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RECOVERY OF "RESULTS BONUSES" IN FLORIDA UNDER POST-ROSEN CASE LAW
© 1997 National Legal Research Group, Inc.
Florida is the leading state in the country following the "lodestar" method for making awards of attorney's fees in divorce cases. Under this method, the court must make express findings as to the rate reasonably charged by the attorney and the amount of time reasonably spent on the file. The court then multiplies these two numbers together to obtain the presumptive "lodestar" amount of reasonable attorney's fees. The court can then deviate from this amount in response to a list of relevant factors. Finally, the court considers how much of the reasonable amount the payor spouse can reasonably be expected to pay, in light of the comparative financial resources of the parties. See generally Patient's Compensation Fund v. Rowe, 472 So. 2d 1145 (Fla. 1988).
The most difficult issue in applying this method over the past five years has been the role of the results achieved in determining whether to deviate from the lodestar result. A 1990 Florida Supreme Court case stated in dicta that any increase beyond the lodestar amount based upon good results obtained (a "results bonus") would violate the general rule against contingent fees in divorce cases. Standard Guaranty Insurance Co. v. Quanstrom, 555 So. 2d 828 (Fla. 1990). Between 1990 and 1997, every trial court decision which awarded a results bonus was reversed. See Faust v. Faust, 553 So. 2d 1275 (Fla. 1st Dist. Ct. App. 1989); Claughton v. Claughton, 625 So. 2d 853 (Fla. 3d Dist. Ct. App. 1993) (expressly noting the absence of any case law which actually permitted an award of more than the lodestar amount); Siegel v. Siegel, 564 So. 2d 226 (Fla. 5th Dist. Ct. App. 1990) (unusual circumstances not present merely because of competing child custody jurisdiction proceeding in other state with uncooperative trial judge); Pirino v. Pirino, 558 So. 2d 171 (Fla. 5th Dist. Ct. App. 1990) (unusual circumstances not present merely because claimant's attorney convinced court of appeal to write an excellent opinion on the merits). Likewise, every trial court decision which denied a results bonus was affirmed. See Garcia v. Garcia, 570 So. 2d 357 (Fla. 3d Dist. Ct. App. 1990); see also Valparaiso Bank & Trust Co. v. Sims, 343 So. 2d 967 (Fla. 1st Dist. Ct. App. 1977) (pre-Rowe case suggesting that results achieved are less important under no-fault divorce than they were under a fault-based system). There was, however, a split in authority as to whether the court could set a reasonable fee at lessthan the lodestar amount because of the poor results obtained. Compare Margulies v. Margulies, 506 So. 2d 1093 (Fla. 3d Dist. Ct. App. 1987) (reduction permitted), withHoopes v. Hoopes, 525 So. 2d 1015 (Fla. 4th Dist. Ct. App. 1988), and Brock v. Brock, 654 So. 2d 163 (Fla. 1st Dist. Ct. App. 1995) (reduction not permitted).
In Rosen v. Rosen, 696 So. 2d 697 (Fla. 1997), the Supreme Court of Florida considered the split in authority in the reduction cases. Rosen was an appeal from a lower court case remanding an award of attorney's fees for reconsideration in light of the appellant's lack of success on the merits. After noting the existence of the conflict, the court then attempted to resolve it:
- We resolve this conflict by pointing out that proceedings under chapter 61 are in equity and governed by basic rules of fairness as opposed to the strict rule of law. . . . The legislature has given trial judges wide leeway to work equity in chapter 61 proceedings. . . . Thus, section 61.16 should be liberally not restrictively construed to allow consideration of any factor necessary to provide justice and ensure equity between the parties.
. . . Under this scheme, the financial resources of the parties are the primary factor to be considered. However, other relevant circumstances to be considered include factors such as the scope and history of the litigation; the duration of the litigation; the merits of the respective positions; whether the litigation is brought or maintained primarily to harass (or whether a defense is raised mainly to frustrate or stall); and the existence and course of prior or pending litigation. Had the legislature intended to limit consideration to the financial resources of both parties, the legislature could easily have said so.
Rosen clearly holds that the court may reduce an attorney's fee beneath the lodestar amount because successful results were not obtained. The difficult question is whether Rosen permits the court to grant a results bonus that is, to increase the total fee beyond the lodestar amount.
The author believes that prior case law prohibiting an increase in fees based upon the results obtained continues to be valid. To the extent that prior case law held that 61.16 did not permit consideration of the results achieved, that case law is reversed, as the supreme court has now held that 61.16 permits such consideration. The Rosencourt did not consider, however, whether such consideration might be permitted by some rule of law other than 61.16. This lack of consideration is significant, for there is an additional consideration which applies only when the court increases the fees beyond the lodestar amount: the public policy against awarding contingent fees in divorce cases. That policy is the basis behind all of the pre-Rosen case law rejecting an increase beyond the lodestar amount based upon the results achieved. If the court intended to reverse that prior case law, surely the court would have discussed the policy against contingent fees, or at least summarily stated that the lower courts erred in concluding that a results bonus amounts to a contingent fee. Yet the entire subject of contingent fees is absent from the court's opinion.
The court's complete failure to discuss the rule against contingent fees is striking and significant. Rosen holds that 61.16 permits consideration of the results achieved. Rosen did not consider, however, whether a bonus based upon the results achieved violates the rule against contingent fees in divorce cases. This refusal was entirely proper, for the facts of Rosen involved a decrease in fees, and the contingent fee issue only arises when the court grants an increase. Because the increase issue was neither presented nor ruled upon in Rosen, the author believes that present Florida law still does not normally permit the court to increase an award of attorney's fees beyond the lodestar amount. Such an increase is not prohibited by 61.16, Rosen, but it is prohibited by the rule against contingent fee awards in divorce cases. Quanstrom.
If there is one factor which gives the author pause in reaching this conclusion, it is the dissenting opinion in Rosen. The dissent clearly construes the majority opinion to hold that the court may increase the fee beyond the lodestar amount based upon the results achieved. But nothing in the majority opinion expressly states that. The majority makes no reference to increases beyond the lodestar amount, and it does not even mention the policy against contingent fees, which is the driving force behind all of the pre-Rosen increase cases. A decision which construes 61.16 and fails to mention the rule against contingent fees cannot logically be construed to reverse decisions which relied primarily upon the policy and only secondarily (if at all) upon the statute. The author concludes that the dissent was overreacting to a holding which the majority opinion did not actually make.
Turning from the role of the objective analyst to the role of the advocate, what arguments can be made in favor of results bonuses under post-Rosen law? The argument in favor of results bonuses is based upon two cornerstones: the broad language of the opinion and the clear position of the dissent. On the first point, the majority held that the court can consider any relevant factor, and it affirmed a decision which decreased the fee based upon the results obtained. Nothing in the court's opinion suggests that the court's power to consider the results obtained depends in any way upon whether the results reached were positive or negative. On the second point, the dissenting opinion had more knowledge of the majority's position than any reader will ever have, and it clearly thought that the majority was permitting increases as well as decreases based upon the results obtained. Informal reports from Florida sources indicate that at least some trial courts are accepting these arguments and are awarding results bonuses under post-Rosen law.
The author, however, remains unpersuaded by these arguments. The majority held in general terms that 61.16 permits consideration of the results obtained, but it never expressly stated that such consideration could increase the fee above the lodestar amount, and such an increase was not involved on the facts. In addition, and more importantly, the court held only that 61.16 permits consideration of the results obtained. Prior decisions reject results bonuses not because they violate 61.16 but because they violate the rule against contingent fees in divorce cases an entirely distinct rule of law, which was not involved in Rosen, and which the court did not discuss. Among the prior cases discussing the rule against contingent fees is Quanstrom, which the Rosen decision did not overrule. Because Rosen did not address the rationale behind the increase cases, the author believes that the court's opinion permits only decreases in attorney's fees based upon the results obtained. The policy against contingent fees still prohibits Florida courts from using the results obtained as the rationale for an increase beyond the lodestar amount.
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