 556-557, 561-566 (1978); Schwartz & Mitchell, An Economic Analysis of the Contingent Fee in Personal-Injury Litigation, 22 Stan. L. Rev. 1125, 1150-1154 (1970); F. MacKinnon, Contingent Fees for Legal Services 28, 62 (1964). All else being equal, attorneys naturally will prefer cases where they will be paid regardless of the outcome, rather than cases where they will be paid only if they win. Cases of the latter type are inherently riskier and an attorney properly may expect greater compensation for their successful prosecution. See Lindy Bros. Builders, Inc. v. American Radiator & Standard Sanitary Corp., 487 F. 2d 161, 168 (CA3 1973) (“‘No one expects a lawyer whose compensation is contingent upon his success to charge, when successful, as little as he would charge a client who in advance had agreed to pay for his services, regardless of success’”), quoting Cherner v. Transitron Electronic Corp., 221 F. Supp. 55, 61 (Mass. 1963); Wildman v. Lerner Stores Corp., 771 F. 2d 605, 612 (CA1 1985) (significant difference between a “case taken on a full retainer and a case in which an attorney spends many hours over a period of months or years with no assurance of any pay if the suit is unsuccessful”). See also E. Larson, Federal Court Awards of Attorney’s Fees 224-225 (1981).
*737In the private market, the premium for contingency usually is recouped by basing the fee on a percentage of the damages recovered. The premium also could be computed as part of an hourly rate that the lawyer bills after the litigation succeeds. See Clermont & Currivan, 63 Cornell L. Rev., at 546-547, 567; See, An Alternative to the Contingent Fee, 1984 Utah L. Rev. 485, 499-503. Under either approach, the market-based fee or hourly rate that is contingent on success is necessarily higher than the hourly rate charged when payment is current and certain. This fee enhancement ensures that accepting cases on a contingent basis remains an economically attractive and feasible enterprise for lawyers. See generally MacKinnon, at 3-6.
B
In directing courts to award a “reasonable” attorney’s fee to a litigant who vindicates various statutory rights, e. g., 42 U. S. C. § 7604(d) (Clean Air Act), Congress made clear that the winning lawyer should be paid at a rate that is basically competitive with what the lawyer is able to earn in other eases. Congress’ purpose — extensively described in the legislative history of the Civil Rights Attorney’s Fees Awards Act, 42 U. S. C. § 1988, but fully applicable to statutes that protect the environment, see Ruckelshaus v. Sierra Club, 463 U. S. 680, 691-692 (1983)—was to encourage the enforcement of federal law through lawsuits filed by private persons. Congress found that the market itself would not provide an adequate supply of interested lawyers because many potential plaintiffs lacked sufficient funds to hire such lawyers. See H. R. Rep. No. 94-1558, p. 1 (1976); S. Rep. No. 94-1011, at 2. Thus, fee awards were considered to be “an essential remedy” in order to encourage enforcement of the law. Ibid. And unless the fee reimbursement was “full and complete,” the statutory rights would be meaningless because they would remain largely unenforced. H. R. Rep. No. 94-1558, at 1. See also Note, Promoting The Vindica*738tion of Civil Rights Through the Attorney’s Fees Awards Act, 80 Colum. L. Rev. 346, 350-351, 372 (1980); Berger, Court Awarded Attorney’s Fees: What Is “Reasonable”?, 126 U. Pa. L. Rev. 281, 306-310 (1977).
Congress determined that the public would be best served by the award of fees similar to what “is traditional with attorneys compensated by a fee-paying client.” S. Rep. No. 94-1011, at 6. “It is intended that the amount of fees awarded ... be governed by the same standards which prevail in other types of equally complex Federal litigation, such as antitrust cases and not be reduced because the rights involved may be nonpecuniary in nature.” Ibid. See also H. R. Rep. No. 94-1558, at 9. Thus, in Blum v. Stenson, 465 U. S. 886 (1984), the Court emphasized: “The statute and legislative history establish that ‘reasonable fees’ under § 1988 are to be calculated according to the prevailing market rates in the relevant community.” Id., at 895.
Congress found that a broad variety of factors go into the computation of a “reasonable” attorney’s fee. One such consideration is the contingency that - the attorney will be paid only if he wins the case. Three of the four major cases cited as examples of “the appropriate standards . . . correctly applied,” S. Rep. No. 94-1011, at 6—and noted by this Court in Blum v. Stenson, 465 U. S., at 895, 897, n. 13—mentioned this risk as a factor for a court to weigh. See Johnson v. Georgia Highway Express, Inc., 488 F. 2d 714, 718 (CA5 1974);2 Stanford Daily v. Zurcher, 64 F. R. D. 680, 685-686 *739(ND Cal. 1974), aff’d, 550 F. 2d 464 (CA9 1977), rev’d on other grounds, 436 U. S. 547 (1978); Swann v. CharlotteMecklenburg Board of Education, 66 F. R. D. 483, 486 (WDNC 1975). In the Stanford case, the court expressly increased the fee award for the contingent nature of the attorneys’ work, noting that such an increase “parallels] the American Bar Association’s determination that attorneys deserve higher compensation for contingent than for fixed-fee work.” 64 F. R. D., at 685. The court explained: “From the public’s standpoint, the contingent fee helps equalize the access of rich, middle-class, and poor individuals to the courts by making attorney decisions concerning representation turn on an action’s merits rather than on the size of a client’s income.” Ibid. Thus, contrary to the plurality’s assertion, see ante, at 723-724, Congress envisioned that district courts would take the fact of contingency into account when calculating a reasonable attorney’s fee so that the resulting fee would be equivalent to prevailing market rates.3
As courts have gained more experience with fee calculations, many have begun to utilize as a “lodestar” the reasonable hours worked multiplied by a reasonable hourly rate. See Lindy Bros. Builders, Inc. v. American Radiator & Standard Sanitary Corp., 487 F. 2d, at 167-168; Hensley v. Eckerhart, 461 U. S. 424, 433 (1983) (approving use of the lodestar approach). The lodestar, however, was designed *740to simplify, not to circumvent, application of the Johnson factors where appropriate. See Copeland v. Marshall, 205 U. S. App. D. C. 390, 400, 641 F. 2d 880, 890 (1980) (en banc); Berger, 126 U. Pa. L. Rev., at 286-287. Thus, a statutory fee cannot be computed solely by reference to rates charged by corporate firms, which obtain many payments from their clients through monthly billings.4 Rather, in order to arrive at a “reasonable” attorney’s fee, a court must incorporate a premium for the risk of nonrecovery, for the delay in payment, and for any economic risks aggravated by the contingency of payment, at a level similar to the premium incorporated in market rates. The risk premium can be reflected in the hourly rate that goes into the lodestar calculation, or, if the hourly rate does not include consideration of risk, in an enhancement of the lodestar. See Blum v. Stenson, 465 U. S., at 903 (concurring opinion). Under either approach, adding a premium simply brings the fee up to the “reasonable” level contemplated by Congress. See 2 M. Derfner & A. Wolf, Court Awarded Attorney Fees, ¶ 16.04, p. 16-84 (1986) (“The increase in the fee to account for contingency ... is part of the fine tuning which courts must do to make a fee reflect the true market value of an attorney’s efforts”).5
An adjustment for contingency is necessary if statutory fees are to be competitive with the private market and if competent lawyers are to be attracted in their private practice to prosecute statutory violations. See The Commitee on Legal Assistance Committee Report on Counsel Fees in Public Interest Litigation, 39 Record of N. Y. C. B. A. 300, 317 *741(1984). This is simply the law of supply and demand. If lawyers can earn substantially higher pay from other cases in the private sector, they will tend either to reject statutory-enforcement cases or they effectively will be penalized for taking such cases. See Brief for Twelve Small Private Civil Rights Law Firms as Amici Curiae 6-29 (describing financial difficulties in depending on contingency cases with statutory attorney’s fees); see also Darden v. Illinois Bell Tel. Co., 797 F. 2d 497, 505 (CA7 1986) (concurring opinion) (“Unless fees under § 1988 are enhanced to take account of the risk of losing — whether through a multiplier or by the contingent fee device when the stakes are high — fees will be systematically too small”). Allowing adjustments for contingency similar to that given to attorneys in the private market thus appropriately “ ‘enable[s] counsel to accept apparently just causes without awaiting sure winners.’” Yates v. Mobile County Personnel Bd., 719 F. 2d 1530, 1533 (CA11 1983), quoting Jones v. Diamond, 636 F. 2d 1364, 1382 (CA5 1981).
Not surprisingly, the Courts of Appeals are in agreement that adjustments for the risk of nonrecovery are appropriate in most circumstances.6 And while this Court, in Blum v. *742Stenson, 465 U. S., at 901, n. 17, left open the question of contingency adjustments, the Court also made clear that Congress intended statutory fees to be competitive with the private market for lawyers’ services. Id., at 895. Thus, competitive awards, rather than being “the kind of 'windfall profits’ [Congress] expressly intended to prohibit,” ibid., are, instead, the way to implement congressional intent.
C
If it were the law of the land, the plurality’s decision, in Part IV of its opinion, to foreclose any compensation for the risk of nonrecovery would reduce statutory fees below the market rate and inevitably would obstruct the vindication of federal rights.7 Because fewer lawyers would be attracted to the work, some persons who now are able to bring valid claims would be unable to find a lawyer. They likely would be persons of modest means who could not afford to augment their lawyer’s fee to what the market would charge — precisely the persons Congress sought to assist. Even plaintiffs who somehow could manage to attract lawyers at below the *743market rate usually would get what they pay for: lawyers who are less than fully employed or who are less capable. Without compensation for contingency, “[b]usy and successful attorneys simply could not afford to accept contingent employment .... Such an arrangement would ill serve policies of enormous national importance.” Yates v. Mobile County Personnel Bd., 719 F. 2d, at 1534. As Congress recognized, effective enforcement of complex cases requires the services of experienced attorneys. Such lawyers are less likely to be underemployed. They therefore will tend to demand rates approaching what can be obtained in the private sector. Berger, at 314-315.
The plurality offers assurances that enforcement would not end completely because public-interest groups would still take these cases. See ante, at 726. In effect, the plurality would place the entire burden of injunctive actions and modest damages claims on the shoulders of the public-interest bar. But it is unrealistic to think that 600 public-interest lawyers in 90 public-interest law centers around the country would be able to pick up the slack from the rest of the bar, with its approximately 400,000 lawyers. “The services of the pro bono bar, which is concentrated in the eastern urban centers, simply [are] not available to most people.” Berger, at 313 (footnote omitted).
Significantly, the plurality’s opinion would validate payment of public-interest lawyers at substantially less than what would be competitive with the private market. In Blum, however, this Court made clear that nonprofit legal-aid organizations should receive no less in fee awards than the hourly rate set by the private market for an attorney’s services. 465 U. S., at 895.8 See also New York Gaslight Club, Inc. v. *744Carey, 447 U. S. 54, 70, n. 9 (1980). The plurality today attempts to accomplish indirectly what the Court refused to do directly in Blum.
The plurality further defends its approach by asserting that plaintiffs bringing large damages claims could continue to attract private lawyers. See ante, at 726. But those plaintiffs might be able to hire counsel in any event through private contingency arrangements. Congress provided for fee shifting precisely because it concluded that too many plaintiffs would be unable to obtain representation in this manner. The plurality’s solution would slight actions that seek injunctive relief or relatively small damages awards, on which the vindication of many federal 'rights depends. See Riverside v. Rivera, 477 U. S. 561 (1986).
II
In view of Congress’ desire that statutory fees be competitive with the private market, the plurality needs a compelling reason in order to reject the market approach for determining what constitutes a reasonable fee. Although the plurality suggests some reasons, its objections are all based on a fundamental mischaracterization of the enhancement for contingency in awarding attorney’s fees. The Court states that the issue before it is whether an attorney “may be awarded separate compensation for assuming the risk of not being paid,” and explains that “[t]hat risk is measured by the risk of losing rather than winning and depends on how unsettled the applicable law is with respect to the issues posed by the case and by how likely it is that the facts could be decided against *745the complainant.” Ante, at 715-716. Having framed the issue in this fashion, the Court discovers significant problems in allowing enhancements based on the likelihood of success in particular cases. The Court, for example, says it is disturbed that evaluation of the risk of loss may create a conflict of interest between attorneys and their clients, as both plaintiff and defense attorneys try to characterize their cases in a manner that will increase or decrease attorney’s fees, ante, at 721-722, and that it is difficult for a court to estimate retroactively a prevailing party’s chance of success once a court knows the outcome. Ante, at 722. The Court further notes that such enhancements have the perverse result of penalizing defendants with the strongest defenses and causing those defendants to subsidize plaintiffs’ attorneys for other unsuccessful actions that they may bring. Ibid. This last concern is of great significance to the plurality because it appears to be “[in]consistent with Congress’ decision to adopt the rule that only prevailing parties are entitled to fees.” Ante, at 725. The Court also expresses alarm, echoing the opinion of the Court of Appeals for the District of Columbia Circuit in Laffey v. Northwest Airlines, Inc., 241 U. S. App. D. C. 11, 33, 746 F. 2d 4, 26 (1984), cert. denied, 472 U. S. 1021 (1985), that “in theory, there should be no limit on the size of the fee if risk enhancement is permitted, for the less likely the chances of success in a particular case, the more ‘entitled’ the prevailing party should be to have the fee award reflect acceptance of this risk.” Ante, at 719; see also ante, at 725.
The underlying flaw in all of these objections is that the appropriate enhancement for risk does not depend, in the first instance, on the degree of risk presented by a particular case. Enhancement for risk is not designed to equalize the prospective returns among contingent cases with different degrees of merit.9 Rather, it is designed simply to place *746contingent employment as a whole on roughly the same economic footing as noncontingent practice, in order that such cases receive the equal representation intended by Congress. Enhancement compensates attorneys for the risk of nonpayment associated with contingent employment, a risk that does not exist in noncontingent cases. As discussed above, without the possibility of enhancement for contingency, an attorney, from a simple economic point of view, would prefer noncontingent employment to contingent employment. This is because even contingent cases with the best merit may sometimes fail, because delay in payment is inherent in any contingent arrangement, and because other economic risks may be aggravated by the contingency in payment.10 Thus, contrary to the plurality’s vision of an enhancement that radically increases as a case’s chance of success decreases, an enhancement for contingency in ordinary cases will not be based on the relative likelihood of success of a particular case.11
*747Once it is recognized that it is the fact of contingency, not the likelihood of success in any particular case, that mandates an increase in an attorney’s fee, the frightening difficulties envisioned by the plurality disappear. There is no reason to assume that, in most cases, a court will have to delve into the strengths and weaknesses of a particular case, that potential conflict of interests will arise between attorneys and clients, or that large enhancements disproportionate to the success of a case will be granted. Rather, a court’s job simply will be to determine whether a case was taken on a contingent basis, whether the attorney was able to mitigate the risk of nonpayment in any way, and whether other economic risks were aggravated by the contingency of payment. The Court of Appeals for the First Circuit correctly points out that “it is the actual risks or burdens that are borne by the lawyer or lawyers that determine whether an upward adjustment is called for.” Wildman v. Lerner Stores Corp., 771 F. 2d, at 613.12
*748The American Bar Association sets forth a reasonable approach for determining when, and to what degree, enhancement is appropriate in calculating a statutory attorney’s fee. Brief for American Bar Association as Amicus Curiae 18-22. A court first must determine whether an attorney has taken a case on a contingent basis. If a client has contracted to pay the “lodestar” fee (i. e., reasonable hours times a reasonable hourly rate), regardless of the outcome of the case, and has paid the attorney on a continuing basis, then the attorney has clearly avoided the risk of nonpayment and enhancement is not appropriate. See, e. g., Ohio-Sealy Mattress Mfg. Co. v. Sealy Inc., 776 F. 2d 646, 660 (CA7 1985) (plaintiff paid lawyers on a regular hourly basis and therefore “lawyers neither risked noncompensation nor endured a delay before payment”); Jones v. Central Soya Co., 748 F. 2d 586, 592 (CA11 1984) (no indication that case was taken on a contingent basis and therefore upward adjustment not appropriate). The court also must determine if an attorney has been able to mitigate the risk of nonpayment in any way. For example, if a client has agreed to pay some portion of the lodestar amount, regardless of the outcome of the case, the attorney has mitigated the risk of loss to some extent, although the percentage of total expenses paid by the client will indicate how much of a mitigating factor this contribution should be considered to be. See, e. g., Stanford Daily v. Zurcher, *74964 F. R. D., at 686 (client agreed to pay $5,000 retainer and to undertake fundraising effort, but attorneys clearly not guaranteed payment for most of the hours expended). Or, for example, if the attorney has entered into a contingent-fee contract in a suit seeking substantial damages, the attorney again has mitigated the risk to some extent by exchanging the risk of nonpayment for the prospect of compensation greater than the prospective lodestar amount. Even in such cases, of course, a court must still calculate a reasonable attorney’s fee to be assessed against the defendant. There is no reason to grant a defendant a “windfall” by excusing payment of attorney’s fees simply because a plaintiff has entered into a contingent-fee contract. See, e. g., Hamner v. Rios, 769 F. 2d 1404, 1408-1410 (CA9 1985); Sargeant v. Sharp, 579 F. 2d 645, 649 (CA1 1978).
If an attorney and client have been unable to mitigate the risk of nonpayment, then an enhancement for contingency is appropriate. In many cases, a client will be unable to pay for counsel or will be unwilling to assume the risk of liability for attorney’s fees, even if the public interest may be significantly aided by the private litigation. Other cases simply will not generate significant funds, even if they are successful. Many actions seek only declaratory or injunctive relief, many are hampered by immunity doctrines and special defenses available to the defendants, and many will generate only small awards. See H. R. Rep. No. 94-1558, at 9; Riverside v. Rivera, 477 U. S. 561 (1986); see also Rowe, The Legal Theory of Attorney Fee Shifting: A Critical Overview, 1982 Duke L. J. 651, 676.
As the American Bar Association points out, a court must not only determine whether an attorney has been able to mitigate the economic risk of nonpayment, it must also determine whether specific aspects of the case have aggravated that economic risk. Brief for American Bar Association as Amicus Curiae 21-22. The enhancement for contingency compensates the attorney primarily for the risk of spending *750numerous hours, indeed often years, on a case, with the knowledge that no payment may ever be recovered. Other aspects of a case, however, can aggravate the economic risk inherent in contingency payments.
First, although the Court treats delay in payment as independent of the risk of nonpayment, see ante, at 716, such delay is an integral aspect of contingency payments for which compensation is appropriate.13 Delay in payment causes cash-flow problems and deprives an attorney of the use of money, thus magnifying the economic risk associated with the uncertainty of payment. See, e. g., Copeland v. Marshall, 205 U. S. App. D. C., at 403, 641 F. 2d, at 893; Brief for Twelve Small Private Civil Rights Law Firms as Amici Curiae 6-31 (describing difficulties related to delayed payments). Indeed, some types of litigation, such as cases seeking institutional reform or involving complex environmental issues, have a potential for such significant delay that attorneys must be assured of an appropriate enhancement in order to offset the financial disincentive to taking such cases.
Second, a case may present greater economic risks because of a particular attorney’s circumstances. For example, contingent litigation may pose greater risks to a small firm or a solo practitioner because the risk of nonpayment may not be offset so easily by the presence of paying work, and because such paying work may have to be turned away once a contingent case is accepted.14 Conversely, where responsibility for *751a case is shared among several firms, the relative economic risk borne by each firm may be diminished. See, e. g., In re Fine Paper Antitrust Litigation, 98 F. R. D. 48, 84 (ED Pa. 1983), aff’d in part and rev’d in part, 751 F. 2d 562 (CA3 1984).15
In most cases in which an enhancement for contingency is sought, therefore, a court will not need to inquire into the relative likelihood of success of the particular case before it. It is possible, however, that in a few, unusual cases the likelihood of success may appropriately be taken into account. Sometimes, the “legal” risks facing a case may be so apparent and significant that they will constitute an economic disincentive independent of that created by the basic contingency in payment. When the result achieved in such a case is significant and of broad public interest, an additional enhancement is justified in order to attract attorneys to take such cases, which otherwise might suffer from lack of representation. Extra enhancement for such cases, however, should be awarded in exceptional cases only. In most cases where the “legal” risks are high, and the case therefore novel and difficult, attorneys may be expected to spend a greater number of hours preparing and litigating the case. Courts should consider this seriously in determining the number of “reasonable” hours to be incorporated in the lodestar and should be careful not to reduce unduly the number of hours in a novel and difficult case. If a court finds, however, that an attor*752ney has taken a significant legal risk in a case of important public interest, and that this risk has not been compensated adequately by the court in the number of hours represented in the lodestar, the court may then grant an enhancement above that awarded for the basic contingency risk. In such a case, the court must make detailed findings regarding the particular legal risks that were apparent at the outset of the litigation and the importance of the result obtained — findings that would justify the additional enhancement.
Almost all of the plurality’s objections to enhancements for contingency become irrelevant once such enhancement is seen, as a general matter, to be completely independent from the likelihood of success in particular cases. Under the approach outlined above, there is no reason for a court to assess the success of a case retroactively, no cause for a conflict of interest to arise between attorney and client, and no possibility of a grant of huge multipliers simply because the odds against a case were significant.16 The only remaining objection is that awarding higher fees to lawyers who accept contingent cases gives such lawyers the economic stability with which to bring other, possibly unsuccessful, lawsuits. In the plurality’s view, this contravenes Congress’ intent to award attorney’s fees only to prevailing parties. Ante, at 725. But this objection must ultimately fail. The fact is that an attorney still recovers fees only when that attorney’s client prevails in a lawsuit. If the attorney represents a client in an unsuccessful contingent litigation, no fees are recovered. That the attorney may use the fees obtained in the successful contingency lawsuit to bring other lawsuits — some of which will not be successful — does not contravene in any way Congress’ mandate that fees be awarded solely to prevailing *753parties.17 There is certainly no indication in the legislative history of § 1988 that Congress’ restriction of attorney’s fees to prevailing parties was intended to deny reasonable fees to attorneys who would use their income to subsidize unsuccessful litigation. Indeed, that would be contrary to Congress’ intent that attorneys bringing statutory violation cases be compensated in a manner similar to that by which attorneys in the private market are compensated. As in the private market, what a successful attorney does with earned fees is the attorney’s own business.
The basic objective for courts to keep in mind in awarding enhancements for risk is that a “reasonable attorney’s fee” should aim to be competitive with the private market, even if it is not possible to reflect that market perfectly. Thus, an enhancement for contingency, whether calculated as an increase in the reasonable hourly rate used to arrive at the lodestar or added to the lodestar as a bonus or a multiplier, is not designed to be a “windfall” for the attorney of the prevailing party. Rather, it is designed to ensure that lawyers who take cases on contingent bases are properly compensated for the risks inherent in such cases. Vindication of the statutory rights passed by Congress depends on the continued availability and willingness of highly skilled lawyers to take cases for which they will receive a statutory attorney’s fee. In setting such fees, courts must ensure that the fees are “reasonable” — i. e., that the fees properly compensate an attorney for the risks assumed.
*754Ill
Respondent Delaware Valley “clearly prevailed in attaining what [it] sought and [won results that] would not have occurred without [its] efforts.” 581 F. Supp. 1412, 1420 (ED Pa. 1984). As a prevailing party, Delaware Valley is entitled to a statutory fee award. Newman v. Piggie Park Enterprises, Inc., 390 U. S. 400, 402 (1968).
This case also appears to be a candidate for a contingency adjustment because the plaintiffs’ lawyers apparently accepted the case on the expectation that they would be paid only if their clients prevailed. The District Court, however, explained its award of a multiplier in three phases of the litigation in the following brief statement:
“The contingent nature of plaintiffs’ success has been apparent throughout this litigation. Plaintiffs entered the litigation against the U. S. Government and the Commonwealth of Pennsylvania. The case involved new and novel issues, the resolution of which had little or no precedent. Commencing in Phase IV and continuing up until the present, plaintiffs have had to defend their rights under the consent decree due to numerous attempts by defendants and others to overturn or circumvent this court’s Orders.” 581 F. Supp., at 1431.
I conclude that we should vacate the award and remand the case to the District Court for further findings. First, as I have explained, the District Court should determine whether respondent’s attorneys took this case on a contingent basis, whether they were able to mitigate the risks of nonpayment in any way, and whether other economic risks were aggravated by the contingency of payment. The court then should arrive at an enhancement for risk that parallels, as closely as possible, the premium for contingency that exists in prevailing market rates. The court should thereby arrive at an enhancement that appropriately compensates the attorneys for the risks assumed.
*755Second, the court might also determine whether this ease deserves an extra enhancement because of the significant legal risks apparent at the outset of the litigation and because of the importance of the case. I would note, however, that respondent’s attorneys began this litigation in order to enforce a consent decree — a situation that does not usually entail difficult legal risks. If the District Court were to believe that the case nonetheless did involve significant legal risks at the outset of the litigation, it would make specific findings to that effect and would not simply state that the “case involved new and novel issues.” Ibid.18
The plurality’s per se ruling, in Part IV of its opinion, against enhancements for contingency contravenes Congress’ express intent that statutory attorney’s fees should be equivalent to prevailing market rates so that highly skilled lawyers will be available to vindicate the statutory rights conferred by Congress. At the least, however, the majority of this Court leaves open the opportunity for district courts to award enhancements for contingency in selected cases.
I respectfully dissent.

 The concurrence recognizes that Congress did not intend to foreclose enhancements for contingency in the setting of reasonable attorney’s fees. See ante, at 731. The plurality also recognizes, after a fashion, that fee-shifting statutes might be “construed to permit supplementing the lodestar in appropriate eases by paying counsel for assuming the risk of nonpayment.” See ante, at 728. Neither opinion, however, follows through on its analysis by remanding the case to the District Court for application of the proper standards.

 In Johnson v. Georgia Highway Express, Inc., the court essentially adopted the factors that the ABA Model Code of Professional Responsibility DR 2-106(B) sets forth as guidelines for determining the size of an appropriate attorney’s fee, including “[w]hether the fee is fixed or contingent.” 488 F. 2d, at 718 (emphasis omitted). The other factors cited by the court included: the time and labor required for the case, the novelty and difficulty of the questions, the skill required to perform the legal service properly, the preclusion of other employment, the customary fee, time limitations imposed by the client, the experience of the attorneys, the undesirability of the case, the nature of the relationship with the client, and *739awards in similar eases. Id., at 717-719. Many of these factors can be included within the “lodestar,” in which the reasonable hours worked are multiplied by a reasonable hourly rate. See Blum v. Stenson, 465 U. S., at 898-899.

 Bills have been introduced in Congress to prohibit “bonuses or multipliers,” including adjustments for the risk of nonrecovery, where a suit is brought against the United States, a State, or a local government. See H. R. 5757, 98th Cong., 2d Sess., §§ 6(a)(1) and (2) (1984); S. 2802, 98th Cong., 2d Sess., §§ 6(a)(1) and (2) (1984); H. R. 3181, 99th Cong., 1st Sess., §§ 6(a)(1) and (2) (1985); S. 1580, 99th Cong., 1st Sess., §§ 6(a)(1) and (2) (1985). So far these efforts to limit recovery of attorney’s fees have been unavailing.

 Lawyers who are paid on an hourly basis, of course, face some risk of nonpayment, because not all hours worked can be billed. The hourly rate charged may reflect this. See Murray v. Weinberger, 239 U. S. App. D. C. 264, 272, 741 F. 2d 1423, 1431 (1984).

 I therefore have little quarrel with the plurality’s statement that “[n]either the Clean Air Act nor § 1988 expressly provides for using the risk of loss as an independent basis for increasing an otherwise reasonable fee.” Ante, at 723 (emphasis added). The difficulty is that, on purely economic terms, a statutory attorney’s fee is not “otherwise reasonable” if it fails to include some premium for the contingency in payment.

 After the Court left the issue open in Blum v. Stenson, 465 U. S., at 901, n. 17, almost all Courts of Appeals have upheld enhancements for contingency or have ruled that such enhancements are allowable in appropriate circumstances. See, e. g., Wildman v. Lerner Stores Corp., 771 F. 2d 605, 613 (CA1 1985); Lewis v. Coughlin, 801 F. 2d 570, 573-574 (CA2 1986); Durett v. Cohen, 790 F. 2d 360, 364, and n. 3 (CA3 1986); Vaughns v. Board of Ed. of Prince George’s County, 770 F. 2d 1244, 1246 (CA4 1985); Sims v. Jefferson Downs Racing Assn., Inc., 778 F. 2d 1068, 1084 (CA5 1985); Kelley v. Metropolitan County Bd. of Ed., 773 F. 2d 677, 683, 686 (CA6 1985) (en banc), cert. denied, 474 U. S. 1083 (1986); Moore v. Des Moines, 766 F. 2d 343, 346 (CA8 1985), cert. denied, 474 U. S. 1060 (1986); Planned Parenthood v. Arizona, 789 F. 2d 1348, 1353-1354 (CA9 1986); Ramos v. Lamm, 713 F. 2d 546, 558 (CA10 1983), cited with approval in Jordan v. Heckler, 744 F. 2d 1397, 1401-1402 (CA10 1984); Jones v. Central Soya Co., 748 F. 2d 586, 591 (CA11 1984); Crumbaker v. Merit Systems Protection Board, 781 F. 2d 191, 196 (CA Fed. 1986).
The Courts of Appeals for the District of Columbia and the Seventh Circuits have questioned the propriety of risk enhancement. See Laffey v. *742Northwest Airlines, Inc., 241 U. S. App. D. C. 11, 36, 746 F. 2d 4, 29 (1984), cert. denied, 472 U. S. 1021 (1985); McKinnon v. Berwyn, 750 F. 2d 1383, 1392-1393 (CA7 1984). The Court repeats the analyses of these cases in some detail. See ante, at 719-720, and n. 6. Panels in each of those two Circuits, however, have indicated that enhancements would be appropriate in certain situations. See Murray v. Weinberger, 239 U. S. App. D. C. 264, 272-273, 741 F. 2d 1423, 1431-1432 (1984); Ohio-Sealy Mattress Mfg. Co. v. Sealy, Inc., 776 F. 2d 646, 661 (CA7 1985). Moreover, as the plurality does in this case, the courts in both Laffey and McKinnon misconstrued the nature and purpose of enhancements for contingency.

 The plurality’s conclusion in Part IV of its opinion is, of course, not the governing law because five Members of this Court (those who are parties to this opinion and Justice O’Connor) believe that an enhancement for contingency is appropriate in specified cases. See ante, at 731 (concurrence) (“I conclude that Congress did not intend to foreclose consideration of contingency in setting a reasonable fee under fee-shifting provisions such as that of the Clean Air Act, 42 U. S. C. § 7604(d), and the Civil Rights Attorney’s Fees Awards Act, 42 U. S. C. § 1988”).

 A nonprofit, public-interest law firm cannot obtain additional revenue by charging its clients for services (other than expenses) and still retain its tax-exempt status as a charitable organization. See 26 CFR § 1.501(c)(3)-1 (1987); Rev. Proe. 71-39, § 3.02, 1971-2 Cum. Bull. 575; Rev. Proc. 75-13, 1975-1 Cum. Bull. 662; Rev. Rul. 75-74, 1975-1 Cum. Bull. 152; Rev. Rul. *74475-75, 1975-1 Cum. Bull. 154. Acceptance of statutory fee awards within limits, however, does not jeopardize that status. See Rev. Rul. 75-76, 1975-1 Cum. Bull. 154. And public-interest firms generally may not use money they receive from the Federal Government, such as the limited public funding received through the Legal Services Corporation, in cases where fees are available. See 42 U. S. C. § 2996f(b)(1); Hensley v. Eckerhart, 461 U. S. 424, 446, n. 6 (1983) (opinion concurring in part and dissenting in part).

 Such equalization is the result under the plurality’s view of risk enhancement. Under that view, an attorney who takes relatively weak contingent cases would prevail infrequently, but could expect to receive large *746enhancements. This attorney would thus receive approximately the same compensation as an attorney who takes stronger contingent cases, prevails more often, and accordingly receives smaller enhancements.

 See, e. g., Hensley v. Eckerhart, 461 U. S., at 449 (opinion concurring in part and dissenting in part) (“Courts applying § 1988 must also take account of the time-value of money and the fact that attorneys can never be 100% certain they will win even the best ease”); Crumbaker v. Merit Systems Protection Board, 781 F. 2d, at 197 (argument that no risk enhancement should be allowed, because plaintiff’s attorney must have known, on the basis of law and facts in the case, that the defendant could not prevail, is “inane”; case required the best ability of counsel, defendant vigorously contested the case, and no case is certain to prevail).

 See Leubsdorf, The Contingency Factor in Attorney Fee Awards, 90 Yale L. J. 473, 501 (1981) (Leubsdorf) (“A contingency award does not require an inquiry into the likelihood of success in each case”); Note, Attorney Fees and the Contingency Factor Under 42 U. S. C. § 1988: Blum v. Stenson, 465 U. S. 886 (1984), 64 Ore. L. Rev. 571, 588 (1986) (“[Standard contingency adjustment, unrelated to the risks of any particular case, [should be] used in calculating section 1988 attorney’s fees”).
Indeed, it is ironic that the Court draws as heavily as it does on the article by Professor Leubsdorf, see ante, at 721-722—an article on which the Court of Appeals for the District of Columbia Circuit in Laffey and the *747Court of Appeals for the Seventh Circuit in McKinnon likewise rely. In his article, Professor Leubsdorf clearly sets forth the difficulties that arise when contingency enhancements are based on the relative likelihood of success in particular cases, Leubsdorf, at 482-497 —an approach that he terms “the Lindy-Grinnell approach” because of two leading eases in the area, id., at 478-482. But Professor Leubsdorf begins his analysis with a recognition that some enhancement for contingency is necessary if attorneys are to receive the fair market value of their work. Id., at 480 (“A lawyer who both bears the risk of not being paid and provides legal services is not receiving the fair market value of his work if he is paid only for the second of these functions. If he is paid no more, competent counsel will be reluctant to accept fee award cases”). Thus, as the professor explains: “Although economic reasoning justifies a contingency bonus, it does not by itself explain the Lindy-Grinnell approach to calculating the size of the bonus” (first emphasis added). Ibid. Professor Leubsdorf subsequently offers alternative approaches for calculating and awarding contingency enhancements. Id., at 501-512.

 Thus, contrary to the implication in the Court’s opinion, ante, at 717-718, the Court of Appeals in Wildman did not approve of contingency enhancements based on the likelihood of success in particular cases. Rather, the court vacated the multiplier granted by the District Court — which had held, without elaboration, that the contingent nature of the ease and the *748quality of the attorney’s work warranted an enhancement — and remanded the case for the District Court to determine whether an enhancement for contingency was warranted. 771 F. 2d, at 613-614. Among the factors to be considered on remand were: what, if any, payment the attorneys would have received had the suit not been successful; what, if any, costs or expenses the attorneys would have incurred if the case had been lost; the extent to which the attorneys were required to compensate associates and to carry overhead expenses without assurance of compensation; and whether other attorneys refused to take the case because of the risk of nonpayment. Id., at 614. All these factors focus solely on the extent of contingency in payment and not on the likelihood of success based on the law or facts in the particular case.

 Although the Court errs in not viewing delay as an integral component of contingency, it is gratifying to note that the Court does “not suggest. . . that adjustments for delay are inconsistent with the typical fee-shifting statute.” Ante, at 716.

 See, e. g., Brewer v. Southern Union Co., 607 F. Supp. 1511, 1532 (Colo. 1984) (small firm); Uzzell v. Friday, 618 F. Supp. 1222, 1227 (MDNC 1985) (solo practitioner). A ease to which a substantial percentage of an attorney's law practice is devoted, see, e. g., Craik v. Minnesota State University Bd., 738 F. 2d 348, 350-351 (CA8 1984), or in which additional personnel must be hired without assurance of compensation, may also be riskier than an ordinary contingent case.

 Economic risks might also be increased if a case foreclosed participation in otherwise available business because of potential conflicts of interest, or if the case was so unpopular as to risk loss of other business. See, e. g., Johnson v. Georgia Highway Express, Inc., 488 F. 2d, at 719 (one of the factors to consider is the “ ‘undesirability’ of the case” because of the effect it may have on obtaining other business) (emphasis omitted); York v. Alabama State Board of Education, 631 F. Supp. 78, 85 (MD Ala. 1986) (successful plaintiffs’ civil rights lawyers often not hired for other types of sophisticated federal litigation). Although these circumstances probably will exist in comparatively few cases, attorneys should nonetheless be compensated if they have undertaken representation despite such risks.

 The cases in which an extra enhancement is granted for the low likelihood of success and for the importance of the result achieved will be sufficiently rare that the plurality’s concerns lose much of their force. Moreover, those cases will tend to be the important test cases that should be encouraged through an award of attorney’s fees.

 The justification for a contingency premium can be explained either as an inducement to persuade an attorney to invest his time in a matter that may be unproductive — even a lawyer who has all the hourly fee work that he can handle may be willing to accept a contingency if he concludes that the value of the potential premium justifies the risk of nonpayment — or as a means of providing a level of compensation that will offset the losses on other cases that fail. Either explanation is simply a reflection of how the private market compensates for contingency. See, e. g., Berger, Court Awarded Attorney’s Fees: What is “Reasonable”?, 126 U. Pa. L. Rev. 281, 325 (1977).

 Both the District Court and the Court of Appeals relied heavily on the fact that respondent faced serious and persistent opposition in this case. See 581 F. Supp., at 1431; 762 F. 2d 272, 281 (1985). The fact that an attorney faces strong opposition by a well-funded opponent should certainly be given significant weight by a court. This factor, however, ordinarily becomes relevant in the assessment of the reasonableness of the hours expended by the attorney in preparing and litigating the ease. Like the novelty or difficulty of a case, a strong and persistent opponent usually demands a significant increase in the hours devoted to a case. In the few cases in which an extra enhancement is justified for significant legal risks faced at the outset of litigation, a court may take into account as well the perceived strength of the opposition at the outset. A court, however, should grant such extra enhancement only if it determines that the attorneys have not already been adequately compensated through the number of reasonable hours that constitute the lodestar.