Blum v. Witco Chemical Corp.

702 F. Supp. 493, 1988 U.S. Dist. LEXIS 14999, 49 Empl. Prac. Dec. (CCH) 38,895, 49 Fair Empl. Prac. Cas. (BNA) 388, 1988 WL 139485
CourtDistrict Court, D. New Jersey
DecidedDecember 27, 1988
DocketCiv. A. 83-3047
StatusPublished
Cited by2 cases

This text of 702 F. Supp. 493 (Blum v. Witco Chemical Corp.) is published on Counsel Stack Legal Research, covering District Court, D. New Jersey primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

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Blum v. Witco Chemical Corp., 702 F. Supp. 493, 1988 U.S. Dist. LEXIS 14999, 49 Empl. Prac. Dec. (CCH) 38,895, 49 Fair Empl. Prac. Cas. (BNA) 388, 1988 WL 139485 (D.N.J. 1988).

Opinion

OPINION

SAROKIN, District Judge.

INTRODUCTION

The Supreme Court has sent a Christmas gift to this court delivered via the Third Circuit Court of Appeals. It is called “How to Make an Attorney Fee Multiplier.” However, the instructions are so confusing and inconsistent that this court has been unable to put the “gift” together. Before dealing with the specific instructions received, it is necessary to consider what it is that we are to construct. In doing so we must reconsider the purpose of contingency fee agreements and how they relate to statutory fee awards, particularly in civil rights cases.

The typical contingency fee agreement permits the client and his or her counsel to provide that in the event of a recovery, the fee will be a percentage of that recovery. In the event of no recovery there will be no fee. By this arrangement the attorney accepts two major risks: (1) the client may not prevail and counsel will receive nothing, and (2) the percentage applied to the recovery may not be sufficient to compensate for the time expended, even if the client prevails. As a result, the contingency agreement usually anticipates a higher fee than would be charged if billing were done solely on an hourly basis. The logic is simple. If the attorney may not be compensated at all or adequately, a premium should be paid if the matter is concluded as both client and counsel hope. It is recognized that such arrangements permit those who cannot afford to hire lawyers on an hourly basis to have access to our judicial system. It opens the courthouse door to the poor.

Having recited the obvious, it next becomes necessary to view such arrangements in the context of statutory fee awards. The same policy which permits and encourages private contingency contracts underlies congressionally authorized fee awards to the prevailing party in certain types of litigation. It provides the means to the underprivileged and encourages the enforcement of certain rights in instances in which it would not otherwise be feasible or affordable to do so. See *495 Senate Report 94-1011, Civil Rights Attorney’s Fees Award Act of 1976, 1976 U.S. Code Cong. & Admin. News 5908, 5910.

Statutory fee cases are distinguishable from contingency agreements, however, in that statutory fee cases carry one principal risk to counsel, not two. They likewise, in most instances, will not provide for any payment if the client does not prevail, but they do provide to a prevailing party full payment of the time counsel reasonably devoted to the matter, rather than being dependent on the size of the recovery. If otherwise justified, the fee award may even exceed the total recovery, but full compensation for the time reasonably devoted is guaranteed.

The question presented is when and whether counsel is entitled to have her hourly compensation increased because she has assumed the risk of receiving no fee at all. Since the purpose of these statutes is to encourage the vindication of certain enumerated rights and provide competent counsel to accept and pursue these matters, the ultimate question is whether further fee enhancement is necessary to obtain the services of such counsel. The court fears, however, that both the Supreme Court and the Third Circuit Court of Appeals have designed an erector set from which no attorney will ever be able to build a valid claim for a contingency enhancement or multiplier.

Initially, the Supreme Court has held that determination of this issue requires a marketwide analysis of the legal community and is not to be resolved by consideration of the specific risk encountered in the particular litigation under consideration. See Pennsylvania v. Delaware Valley Citizens’ Council for Clean Air, 483 U.S. 711, 107 S.Ct. 3078, 3089, 97 L.Ed.2d 585 (1987) (O’Connor, J., concurring) [hereinafter “Delaware Valley II”]. This court respectfully submits that evidence of the practices and expectations in non-statutory fee cases is not relevant.

In private litigation the client is usually given the choice between paying an hourly rate — win or lose — or paying a percentage only if there is a successful result. Of course, that inquiry will demonstrate that attorneys will not insist upon a contingency in order to undertake such matters, since they will be paid their fee on an hourly basis irrespective of the outcome. If the client is unable or unwilling to enter into such an arrangement, then a contingency is the only alternative. Such contingency is invariably geared to the amount of the recovery and not the time devoted by counsel.

The unique question raised in statutory fee cases is whether competent counsel can be obtained with the understanding that if they lose they will receive nothing, but if they prevail they will be compensated solely upon the basis of the time devoted. Therefore, that inquiry can only be directed towards those who regularly handle such matters. In those circumstances, evidence of the practices and expectations of such specialists is relevant.

Nonetheless, it is doubtful that analysis of the risk of a specific case can be avoided. If the relevant market requires some form of enhancement, is the quantification likewise to be done on a marketwide basis or should it depend on the risks presented in the case before the court? Furthermore, even if the market discloses that multipliers are not necessary to attract competent counsel in general, may not the specific case require it because of the substantial risk envisioned? The risk for which counsel should be compensated is the risk of no recovery in the particular case for which she seeks fees. Even if lawyers do not need, seek or expect such enhancement in most other cases, this conclusion would be irrelevant if no one can be found to undertake the particular matter in issue because of the substantial risk of no recovery.

Therefore, two inquiries must be made: (1) Do competent counsel require multipliers in order to represent plaintiffs in these cases or in the particular case before the court; and (2) if multipliers are a necessary inducement, how are they to be calculated and determined? 1

*496 The courts have generally recognized the danger in lengthy and complex hearings on post trial fee applications. Indeed, in the opinion on remand the Third Circuit reiterates the danger of “the tail wagging the dog.” See Blum v. Witco Chemical Corp., 829 F.2d 367, 377 (3rd Cir.1987) [hereinafter “Blum”]. But in the face of this reiteration, the Third Circuit proposes a hearing which conceivably could be longer, more complex and more expensive than the trial itself. It also strikes fear into the court and counsel by suggesting that the court’s findings might be binding in other similar matters upon lawyers and future parties not now before the court or otherwise represented.

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702 F. Supp. 493, 1988 U.S. Dist. LEXIS 14999, 49 Empl. Prac. Dec. (CCH) 38,895, 49 Fair Empl. Prac. Cas. (BNA) 388, 1988 WL 139485, Counsel Stack Legal Research, https://law.counselstack.com/opinion/blum-v-witco-chemical-corp-njd-1988.