In Ketchum, our State Supreme Court reiterated that fee awards should be fully compensatory. Ketchum, 24 Cal.4th at 1133. The unadorned lodestar is computed by multiplying the number of hours reasonably spent by the prevailing hourly rate for private “attorneys in the community conducting ‘noncontingent’ litigation of the same type.” Id. “We remarked that the reasonable value of attorney services is variously defined as the ‘hourly amount to which attorneys of like skill in the area would typically be entitled.”’ Id.
In Ketchum, the trial court, in 1998, awarded an initial lodestar figure of $70,000.00 to the prevailing defendant’s attorney, Jeremy Friedman, based on the superior quality of the representation and his expertise in anti-SLAPP law as demonstrated by declarations from other attorneys. Ketchum, 24 Cal.4th at 1129. In addition, the trial court in Ketchum, applied a contingent-fee risk multiplier of 2.00 to the lodestar for a total award of $140,000.00. Id. This amount did not include any appeal fees. The California Supreme Court (for the most part) upheld the award. Id. at 1141-1142. The Supreme Court noted expert testimony that multipliers of two to four times the normal hourly rate are required to attract competent counsel where statutory fees are authorized. Id. at 1128. Similarly, the Rosenaur v. Scherer court, relying on our High Court in Ketchum, held that any portion of the fee that is contingent upon prevailing is subject to a contingent risk multiplier to compensate the attorney for the risk of nonpayment and the delay in payment incurred in the representation where mandatory fees are provided by statute as in SLAPP cases. Rosenaur v. Scherer, 88 Cal.App.4th at 282-285. Discussing the purpose of the anti-SLAPP statute, the California Supreme Court stated:
. . . the legislative aim in including the attorney fee provision [in section 425.16] was apparently to strengthen enforcement of certain constitutional rights, including freedom of speech and petition for redress of grievances, by placing the financial burden of defending so-called SLAPP actions on the party abusing the judicial system, and by encouraging private representation, including instances when a litigant cannot afford fees. ‘The experience of the market-place indicates that lawyers generally will not provide legal representation on a contingent basis unless they receive a premium for taking that risk.’ (Emphasis in original).
In anti-SLAPP cases, a defense attorney may agree to represent the defendant on a partial or full contingency basis order to ease the financial burden to the defendant. If the anti-SLAPP motion is ultimately unsuccessful, then the defense attorney would absorb the loss of all or a portion of his fees at market value and defendant would not be liable for the difference. If defendant prevails, however, the defense attorney may reserve the right to recover his full market rates from the SLAPP Plaintiffs in addition to any premium the court may award for partial contingency assumed. Rosenaur, 88 Cal.App.4th 260 at 283-288. Defense attorneys typically will not agree to this arrangement without the opportunity for a premium for contingent risk. As the California Supreme Court correctly observed in explaining its rationale and support for lodestar enhancements:
Under our precedents, the unadorned lodestar reflects the general local hourly rate for a fee-bearing case; it does not include any compensation for contingent risk, extraordinary skill, or any other factors a trial court may consider under Serano III. The adjustment to the lodestar figure, e.g., to provide a fee enhancement reflecting the risk that the attorney will not receive payment if the suit does not succeed, constitutes earned compensation; unlike a windfall, it is neither unexpected nor fortuitous. Rather, it is intended to approximate market-level compensation for such services, which typically includes a premium for the risk of non-payment OR delay in payment of attorney’s fees.
The purpose of a fee enhancement, or so-called multiplier, for contingent risk is to bring the financial incentives for attorneys enforcing important constitutional rights, such as those protected under the anti-SLAPP provision, into line with incentives they have to undertake claims for which they are paid on a fee-for-service basis . . .
A contingent fee must be higher than the fee for the same legal services as they are performed. The contingent fee compensates the lawyer not only for the services he renders but also for the loan of those services. The implicit interest rate on such a loan is higher because the risk of default(the loss of the case, which cancels the debt of the client to the lawyer) is much higher than that of conventional loans … 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. (Emphasis added.)
Contingent arrangements may be useful in cases where a defendant is not able to afford to retain competent counsel in an anti-SLAPP case.
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