Attorneys’ Fee Awards Can Exceed Fees Actually Billed

John Cu
July 24, 2014

Sayers Properties III, Inc. v. Rankin, 2014 WL2192362 (Cal.App.1st District)

Plaintiff sued defendants for legal malpractice and breach of fiduciary duty arising out of defendants’ representation of plaintiff in a construction defect case, which lasted over seven years. After the court granted the defendants’ nonsuit motion, defendants sought their attorneys’ fees as the prevailing parties pursuant to the attorney-client fee agreement, in the amount of $843,245.27 (2,324.5 hours of attorney and paralegal time spent defending the construction case).

In determining the “reasonable rate of pay,” defendants relied on the Laffey Matrix. According to defendants, the Laffey Matrix “is an official source of attorney rates based in the District of Columbia area, which can be adjusted to the San Francisco Bay Area by using the Locality Pay Tables.” The Laffey Matrix provided a nine percent upward rate over rates in the District of Columbia. The lead defense attorney declared that the Laffey Matrix adjusted his rate upward to $517.75. That rate represented “a reasonable rate for competent trial counsel of his education and experience, as well as the complexity and specialization of these particular proceedings and the claims alleged therein.” He further declared that the Laffey Matrix adjusted the hourly rates for three other defense attorneys working on the case to $299.75 and for the four paralegals to $147.15. In granting the fee motion, the court noted that “the cost of sophisticated legal work is high” and awarded defendants the sum of $843,245.27 based on the hours and rates requested by defendants.

On appeal, plaintiff argued that the trial court abused its discretion in adopting rates that far exceeded the actual rates billed to the insurance company that paid the bill for the defense. In affirming the trial court’s award of fees, the appellate court noted that there was no requirement that the reasonable market rate mirror the actual rates billed. Following Chacon v. Litke, 181 Cal.App.4th 1234 (1st Dist. 2010), the Court held that “the reasonable market value of the attorney’s services is the measure of a reasonable hourly rate. This standard applies regardless of whether the attorneys claiming fees charge nothing for their services, charge at below-market or discounted rates, represent the client on a straight contingent fee basis, or are in-house counsel.” Accordingly, defendants were awarded the sum of $843,245.27.