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Syers Properties III, Inc. v. Rankin (A137610, May 27, 2014) __ Cal.App.4th ___

The California Court of Appeal, First Appellate District, Division Two (San Francisco) published its opinion in Syers Properties III, Inc. v. Rankin (A137610, May 27, 2014) __ Cal.App.4th ___, capsulizing several important holdings in attorney fee cases.

After judgment was entered in favor of defendants in a legal malpractice action, defendants moved for attorney fees as the prevailing parties in the malpractice action, pursuant to the attorney-client fee agreement with plaintiff and Civil Code section 1717. Defendants’ attorneys provided declarations describing the work they performed. The attorneys declared what they believed the reasonably hourly rate was in the area. They also relied upon the Laffey Matrix, which is an official source of attorney rates based in the District of Columbia areas, which can be adjusted to the San Francisco Bay Area by using Locality Pay Tables. The trial court awarded defendants $843,245.27 in fees for 2,324.5 hours of attorney and paralegal time.

The Court of Appeal affirmed. The court summarized the general standards for determining a reasonable fee, explaining that “Supreme Court has recognized that the lodestar is the basic fee for comparable legal services in the community and that it may be adjusted by the court based on a number of factors in order ‘to fix a fee at the fair market value for the particular action. In effect, the court determines, retrospectively, whether the litigation involved a contingent risk or required extraordinary legal skill justifying augmentation of the unadorned lodestar in order to approximate the fair market rate for such services.’”

The Court of Appeal held that the trial court did not abuse its discretion in accepting defense counsel’s computation of attorney hours as hours reasonably spent working on the case. According to the court, “is well established that ‘California courts do not require detailed time records, and trial courts have discretion to award fees based on declarations of counsel describing the work they have done and the court’s own view of the number of hours reasonably spent. “Because time records are not required under California law . . . , there is no required level of detail that counsel must achieve.” The Court explained that the three attorneys involved in the litigation provided declarations under penalty of perjury in support of the hours sought, which were broken down by category of services rendered. The lead attorney also declared he exercised his “billing judgment” to delete hours he believed either exceeded the time required for the task or had other reasons to cut. Further, the trial court was in the best position to evaluate whether the hours were reasonable.

In addition, the Court discussed the reasonable hourly rate, explaining that “is no requirement that the reasonable market rate mirror the actual rate billed.” “The reasonable market value of the attorney’s services is the measure of a reasonable hourly rate. This standard applies regardless of whether the attorneys claiming fees charge nothing for their services, charge at below-market or discounted rates, represent the client on a straight contingent fee basis, or are in-house counsel. ”Further, this rule allowing the “reasonable rate” to vary from the actual billed rate is not limited to cases where there is a contingent risk regarding payment of the fees or other special circumstances. Plaintiff's are “not entitled to avoid their contractual obligation to pay reasonable attorney fees based on the fortuitous circumstance that they sued a defendant who obtained insurance coverage providing a defense.’” The Court of Appeal explained that the trial court’s rate determination was supported not only by the adjusted Laffey Matrix, but also by the lead attorney, who had more than 20 years experience in civil litigation of this type, who stated under penalty of perjury his opinion as to the prevailing rate in the San Francisco Bay Area for the services performed by the attorneys and paralegals in the case. Finally, the Court concluded that “the trial court was neither required to follow the Laffey Matrix nor to adopt the rate defense counsel opined was the ‘market rate’ for services of this type.” The determination lies within the broad discretion of the trial court.
 

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• Professional Liability