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On the Hook for a Prevailing Party's Attorney's Fees? Here's What to Know About Contingency Fee Multipliers

Valerie A. Dondero and Caitlin A. Polly | July 18, 2022

With so much litigation in the first party property arena, courts are taking a stronger, more conservative look at a prevailing party’s attorneys’ fees pursuant to §627.428, Fla. Stat., and whether those claims entitle counsel to a contingency fee multiplier.

Under ¶627.428, a prevailing insured is entitled to recover fees from the insurer in a first party claim. The statute’s limitation, however, is that the court “shall” determine “a reasonable sum as fees or compensation” for the insured’s prosecuting of the suit. §627.428, Fla. Stat. Courts are quite familiar with the various factors required to be considered under Florida Patient’s Compensation Fund v. Rowe, 472 So. 2d 1145, 1150-51 (Fla. 1985), in order to determine a reasonable fee. The court must assess both an hourly rate for the attorney seeking fees, as well as a reasonable numbers of hours for the work performed.

Many courts are faced with deciding not only the reasonable number of hours spent litigating, but also whether the prevailing party’s attorney is entitled to a “contingency fee multiplier,” which can double and sometimes triple the hourly rates demanded. Florida has a three-pronged approach to assist in determining whether the award of a contingency fee multiplier is proper. Specifically, trial courts must determine, based on competent and substantial evidence: “(1) whether the relevant market requires a contingency fee multiplier to obtain competent counsel; (2) whether the attorney was able to mitigate the risk of nonpayment in any way; and (3) whether any of the factors set forth in Rowe are applicable, especially, the amount involved, the results obtained, and the type of fee arrangement between the attorney and [the attorney’s] client.” Std. Guar. Ins. Co. v. Quanstrom, 555 So. 2d 828, 834 (Fla. 1990) (emphasis added).

Though all factors are equally-assessed, more recent decisions highlight a deficiency in the presentation of competent, substantial evidence to overcome the first prong—relevant market factor and alternate competent counsel. The purpose of the relevant market factor is “to assess, not just whether there are attorneys in any given area, but specifically whether there are attorneys in the relevant market who both have the skills to handle the case effectively and who would have taken the case absent the availability of a contingency fee multiplier.” Joyce v. Federated Nat’l Ins. Co., 228 So. 3d 1122, 1135 (Fla. 2017). Recently, the Third District Court of Appeal reversed the portion of a fee award applying a contingency fee multiplier, holding that Plaintiff “failed to present any evidence [] that the relevant market required a contingency fee multiplier to obtain competent counsel . . . .” Impex Caribe Corp. v. Carl Levin P.A., 2022 WL 610157 (Fla. 3d DCA Mar. 2, 2022). The court likened the case to Universal Property & Casualty Ins. Co. v. Deshpande, 314 So. 3d 416, 420 (Fla. 3d DCA 2020), where the court reversed a contingency fee multiplier because Plaintiff’s fee expert failed to testify that, while there was other competent counsel available in the relevant market, they would not have taken the case on a simple contingency fee and would have done so only if the multiplier was available.

In an effort to thwart contingency fee multipliers, defense counsel must be prepared to highlight the extent of available competent counsel in the relevant market, and to present expert testimony outlining the plethora of competent, first-party claim-handling attorneys from which the insured could have chosen as counsel. Defense counsel should also be prepared to advise the court of other competent counsel in the market that would have taken the case on a simple contingency fee. “If there is no evidence that the relevant market required a contingency fee multiplier to obtain competent counsel, then a multiplier should not be awarded.” See USAA Cas. Ins. Co. v. Prime Care Chiropractic Ctrs., P.A., 93 So. 3d 345, 347 (Fla. 2d DCA 2012) (emphasis added).

Given the number of first party cases flooding Florida’s court system, contingency fee multipliers are increasingly being denied when there is no competent, substantial evidence that the multiplier is “required” in order to obtain competent counsel.

For more information, please contact firstpartyproperty@kubickidraper.com.

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