Chodos v. Borman

Trial court mistakenly allows jury to multiply attorney’s hourly rate by five, resulting in $7.8 million fee award, which was both excessive and inequitable.

Summary

Hillel Chodos represented Navabeh Borman in two divorce cases and a related Marvin action beginning in 2007. They did not put their fee arrangement in writing as required by relevant statutes. The cases settled in 2009, but Chodos did not receive payment. Chodos then sued Borman for the reasonable value of his services. He alleged that he agreed to be paid at his usual rate of $1,000 per hour or at a minimum, a reasonable rate. He claimed that he spent 300 hours on the first divorce case, and 1,500 hours on the second divorce case and Marvin action. Borman asserted she was willing to pay Chodos a reasonable amount. In presenting testimony regarding Chodos’ representation and the application of a “lodestar” multiplier, Chodos’ experts raved about his experience and skill as a trial lawyer. Borman downplayed his work, noting his relative lack of experience in dealing with Marvin cases. The trial court instructed the jury that it could apply a multiplier to the lodestar amount in calculating Chodos’ fee award. Ultimately, the jury used a multiplier of five to increase Chodos’ hourly rate of $1,000 to $5,000, and awarded him $7.8 million in total fees. Borman argued the fee was excessive.

Reversed and remanded. The lodestar is the basic fee for comparable legal services in the community, and may be adjusted by a trial court based on certain factors. In calculating attorney fees, the application of a fee multiplier may be appropriate where from the outset of the litigation, the attorney voluntarily assumes the contingent risk of nonpayment for services. However, here, Chodos did not voluntarily assume a contingent risk of nonpayment, and did not work under a valid contractual obligation to assume the contingent risk of loss. He agreed to accept his regular rate of pay of $1,000 or, at a minimum, a reasonable rate, regardless of the outcome of the case. Thus, the trial court erred in instructing the jury to apply a multiplier. Moreover, the principles underlying the lodestar adjustment method did not support the increased multiplier, given that the case was unremarkable, and the jury’s windfall award would be contrary to equitable principles. Thus, this court reversed the judgment and remanded the matter for a recalculation of fees.

Opinion by Justice Mosk.

— Brian Cardile