ELR Citation: ELR 21099
No(s). 91-810 (U.S. Jun 24, 1992)

The Court rules that attorneys representing citizens who sue under federal environmental laws cannot receive enhanced fees beyond the lodestar amount for accepting a case on a contingency fee basis. Prevailing parties received an attorney fees award under the Solid Waste Disposal Act and the Federal Water Pollution Control Act that enhanced the lodestar amount by 25 percent, on the ground that their attorneys were retained on a contingent-fee basis and that without the enhancement they would have faced substantial difficulties in obtaining suitable counsel. Writing for the Court, Justice Scalia initially notes that the attorney's contingent risk of loss in a particular case is the product of the legal and factual merits of the claim, and the difficulty of establishing those merits. This risk of loss is already reflected in the lodestar, either in the higher number of hours expended to overcome the difficulty, or in the higher hourly rate of the attorney skilled and experienced enough to do so. Thus, the Court concludes that an enhancement for contingency risk would likely duplicate factors already subsumed in the lodestar and would encourage meritorious claims to be brought but only at the social cost of indiscriminately encouraging nonmeritorious claims to be brought as well. The Court rejects the view that contingency enhancement is appropriate in defined limited circumstances, because this view is impractical in application. Further, any approach that applies uniform treatment to the entire class of contingent-fee cases cannot mirror market incentives. The Court concludes that contingency enhancement is not compatible with the fee-shifting statutes at issue, because such enhancement would in effect pay for the attorney's time in cases where the client does not prevail. Contingency enhancement is also contrary to the Court's general rejection of the contingent-fee model in favor of the lodestar model, as well as unnecessary to the determination of a reasonable fee. It would make the setting of fees more complex, arbitrary, unpredictable, and thus more litigable.

Dissenting Justices Blackmun and Stevens would hold that the enhanced fee award was reasonable. They conclude that the Court's decision violates principles applied consistently in prior cases. Further, the Court's decision will weaken the enforcement of civil rights and environmental statutes for which Congress has authorized fee awards, and will result in fewer filings of meritorious actions for which fee-shifting statutes were designed.

Justice O'Connor, in a separate dissent, would vacate the judgment affirming the fee award and remand for a market-based assessment of a contingency enhancement. She concludes that in certain circumstances a reasonable attorney fee should not be computed by the lodestar figure, but also must incorporate a reasonable incentive to an attorney contemplating whether to take a case in the first place.

[Previous decisions in this case are published at 20 ELR 21001, 20 ELR 21012, and 21 ELR 21133.]

Counsel for Petitioner
Michael Clapp
Dinse, Erdman & Clapp
209 Battery St., PO Box 988, Burlington VT 05402
(802) 864-5751

Counsel for Respondent
William Pearson
33 Northstone Ave., Ste. 2100, PO Box 2268, Tucson AZ 85702
(602) 622-3531