SAN FRANCISCO – A class-action suit against a staffing agency over allegedly lost wages has gone to the California Supreme Court, but not regarding the initial claim.
Instead, the justices will rule on which type of calculation method should be used for attorneys' fees in state courts: the lodestar method, which takes into account hourly fees and amount of time on a suit; or a simple percentage of the recovery.
Robert Half International settled with Mark Laffitte and several other employees over three class actions in 2012 for a total of $19 million, but one plaintiff, David Brennan, took issue with the amount earmarked from that total for the attorneys. The plaintiffs' attorneys had asked for a fee of no more than one-third of the total, which was approved by the trial judge over Brennan's attorney Lawrence Schonbrun's objection. An appellate court agreed with the ruling.
In court on May 27, it appeared the justices were hesitant to limit the authority of trial judges to dole out a percentage of the recovery. While Chief Justice Tani Cantil-Sakauye noted that judges hearing cases of this nature are usually experienced and thus able to operate with some discretion even in deciding complex calculations for fees, Justice Goodwin Liu noted that guidelines for trial judges might be appropriate.
"I think basically the roots of it go to a common
fund, that if you create a common fund of value, a percentage is probably the
best way" to calculate how much an attorney should be paid, Marc Alexander of the law blog California Attorneys' Fees told the Northern California Record.
But as was argued before the court, it can be tricky to calculate a suitable percentage. In the Laffitte case, attorneys were awarded one-third of the total, or $6,333,333.33. Counsel offered their fees and claimed 4,000 hours of work over the case's eight years of litigation so that the lodestar could also be calculated, and that totaled between $2.9 and $3.1 million. They then asked the trial judge for, and were granted, a multiplier of 2.02 to 2.13 to bring the lodestar calculation result in line with the percentage.
According to Mike Hensley, also of California Attorneys' Fees, cross-checking fees in this manner is typical.
"I’m not aware of any empirical studies," Hensley said, "but the
cases I’ve seen from California is generally the lodestar probably results in
fewer fees, and the law in California is, the preferred method is you use
lodestar and then you check it with the percentage of recovery."
Hensley added that whatever the court decides in this case will likely be public soon enough: the court has 90 days to issue an opinion after hearing oral arguments, but typically issues earlier than that.
"They're probably going to say you still need to check [percentage of recovery] with the lodestar," Hensley said, "but it's my understanding they’re going to give some guidance on what factors judges look for in awarding fees in this area."