The Supreme Court Addresses Attorneys Fees and the Lodestar

On April 21, 2010, the Supreme Court of the United States released a significant attorney fee decision: Perdue v. Kenny A.  This decision, which addresses the calculation of attorney fees under a federal fee shifting statute, may be one of the most significant attorney fee decisions in some time.  Further, Perdue is applicable to the shifting of attorney fees under Section 28(a) and 28(b) of the Longshore and Harbor Workers’ Compensation Act, and by extension the Defense Base Act.   See, e.g., Newport News Shipbuilding & Cry Dock Co. v. Holiday, 591 F.3d 219, 227-28 (4th Cir. 2009); Jeffboat, LLC v. Director, OWCP, 553 F.3d 487, 489 (7th Cir. 2009); B & G Mining, Inc. v. Director, OWCP, 522 F.3d 657, 662-63 (6th Cir. 2008) (Black Lung Benefits Act).

The “lodestar” method is favored in federal courts for determining fees.  It “roughly” approximates the prevailing market value of an attorney had the attorney been billing on an hourly basis.  The question presented to the Court was “whether the calculation of an attorney’s fee…may be increased due to superior performance and results.”

The Court provided six “rules” in support of its decision that while an enhancement is possible, there is a “strong presumption” that the lodestar calculation is reasonable in and of itself: (1) “a ‘reasonable’ fee is a fee sufficient to induce a capable attorney to undertake the representation of a meritorious…claim”; (2) “the lodestar method yields a fee that is presumptively sufficient to achieve” the objective identified in the first rule; (3) “enhancements [to the lodestar calculation] may be awarded in ‘rare’ and ‘exceptional’ circumstances”; (4) “an enhancement may not be awarded based on a factor that is subsumed in the lodestar calculation”; (5) “the burden of proving that an enhancement is necessary must be borne by the fee applicant”; and, (6) “a fee applicant seeking an enhancement must produce ‘specific evidence’ that supports an award.”

To be sure, the Court provides a few examples of situations in which an enhancement may be warranted, but the tenor of the decision is clear: enhancements to the lodestar calculation of a reasonable attorney fee must be few and far between, and there is a “strong presumption” that the lodestar calculation is reasonable.