Florida’s Rate Problem—the Fee Multiplier

In my last report I said that in my next report I would explain what’s driving up residential insurance rates in the Sunshine state. This report is that promised report but, before I tell you about “Fee Multipliers”, let me tell you something else just as relevant and important.

Every session of the Florida legislature is measured to some degree on how much it succeeds in providing the people of Florida what they need and/or deserve.  If this last session is judged by its work reducing premiums for Florida homeowners (something policyholders obviously need and deserve) then the 2020 session was a miserable failure!

Absolutely nothing of worth or weight in the fight against attorneys and their exorbitant fee’s passed. Nothing! (See Note #1 below).

It was explained to industry lobbyists that last year’s AOB reform was enough, for a while, especially in an election year. In other words… “we won’t do what you’re asking even if it helps our own constituents.”

The result? Constituents pay the price and insurers get the blame. The continued spiraling of rate increases within the affected lines, usually residential property and sometimes private passenger auto will not abate.  Almost as infuriating, a dozen or so “billboard attorneys” will continue raking it in off the backs of premium payers. (See Note #2 below)

Now, for the Fee Multiplier.

Understanding the Fee Multiplier first requires understanding Florida’s unique one-way attorney fee statute, Fs 627.728.  In the absence of this statute, the general rule would apply, which is… each party, regardless of who wins, pays their own fees. There’s a slight variation in many states, including Florida, with what’s called the “prevailing party” approach. That’s where the prevailing party gets their fees paid by the losing party. It’s called “fee-shifting” and is created by “fee-shifting” statutes.

Sounds fair but, in Florida the prevailing party approach doesn’t apply in disputes with insurance companies. When the defendant is an insurer and the plaintiff prevails he or she is entitled to get their attorney fees paid by the insurer but, the converse is not true.  The fees are ‘one-way’ because when an insurer prevails, even when the case is frivolous or dismissed, the insurer as defendant never gets its fees paid by the plaintiff. (See Note #3 below)

Last year’s legislature improved Florida’s one-way statute for AOB cases but, attorney fees are still “one-way” for non-AOB insurance disputes.

Stay with me.

Regardless of whether it’s an AOB case or not, the amount of the fee awarded, and it’s calculation, is where the concept of a “Fee Multiplier” emerges.  Traditionally, attorney fees are calculated by multiplying a “reasonable hourly rate” times a “reasonable number of hours.” Simple and sensible, it’s called the “Lodestar” method.

But, there were contingency fee situations where the court might decide the “Lodestar” method didn’t allow for “reasonable” compensation.  If, for example, an attorney handled a case on a contingency fee basis and then lost, they get nothing.  In cases where this was more likely, the difficulty in finding legal representation increases, sometimes dramatically. Some cases might require more scientific analysis or expensive research or sometimes a higher level of expertise than a cub attorney can provide. Whatever the reason, with an increase in risk and expense comes an increase in the difficulty of finding competent counsel. And so was born the idea of a “Fee Multiplier.”

In every state a court can award a “Fee Multiplier” which can increase a reasonable hourly rate up to 2 ½ times or more.  But, in every state, except Florida, courts only grant a Fee Multiplier   on “rare and exceptional” cases.   The US Supreme Court (SCOTUS) frowns on Fee Multipliers but, has generally acquiesced when applied only on a “rare and exceptional” basis.

Prior to 2017 Florida followed the SCOTUS “rare and exceptional” standard. Then,  in Joyce v. Federated National, Florida’s liberal court members applied a multiplier in a case that was anything but “rare and exceptional.”  In fact, the plaintiffs assertion that it was difficult to find a lawyer was completely repudiated by Justice Charles Canady who noted that it only took one phone call.  “Indeed, Florida has no shortage of plaintiff trial lawyers in all corners of the state…and the United States Supreme Court unequivocally repudiated the use of the contingency fee multiplier.  The majority’s decision here underscores the need for a full re-examination of our multiplier jurisprudence.” 

Unfortunately, by rejecting the SCOTUS standard, the Florida Supremes not only departed from decades of federal precedent but also from case law and from Florida intermediate appellate courts and the standards followed by every other state. (See Note #4 below)

Result?  It’s now increasingly common for an attorney to receive fees that exceed the plaintiff’s entire judgement many times over. Here are just a few examples:

Santiago v. Florida Peninsula Insurance Co. A plumbing leak resulted in a $41,000 award. Despite evidence of numerous, qualified attorneys willing to take the case, the judge doubled the attorneys fee under Lodestar to $1,201,670.

Deshpande v. Universal Property & Casualty Insurance Co. A property insurance case involving  repair costs of only $23,335.38 and a settlement of $25,000. The judge calculated a Lodestar fee of $206,090.00, including hourly rates of $675 and $700, and doubled the fee to $415,495.00.  (See Note #5 below)

Pedrero v. Citizens Property Insurance Corp. The plaintiff secured a settlement for $35,000. The court found a multiplier of 2.01 was appropriate, bringing the total attorney’s fee award to $702,927.15.

But, the impact of fee multipliers can’t be considered in a vacuum–you can’t just look at totals and get a net impact on insurance rates.  It’s become the 800 pound gorilla in every negotiation.  Plaintiff lawyers, whose $500+ hourly fees are already required by current Florida law, use Fee Multipliers to threaten insurers under the one-way attorney fee statute creating a Hobson’s Choice–“settle on our terms now or face much worse!” (See Note #7 below)

That’s what Antonin Scalia said was wrong with fee multipliers when he wrote for the majority in 1992: “taking account of a contingency risk again through lodestar enhancement amounts to double counting – it also encourages non-meritorious claims.”  (See Note #6 below)

SUMMARY—SB-914 and HB-7071 attempted to re-align Florida with the Federal standard.  I can think of no reason to avoid enacting reforms that put Florida in the same category as 49 other states; especially since our rates are the highest in America. The Florida House voted in favor of HB-7071 which would have solved the problem.  You can find out who voted “NO” here.  Please take time to thank those who voted “YES.”

At the other end of the hall, The Florida Senate didn’t even get the companion bill, SB-914 to the floor for debate. Every premium payer needs to write to their senator and ask why they were unable to vote on such an important issue.  You can find the names and addresses of every state senator here.


NOTE #1: The following bills to reduce or reform litigation were introduced in the 2020 session and failed to pass:

  • SB-1334; various litigation related reforms, including Civil Remedy Notices
  • SB-312/HB-169; AOB Windshield Reform Bill
  • SB-924; Bad Faith reform
  • SB-914/HB-7071; Contingency Fee Multipliers
  • HB-7041;Litigation Financing reform
  • SB-1668/HB-9; Personal Injury & Wrongful death evidentiary reforms
  • SB-1574/HB-7043; Contingency Fee Limits for local governments
  • SB-1488/HB-295; Construction Defects litigation reform

NOTE #2: beginning late last year numerous carriers announced and/or filed for tremendous rate increases. The OIR approved rate hikes for 29 companies and is still responding to even more. Some approved are:  Heritage Property & Casualty (statewide average 13.4%); Florida Peninsula (Elite, 7%; Preferred, 8.2%); Castle Key (4.1%); Omega (9.5%); and Tower Hill Select (4.8%). Other actions have forestalled some increases, such as: Anchor P&C selling to Homeowners Choice; Weston   purchasing Anchor Specialty and Avatar acquiring Centauri. A few more companies announced plans to non-renew policies, cancel agency appointments. Other rate increases are: Southern Fidelity (8.6%); Anchor (8.8%), Edison (22.4%);Capitol Preferred began implementing a 47 percent use-and-file rate increase on 25,000 policyholders.

See: Home Insurance Rates Keep Climbing

See: Rising Reinsurance is the Key

NOTE #3: See “Restoring Balance in Insurance Litigation—Curbing Abuses of Assignment of Benefits and Reaffirming Insureds’ Unique Right to Unilateral Attorney’s Fees”; page 1:

“What makes this arrangement particularly lucrative for attorneys  are the ‘one-way’; attorney’s fees awarded to the attorney’s that represent prevailing service providers. Under Section 627.428, Florida Statutes, a prevailing party in a dispute with an insurer is entitled to his attorney’s fees and costs.  The fees are ‘one way’ because insurers that prevail are not entitled to fees under the statute”

NOTE #4: Much of the data in this blog is from the Florida Justice Reform Institute. For more information see its report: Overview of Contingency Fee Multipliers.

NOTE #5: The 2017 Legal Trends Report by software firm Clio states the average hourly rate for Miami attorneys is $310, behind counter parts in New York ($344) and Los Angeles ($323), but ahead of D.C. lawyers ($304).  The data was provided by 60,000 Clio software users from various sized law firms, together with surveys from 3,000 legal professionals and 2,000 consumers.  Both the 2017 and 2018 reports can be downloaded here.

NOTE #6: Also taken from the FJRI report titled Overview of Contingency Fee Multipliers and concerning Loadstar double dipping, (Burlington v Dague). “Additionally, the U.S. Supreme Court re-affirmed their position on multiplier use in a 2010 majority opinion authored by Justice Samuel Alito, writing that “unjustified enhancements that serve only to enrich attorneys are not consistent with the prevailing party statute’s aim.” (Perdue v Kenny).  Furthermore, they should apply only in “rare and exceptional” cases since a case’s difficulty is already reflected in Lodestar — either as more hours to overcome the difficulty, or as a higher hourly rate to obtain a more skilled and experienced attorney.”

NOTE #7:  Again, from Overview of Contingency Fee Multipliers by the FJRI: “..often attorney fees are confidential by terms of the settlement agreement. They aren’t picked up by legal reports or captured in databases like Westlaw and LexisNexis.  This, and the lack of any specific reports from county and circuit courts, make it difficult to find examples like those above.  Still, they’re so numerous they pop up virtually all the time, the example above came from the parties in each case.”


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