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Contingency Risk Multiplier


PROBLEM: A 2017 Florida Supreme Court decision (Joyce v. Federated National Insurance Company) overturned a longstanding application of contingency attorney fee multipliers, which awards plaintiff lawyers 2–2.5x their hourly rate. Previously, contingency fee multipliers were to be applied only in “rare” and “exceptional” cases; however, this 2017 decision opened up the opportunity for multipliers to be applied in a very liberal manner to all insurance cases. Plaintiff attorneys in Florida can now seek 2.0–2.5x their hourly rate in all property insurance cases.

BACKGROUND: Attorney fees are calculated based on the lodestar method, where the court multiplies a reasonable hourly rate by a reasonable number of hours expended. The lodestar considers case difficulty based on the number of hours expended and the hourly rate. Prior to 2017, the standard in a majority of Florida’s District Courts of Appeal and that of the United States Supreme Court was that contingency fee multipliers should be applied only in “rare” and “exceptional” cases. The Courts’ prior decisions established a “strong presumption” that the lodestar represents a “reasonable” fee. An enhancement for contingency duplicates factors already subsumed in the lodestar. In Florida, it is estimated that there are over 30,000 new lawsuits filed annually over property insurance disputes. Because plaintiff attorneys in Florida can now seek 2.0–2.5x their hourly rate in all property insurance cases, property insurers are unable to defend themselves in a majority of cases with this uneven playing field in place and are forced to settle for higher amounts before going to trial. These litigation costs are fueling the rising cost of insurance in Florida.

SOLUTION: Senate Bill 914 by Sen. Brandes and House Bill JDC3 codify into state law the federal precedent regarding the award of attorney fees for claims arising under property insurance policies. The bills create a strong presumption that the lodestar fee is sufficient and reasonable and that a contingency risk multiplier can be applied only in “rare” and “exceptional” circumstances. 

CALL TO ACTION: Support SB 914 and HB JDC3

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