Contingent fee arrangement doesn’t control fee award

Although the plaintiffs argued the contingency fee to which they agreed in their retainer agreement should control, the court instead awarded attorney’s fees to the prevailing party based upon his reasonable hours and the prevailing rate.

Background

This civil action originated from an arrangement between two lawyers, Thomas Lankford and John C. West Jr., who worked together on securing compensation for the Iran hostages. In 2017, Lankford and his firm (Lankford & Reed PLLC) received the first payment from the fund for distribution to the claimants. Thereafter, on Dec. 28, 2017, Lankford and his firm entered into a settlement and release agreement with West and his firm.

From Jan. 2, 2019, through Feb. 16, 2021, nine distributions were made to the former hostages from the fund, for which Lankford and his firm received a total of $6,793,886.67 in legal fees. Lankford never paid West his 8½ percent share of the legal fees received from those nine distributions. In the interim, West passed away in March 2020.

After a two-day trial, the jury returned a verdict in favor of the administrator of the plaintiffs’ estate, awarding $566,157.01 in damages. Before the court is plaintiffs’ motion for attorney’s fees and costs. Plaintiffs retained their counsel, Timothy Clinton, on a contingency fee basis, under which they seek to recover attorney’s fees of $220,801.23, which represents a “39% contingency fee” applied to the $566,157.01 damage award.

Standard

The parties do not dispute that the touchstone of the court’s fee-award determination is reasonableness, but they disagree as to the method by which the court should determine the reasonableness of the fee. Plaintiffs argue that the starting point for the court’s analysis is the contingency fee to which plaintiffs agreed in their retainer agreement. Defendants assert that the starting point should be the lodestar.

This court has previously found that where a plaintiff has entered into a contingency fee agreement with its counsel, “the Court must still evaluate the reasonableness of the claimed fees.” The court agrees with defendants that an independent inquiry into reasonableness is required, the starting point of which is the lodestar.

Plaintiffs assert that defendants’ indemnification obligation provides for recovery of “any and all … losses” and they contend that the contingency fee incurred “under the terms of their engagement with … Clinton & Peed” is a “loss” that is recoverable from defendants, provided the fee is reasonable. This argument is unpersuasive because the clause clearly distinguishes between “losses” and “reasonable attorneys’ fees.” Moreover, as defendants correctly observe, the indemnification clause does not provide for payment of “attorneys’ fees incurred” but for the “reasonable attorneys’ fees” of the party entitled to indemnification.

Analysis

Plaintiffs’ counsel avers that he expended 249 hours on this litigation at an hourly rate of $600. A $600 rate is reasonable for Clinton based on his 17 years of experience. It also falls within the range of hourly rates for an attorney with commensurate experience routinely used in this court.

The court agrees that the 21.8 hours that Clinton spent working on the first complaint that was voluntarily dismissed should be excluded because Clinton should have realized that the complaint was legally insufficient. Of the remaining 227.5 hours, the court finds that no additional reduction is required, producing a lodestar of $136,500.00. The court finds that no adjustment to the lodestar is warranted.

Plaintiffs also seek an ongoing fee award representing 39 percent of any future distributions of legal fees to Lankford. Plaintiffs argue that counsel’s “trial victory necessarily means that Lankford & Reed is required to make those future payments, so it is fair to award the firm with a percentage of those future payments.” There is no merit to this request.

Costs

Plaintiffs seek to recover $17,993.32 in expenses and costs. The only expenses defendants challenge is the $13,778.32 paid to Ben DiMuro for expert services regarding an appropriate attorney’s fee award. Although the court finds that DiMuro’s conclusions about the reasonableness of Clinton’s complex contingency arrangements with plaintiffs is unsupported by any case law and, therefore, is rejected, portions of his reports were useful in evaluating plaintiffs’ decision to agree to such an arrangement and did contribute to the determination of the appropriate lodestar. For these reasons, DiMuro’s fees will be reduced to $7,000.00.

Plaintiffs’ motion for attorney’s fees granted in part, denied in part.

McKoy v. Lankford, Case No. 1:22-cv-604, Aug. 23, 2023. EDVA at Alexandria (Brinkema). VLW 023-3-503. 18 pp.