Contingency Fee Risk Multiplier in Insurance Coverage Disputes

Contingency fee arrangements are used outside of personal injury disputes. They are a performance-based attorney’s fees arrangement where the attorney only gets paid if the client gets paid. There are numerous ways such arrangements can be structured, and if interested in learning more about innovative attorney’s fees arrangements, check out my ebook.

 

One advantage of a contingency fee arrangement for the attorney is the potential benefit of a contingency risk multiplier. This is where the court can award a multiplier to the amount of attorney’s fees based on the complexity of the issues that essentially serves as an added bonus to the attorney for handling the dispute on contingency.

 

In a recent insurance coverage dispute whether the insured prevailed, the appellate court held that the insured’s lawyer was not entitled to a contingency fee multiplier because the fee agreement was neither a full contingency nor partial contingency fee agreement. See Florida Farm Bureau Casualty Ins. Co. v. Gray, 42 Fla. L. Weekly D2086 (Fla. 1st DCA 2017). But, in addressing the issue of the contingency fee multiplier, the appellate court delved into a key discussion explaining when the multiplier is applied:

In Florida Patient’s Compensation Fund v. Rowe, 472 So. 2d 1145, 1150-51 (Fla. 1985), the supreme court discussed the “lodestar process” of determining attorney’s fees, the factors to be considered in determining a reasonable fee, and contingency risk factors. The supreme court explained, “Because the attorney working under a contingent fee contract receives no compensation when his client does not prevail, he must charge a client more than the attorney who is guaranteed remuneration for his services.” Id. at 1151. In determining whether a multiplier is necessary, a trial court is to consider: (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 in Rowe are applicable, especially the amount involved, the results obtained, and the type of fee arrangement between the attorney and his client. Standard Guar. Ins. Co. v. Quanstrom, 555 So. 2d 828, 834 (Fla. 1990).

***

In Lane v. Head, 566 So. 2d 508, 510 (Fla. 1990), the supreme court explained that one of the purposes of Rowe was to encourage attorneys to take cases under contingency fee arrangements, “thereby making legal services more widely available to those who otherwise could not afford them.” The supreme court explained that a multiplier is within the trial court’s discretion in those instances in which the “contingency-fee arrangement is only partial” because “this policy also will encourage attorneys to provide services to persons who otherwise could not afford the customary legal fee.” Id. at 510-11. 

If you are in an insurance coverage dispute, there are creative ways outside of straight hourly attorney’s fee billing to explore with your counsel.  Don’t be afraid to be creative or consider different options. The value of a full or partial contingency fee arrangement is that it can provide the attorney an opportunity to obtain a contingency fee risk multiplier.  

Please contact David Adelstein at dadelstein@gmail.com or (954) 361-4720 if you have questions or would like more information regarding this article. You can follow David Adelstein on Twitter @DavidAdelstein1.

Share:

This entry was posted in attorney fees and tagged , , , , , . Bookmark the permalink.