A recent Metropolitan News story, “Judge Can’t Give City Break on Legal Fee, C.A. Rules” reports that a California court of appeals ruled yesterday that properly documented attorney fees cannot be cut merely because the losing party is a government entity.  The appeals panel explained that Los Angeles Superior Court Judge Kevin C. Brazile’s determination that “the money should be spent in Lywood and not on the lawyers” was not an appropriate factor upon which to reduce the fee award to attorneys who represented residents of a mobile home park in a lawsuit against the city.

In the underlying action, the residents sued the city in 2004, alleging that a proposed Lynwood Redevelopment Agency (LRDA) plan to change the mobile home park where they lived into town homes would result in the loss of low income rental housing.  The LRDA and the residents settled before trial.  The settlement provided that the residents could “recover reasonable attorneys’ fees and costs” but that LRDA was not precluded “from raising its financial condition in response to the effort to recover the attorney fees.  The residents thereafter moved for an award of fees and costs, supported by expert declarations and billing documentation that totaled $2.7 million.  LRDA opposed the fee request, claiming the most it could pay in attorney fees was roughly $160,000.

Brazile ruled that the residents were the prevailing party and that the litigation had “conferred a significant public benefit.”  The judge, however, applied a negative multiplier of 0.2 to the lodestar, citing his concern that “request attorneys’ fees would significantly reduce the amount the [LRDA] has to provide additional low income housing.”  Thus, applying a negative multiplier, the lower court cut down the fee award by $540,000 reasoning that the money was better spent funding ongoing governmental operations rather than paying the prevailing parties in the litigation.

In the published decision, Rogel v. Lynwood Redevelopment Agency (pdf), the appellate court concluded that although the settlement agreement allowed consideration of LRDA's financial situation, the trial court should not be allowed to override the fact prevailing parties were entitled to a lodestar compensating their attorneys for the market value of their work.  “In our view, Serrano III precluded a rule which awards less than the fair market value of attorneys’ fees merely because the case was filed against a government agency.” 

“We also see a strong public policy against such a rule.  Allowing properly documented attorneys’ fees to be cut simply because a losing party is a governmental entity would defeat the purpose of the private attorney general doctrine and would also incentivize governmental entities to negligently or deliberately run up a claimant’s attorneys’ fees, without any concern for consequences.”