The team of lawyers who recently won the largest-ever bad faith insurance verdict in Pennsylvania — more than $7.9 million — are asking U.S. District Judge Cynthia M. Rufe to make new law by awarding them $2.3 million in fees, the largest award of attorney fees that would ever have been granted in such a case.
The lawyers argue that the lodestar approach,under which their fee would be about $323,000, is flawed for two reasons: because the lawyers who bring such cases almost never bill for their work at an hourly rate, and their clients have most often agreed to a contingent fee in which the lawyers will be paid a set percentage of any verdict or settlement they win, usually one-third.
As a result, Tanner and Newman argue, the lodestar approach “unduly focuses the court’s scrutiny on a fictional contrivance as opposed to an approach which accurately reflects the manner in which such cases are handled.”
Of the $7.9m jury verdict, $6.25m is punitive damages, which, the defense argue, is a sufficient pot of money out of which the lawyers can extract their fees. (Law.com, Apr. 7)
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