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- NOTE: Where it is feasible, a syllabus (headnote) will be
- released, as is being done in connection with this case, at the
- time the opinion is issued. The syllabus constitutes no part of
- the opinion of the Court but has been prepared by the Reporter of
- Decisions for the convenience of the reader. See United States v.
- Detroit Lumber Co., 200 U. S. 321, 337.
-
- SUPREME COURT OF THE UNITED STATES
-
- Syllabus
-
- CITY OF BURLINGTON v. DAGUE et al.
- certiorari to the united states court of appeals for
- the second circuit
- No. 91-810. Argued April 21, 1992-Decided June 24, 1992
-
- After ruling on the merits for respondents, the District Court
- determined that they were "substantially prevailing" parties
- entitled to "reasonable" attorney's fees under the attorney's fee
- provisions of the Solid Waste Disposal Act and the Clean Water
- Act. The District Court calculated the fee award by, inter alia,
- enhancing the "lode star" amount by 25% on the grounds that
- respondents' attorneys were retained on a contingent-fee basis
- and that without such enhancement respondents would have faced
- substantial difficulties in obtaining suitable counsel. The
- Court of Appeals affirmed the fee award.
-
- Held: The fee-shifting statutes at issue do not permit
- enhancement of a fee award beyond the lodestar amount to reflect
- the fact that a party's attorneys were retained on a
- contingent-fee basis. In Pennsylvania v. Delaware Valley
- Citizens' Council for Clean Air, 483 U.S. 711 (Delaware Valley
- II), this Court addressed, but did not resolve, a question
- essentially identical to the one presented here. The position
- taken by the principal opinion in that case, id., at 723-727
- (opinion of White, J.) -that the typical federal fee-shifting
- statute does not permit an attorney's fee award to be enhanced on
- account of contingency- is adopted. The position advocated by
- Delaware Valley II's concurrence, id., at 731, 733 (O'Connor, J.,
- concurring in part and concurring in judgment) -that contingency
- enhancement is appropriate in defined limited circumstances- is
- rejected, since it is based upon propositions that are mutually
- inconsistent as a practical matter; would make enhancement turn
- upon a circular test for a very large proportion of
- contingency-fee cases; and could not possibly achieve its
- supposed goal of mirroring market incentives to attorneys to
- take cases. Beyond that approach, there is no other basis,
- fairly derivable from the fee-shifting statutes, by which
- contingency enhancement, if adopted, could be restricted to fewer
- than all contingent-fee cases. Moreover, contingency enhancement
- is not compatible with the fee-shifting statutes at issue, since
- such enhancement would in effect pay for the attorney's time (or
- anticipated time) in cases where his client does not prevail; is
- unnecessary to the determination of a reasonable fee and
- inconsistent with this Court's general rejection of the
-
- contingent-fee model in favor of the lodestar model, see, e. g.,
- Blanchard v. Bergeron, 489 U.S. 87, 96; and would make the
- setting of fees more complex and arbitrary, hence more
- unpredictable, and hence more litigable. Pp.3-9.
- 935 F.2d 1343, reversed in part.
-
- Scalia, J., delivered the opinion of the Court, in which
- Rehnquist, C. J., and White, Kennedy, Souter, and Thomas, JJ.,
- joined. Blackmun, J., filed a dissenting opinion, in which
- Stevens, J., joined.
- O'Connor, J., filed a dissenting opinion.
-
- [June 24, 1992]
-
- Justice Scalia delivered the opinion of the Court.
-
- This case presents the question whether a court, in determining
- an award of reasonable attorney's fees under 7002(e) of the Solid
- Waste Disposal Act (SWDA), 90 Stat. 2826, as amended, 42 U. S. C.
- 6972(e), or 505(d) of the Federal Water Pollution Control Act
- (Clean Water Act (CWA)), 86 Stat. 889, as amended, 33 U. S. C.
- 1365(d), may enhance the fee award above the -lodestar- amount in
- order to reflect the fact that the party's attorneys were
- retained on a contingent-fee basis and thus assumed the risk of
- receiving no payment at all for their services. Although
- different fee-shifting statutes are involved, the question is
- essentially identical to the one we addressed, but did not
- resolve, in Pennsylvania v. Delaware Valley Citizens' Council for
- Clean Air, 483 U. S. 711 (1987) (Delaware Valley II).
-
- /* Opinions on attorneys fees are always carefully read by
- attorneys and the governments and other potential payors of these
- fees. For the few uninitiated persons let's define the terms.
- "Lodestar" refers to a calculation of fees as follows-- a
- reasonable hourly rate multiplied by a reasonable number of
- hours.
- "Enhancement" is a multiplier to the lodestar calculation which
- has been allowed in the past for attorneys taking cases on
- contingent fees to reflect the extra risk that they take when
- taking on a case in which the fee is dependent on winning. */
-
-
- I
-
- Respondent Dague (whom we will refer to in place of all the
- respondents) owns land in Vermont adjacent to a landfill that was
- owned and operated by petitioner City of Burlington. Represented
- by attorneys retained on a contingent-fee basis, he sued
- Burlington over its operation of the landfill. The District
- Court ruled, inter alia, that Burlington had violated provisions
- of the SWDA and the CWA, and ordered Burlington to close the
- landfill by January 1, 1990. It also determined that Dague was a
- -substantially prevailing party- entitled to an award of
- attorney's fees under the Acts, see 42 U. S. C. 6972(e); 33 U. S.
- C. 1365(d). 732 F. Supp. 458 (Vt. 1989).
-
-
- In calculating the attorney's fees award, the District Court
- first found reasonable the figures advanced by Dague for his
- attorneys' hourly rates and for the number of hours expended by
- them, producing a resulting -lodestar- attorney's fee of
- $198,027.50. (What our cases have termed the -lodestar- is -the
- product of reasonable hours times a reasonable rate,-
- Pennsylvania v. Delaware Valley Citizens' Council for Clean Air,
- 478 U. S. 546, 565 (1986) (Delaware Valley I).) Addressing
- Dague's request for a contingency enhancement, the court looked
- to Circuit precedent, which provided that -`the rationale that
- should guide the court's discretion is whether -[w]ithout the
- possibility of a fee enhancement . . . competent counsel might
- refuse to represent [environmental] clients thereby denying them
- effective access to the courts.-'- (Quoting Friends of the Earth
- v. Eastman Kodak Co., 834 F. 2d 295, 298 (CA2 1987)). Following
- this guidance, the court declared that Dague's -risk of not
- prevailing was substantial- and that "absent an opportunity for
- enhancement, [Dague] would have faced substantial difficulty in
- obtaining counsel of reasonable skill and competence in this
- complicated field of law." It concluded that -a 25% enhancement
- is appropriate, but anything more would be a windfall to the
- attorneys.- It therefore enhanced the lodestar amount by 25%-
- $49,506.87. The Court of Appeals affirmed in all respects.
- Reviewing the various opinions in Delaware Valley II, the court
- concluded that the issue whether and when a contingency
- enhancement is warranted remained open, and expressly disagreed
- with the position taken by some Courts of Appeals that the
- concurring opinion in Delaware Valley II was controlling. The
- court stated that the District Court had correctly relied on
- Circuit precedent, and, holding that the District Court's
- findings were not clearly erroneous, it upheld the 25%
- contingency enhancement. 935 F. 2d 1343, 1359-1360 (CA2 1991).
- We granted certiorari only with respect to the propriety of the
- contingency enhancement. 502 U. S. -- (1992).
-
- II
-
- We first provide some background to the issue before us. Fees
- for legal services in litigation may be either -certain- or
- -contingent- (or some hybrid of the two). A fee is certain if it
- is payable without regard to the outcome of the suit; it is
- contingent if the obligation to pay depends on a particular
- result's being obtained. Under the most common contingent-fee
- contract for litigation, the attorney receives no payment for his
- services if his client loses. Under this arrangement, the
- attorney bears a contingent risk of nonpayment that is the
- inverse of the case's prospects of success: if his client has an
- 80% chance of winning, the attorney's contingent risk is 20%.
-
- In Delaware Valley II, we reversed a judgment that had affirmed
- enhancement of a fee award to reflect the contingent risk of
- nonpayment. In the process, we addressed whether the typical
- federal fee-shifting statute (there, 304(d) of the Clean Air Act,
- 42 U. S. C. 7604(d)) permits an attorney's fees award to be
- enhanced on account of contingency. In the principal opinion,
- Justice White, joined on this point by three other Justices,
- determined that such enhancement is not permitted. 483 U. S., at
- 723-727. Justice O'Connor, in an opinion concurring in part and
- concurring in the judgment, concluded that no enhancement for
- contingency is appropriate "unless the applicant can establish
- that without an adjustment for risk the prevailing party would
- have faced substantial difficulties in finding counsel in the
- local or other relevant market," id., at 733 (internal
- quotations omitted), and that any enhancement "must be based on
- the difference in market treatment of contingent fee cases as a
- class, rather than on an assessment of the `riskiness' of any
- particular case," id., at 731 (emphasis in original). Justice
- Blackmun's dissenting opinion, joined by three other Justices,
- concluded that enhancement for contingency is always statutorily
- required. Id., at 737-742, 754.
-
- We turn again to this same issue.
-
- III
-
- Section 7002(e) of the SWDA and Section 505(d) of the CWA
- authorize a court to "award costs of litigation (including
- reasonable attorney . . . fees)" to a "prevailing or
- substantially prevailing party." 42 U. S. C. 6972(e) (emphasis
- added); 33 U. S. C. 1365(d) (emphasis added). This language is
- similar to that of many other federal feeshifting statutes, see,
- e.g., 42 U. S. C. 1988, 2000e 5(k), 7604(d); our case law
- construing what is a -reasonable- fee applies uniformly to all
- of them. Flight Attendants v. Zipes, 491 U. S. 754, 758, n. 2
- (1989).
-
- The -lodestar- figure has, as its name suggests, become
- the guiding light of our fee-shifting jurisprudence. We have
- established a -strong presumption- that the lodestar represents
- the -reasonable- fee, Delaware Valley I, supra, at 565, and have
- placed upon the fee applicant who seeks more than that the burden
- of showing that "such an adjustment is necessary to the
- determination of a reasonable fee." Blum v. Stenson, 465 U. S.
- 886, 898 (1984) (emphasis added). The Court of Appeals held, and
- Dague argues here, that a -reasonable- fee for attorneys who have
- been retained on a contingency-fee basis must go beyond the
- lodestar, to compensate for risk of loss and of consequent
- nonpayment. Fee-shifting statutes should be construed, he
- contends, to replicate the economic incentives that operate in
- the private legal market, where attorneys working on a
- contingency-fee basis can be expected to charge some premium over
- their ordinary hourly rates. Petitioner Burlington argues, by
- contrast, that the lodestar fee may not be enhanced for
- contingency.
-
- We note at the outset that an enhancement for contingency would
- likely duplicate in substantial part factors already subsumed in
- the lodestar. The risk of loss in a particular case (and,
- therefore, the attorney's contingent risk) is the product of two
- factors: (1) the legal and factual merits of the claim, and (2)
- the difficulty of establishing those merits. The second factor,
- however, is ordinarily reflected in the lodestar-either in the
- higher number of hours expended to overcome the difficulty, or in
- the higher hourly rate of the attorney skilled and experienced
- enough to do so. Blum, supra, at 898-899. Taking account of it
- again through lodestar enhancement amounts to doublecounting.
- Delaware Valley II, 483 U. S., at 726-727 (plurality opinion).
-
- /* It is always difficult to divine exactly what the court means
- in these type cases. Does this mean that the hourly rate will
- always be higher for a contingent case than a non-contingent
- case? Future cases will certainly rule on that question. This
- case can be fairly read to indicate that the rate must always be
- higher in a contingent fee case. */
-
- The first factor (relative merits of the claim) is not
- reflected in the lodestar, but there are good reasons why it
- should play no part in the calculation of the award. It is, of
- course, a factor that always exists (no claim has a 100% chance
- of success), so that computation of the lodestar would never end
- the court's inquiry in contingent-fee cases. See id., at 740
- (Blackmun, J., dissenting). Moreover, the consequence of
- awarding contingency enhancement to take account of this -merits-
- factor would be to provide attorneys with the same incentive to
- bring relatively meritless claims as relatively meritorious ones.
- Assume, for example, two claims, one with underlying merit of
- 20%, the other of 80%. Absent any contingency enhancement, a
- contingent-fee attorney would prefer to take the latter, since he
- is four times more likely to be paid. But with a contingency
- enhancement, this preference will disappear: the enhancement for
- the 20% claim would be a multiplier of 5 (100/20), which is
- quadruple the 1.25 multiplier (100/80) that would attach to the
- 80% claim. Thus, enhancement for the contingency risk posed by
- each case would encourage meritorious claims to be brought, but
- only at the social cost of indiscriminately encouraging
- nonmeritorious claims to be brought as well. We think that an
- unlikely objective of the -reasonable fees- provisions. "These
- statutes were not designed as a form of economic relief to
- improve the financial lot of lawyers." Delaware Valley I, 478 U.
- S., at 565.
-
- Instead of enhancement based upon the contingency risk posed by
- each case, Dague urges that we adopt the approach set forth in
- the Delaware Valley II concurrence. We decline to do so, first
- and foremost because we do not see how it can intelligibly be
- applied. On the one hand, it would require the party seeking
- contingency enhancement to "establish that without the adjustment
- for risk [he] `would have faced substantial difficulties in
- finding counsel in the local or other relevant market.'" 483 U.
- S., at 733. On the other hand, it would forbid enhancement based
- "on an assessment of the `riskiness' of any particular case."
- Id., at 731; see id., at 734 (no enhancement "based on `legal'
- risks or risks peculiar to the case"). But since the predominant
- reason that a contingent-fee claimant has difficulty finding
- counsel in any legal market where the winner's attorney's fees
- will be paid by the loser is that attorneys view his case as too
- risky (i. e., too unlikely to succeed), these two propositions,
- as a practical matter, collide. See King v. Palmer, 292 U. S.
- App. D. C. 362, 371, 950 F. 2d 771, 780 (1991) (en banc), cert.
- pending sub nom. King v. Ridley, No. 91-1370.
-
- A second difficulty with the approach taken by the concurrence
- in Delaware Valley II is that it would base the contingency
- enhancement on "the difference in market treatment of contingent
- fee cases as a class." 483 U. S., at 731 (emphasis in original).
- To begin with, for a very large proportion of contingency-fee
- cases "those seeking not monetary damages but injunctive or other
- equitable relief" there is no -market treatment.- Such cases
- scarcely exist, except to the extent Congress has created an
- artificial -market- for them by fee-shifting-and looking to that
- -market- for the meaning of fee-shifting is obviously circular.
- Our decrees would follow the -market,- which in turn is based on
- our decrees. See King v. Palmer, 285 U. S. App. D. C. 68, 76,
- 906 F. 2d 762, 770 (1990) (Williams, J., concurring) ("I see the
- judicial judgment as defining the market, not vice versa"),
- vacated, 292 U. S. App. D. C. 362, 950 F. 2d 771 (1991), cert.
- pending sub nom. King v. Ridley, No. 91-1370. But even apart
- from that difficulty, any approach that applies uniform treatment
- to the entire class of contingent-fee cases, or to any
- conceivable subject-matter-based subclass, cannot possibly
- achieve the supposed goal of mirroring market incentives. As
- discussed above, the contingent risk of a case (and hence the
- difficulty of getting contingent-fee lawyers to take it) depends
- principally upon its particular merits. Contingency enhancement
- calculated on any class-wide basis, therefore, guarantees at best
- (leaving aside the double-counting problem described earlier)
- that those cases within the class that have the class-average
- chance of success will be compensated according to what the
- -market- requires to produce the services, and that all cases
- having above-class- average chance of success will be
- overcompensated.
-
- Looking beyond the Delaware Valley II concurrence's approach,
- we perceive no other basis, fairly derivable from the
- fee-shifting statutes, by which contingency enhancement, if
- adopted, could be restricted to fewer than all contingent-fee
- cases. And we see a number of reasons for concluding that no
- contingency enhancement whatever is compatible with the
- fee-shifting statutes at issue. First, just as the statutory
- language limiting fees to prevailing (or substantially
- prevailing) parties bars a prevailing plaintiff from recovering
- fees relating to claims on which he lost, Hensley v. Eckerhart,
- 461 U. S. 424 (1983), so should it bar a prevailing plaintiff
- from recovering for the risk of loss. See Delaware Valley II,
- supra, at 719-720, 724-725 (principal opinion). An attorney
- operating on a contingency-fee basis pools the risks
- presented by his various cases: cases that turn out to be
- successful pay for the time he gambled on those that did not. To
- award a contingency enhancement under a fee-shifting statute
- would in effect pay for the attorney's time (or anticipated time)
- in cases where his client does not prevail.
-
- Second, both before and since Delaware Valley II, "we have
- generally turned away from the contingent-fee model" -which would
- make the fee award a percentage of the value of the relief
- awarded in the primary action--to the lodestar model.- Venegas
- v. Mitchell, 495 U. S. 82, 87 (1990). We have done so, it must
- be noted, even though the lodestar model often (perhaps,
- generally) results in a larger fee award than the contingent-fee
- model. See, e.g., Report of the Federal Courts Study Committee
- 104 (Apr. 2, 1990) (lodestar method may "give lawyers incentives
- to run up hours unnecessarily, which can lead to
- overcompensation"). For example, in Blanchard v. Bergeron, 489 U.
- S. 87 (1989), we held that the lodestar governed, even though it
- produced a fee that substantially exceeded the amount provided in
- the contingent-fee agreement between plaintiff and his counsel
- (which was self-evidently an amount adequate to attract the
- needed legal services). Id., at 96. Contingency enhancement is
- a feature inherent in the contingent-fee model (since attorneys
- factor in the particular risks of a case in negotiating their fee
- and in deciding whether to accept the case). To engraft this
- feature onto the lodestar model would be to concoct a hybrid
- scheme that resorts to the contingent-fee model to increase a fee
- award but not to reduce it. Contingency enhancement is therefore
- not consistent with our general rejection of the contingent-fee
- model for fee awards, nor is it necessary to the determination of
- a reasonable fee.
-
- And finally, the interest in ready administrability that has
- underlain our adoption of the lodestar approach, see, e.g.,
- Hensley, supra, at 433, and the related interest in avoiding
- burdensome satellite litigation (the fee application "should not
- result in a second major litigation," id., at 437), counsel
- strongly against adoption of contingency enhancement.
- Contingency enhancement would make the setting of fees more
- complex and arbitrary, hence more unpredictable, and hence more
- litigable. It is neither necessary nor even possible for
- application of the fee-shifting statutes to mimic the intricacies
- of the fee-paying market in every respect. See Delaware Valley
- I, 478 U. S., at 565.
-
- * * *
-
- Adopting the position set forth in Justice White's opinion in
- Delaware Valley II, 483 U. S., at 715-727, we hold that
- enhancement for contingency is not permitted under the
- fee-shifting statutes at issue. We reverse the Court of Appeals'
- judgment insofar as it affirmed the 25% enhancement of the
- lodestar.
-
- It is so ordered.
-
- Justice Blackmun, with whom Justice Stevens joins, dissenting.
-
- In language typical of most federal fee-shifting provisions,
- the statutes involved in this case authorize courts to award the
- prevailing party a -reasonable- attorney's fee. Two principles,
- in my view, require the conclusion that the -enhanced- fee
- awarded to respondents was reasonable. First, this Court
- consistently has recognized that a -reasonable- fee is to be a
- "fully compensatory fee," Hensley v. Eckerhart, 461 U. S. 424,
- 435 (1983), and is to be "calculated on the basis of rates and
- practices prevailing in the relevant market." Missouri v.
- Jenkins, 491 U. S. 274, 286 (1989). Second, it is a fact of the
- market that an attorney who is paid only when his client prevails
- will tend to charge a higher fee than one who is paid regardless
- of outcome, and relevant professional standards long have
- recognized that this practice is reasonable.
-
- The Court does not deny these principles. It simply refuses to
- draw the conclusion that follows ineluctably: If a statutory fee
- consistent with market practices is -reasonable,- and if in the
- private market an attorney who assumes the risk of nonpayment can
- expect additional compensation, then it follows that a statutory
- fee may include additional compensation for contingency and still
- qualify as reasonable. The Court's decision to the contrary
- violates the principles we have applied consistently in prior
- cases and will seriously weaken the enforcement of those statutes
- for which Congress has authorized fee awards -notably, many of
- our Nation's civil rights laws and environmental laws.
-
- I
-
- Congress' purpose in adopting fee-shifting provisions was to
- strengthen the enforcement of selected federal laws by ensuring
- that private persons seeking to enforce those laws could retain
- competent counsel. See S. Rep. No. 94-1011, p. 6 (1976). In
- particular, federal fee-shifting provisions have been designed to
- address two related difficulties that otherwise would prevent
- private persons from obtaining counsel. First, many potential
- plaintiffs lack sufficient resources to hire attorneys. See H.
- R. Rep. No. 94-1558, p. 1 (1976); S. Rep. No. 94-1011, p. 2
- (1976). Second, many of the statutes to which Congress attached
- fee-shifting provisions typically will generate either no damages
- or only small recoveries; accordingly, plaintiffs bringing cases
- under these statutes cannot offer attorneys a share of a recovery
- sufficient to justify a standard contingent fee arrangement. See
- Pennsylvania v. Delaware Valley Citizens' Council for Clean Air
- (-Delaware Valley II-), 483 U. S. 711, 749 (1987) (dissenting
- opinion); H. R. Rep. No. 94-1558, p. 9 (1976). The strategy of
- the fee-shifting provisions is to attract competent counsel to
- selected federal cases by ensuring that if they prevail, counsel
- will receive fees commensurable with what they could obtain in
- other litigation. If federal fee-bearing litigation is less
- remunerative than private litigation, then the only attorneys who
- will take such cases will be underemployed lawyers-who likely
- will be less competent than the successful, busy lawyers who
- would shun federal fee-bearing litigation-and public interest
- lawyers who, by any measure, are insufficiently numerous to
- handle all the cases for which other competent attorneys cannot
- be found. See Delaware Valley II, 483 U. S., at 742-743
- (dissenting opinion).
-
- In many cases brought under federal statutes that authorize
- fee-shifting, plaintiffs will be unable to ensure that their
- attorneys will be compensated for the risk that they might not
- prevail. This will be true in precisely those situations
- targeted by the fee-shifting statutes-where plaintiffs lack
- sufficient funds to hire an attorney on a win or-lose basis and
- where potential damage awards are insufficient to justify a
- standard contingent fee arrangement. In these situations, unless
- the fee-shifting statutes are construed to compensate attorneys
- for the risk of nonpayment associated with loss, the expected
- return from cases brought under federal fee-shifting provisions
- will be less than could be obtained in otherwise comparable
- private litigation offering guaranteed, win-or-lose compensation.
- Prudent counsel, under these conditions, would tend to avoid
- federal fee-bearing claims in favor of private litigation, even
- in the very situations for which the attorney's fee statutes were
- designed. This will be true even if the fee-bearing claim is
- more likely meritorious than the competing private claim.
-
- In Delaware Valley II, five Justices of this Court concluded
- that for these reasons the broad statutory term -reasonable
- attorney's fee- must be construed to permit, in some
- circumstances, compensation above the hourly win-or-lose rate
- generally borrowed to compute the lodestar fee. See 483 U. S., at
- 731, 732-733 (O'Connor, J., concurring in part and concurring in
- the judgment); id., at 735 (dissenting opinion). Together with
- the three Justices who joined my dissenting opinion in that case,
- I would have allowed enhancement where, and to the extent that,
- the attorney's compensation is contingent upon prevailing and
- receiving a statutory award. I indicated that if, by contrast,
- the attorney and client have been able to mitigate the risk of
- nonpayment-either in full, by agreeing to win-or-lose
- compensation or to a contingent share of a substantial damage
- recovery, or in part, by arranging for partial payment-then to
- that extent enhancement should be unavailable. Id., at 748-749.
- I made clear that the -risk- for which enhancement might be
- available is not the particular factual and legal riskiness of an
- individual case, but the risk of nonpayment associated with
- contingent cases considered as a class. Id., at 745-747, 752.
- Congress, I concluded, did not intend to prohibit district courts
- from considering contingency in calculating a -reasonable-
- attorney's fee.
-
- Justice O'Connor's concurring opinion agreed that "Congress did
- not intend to foreclose consideration of contingency in setting a
- reasonable fee," id., at 731, and that "compensation for
- contingency must be based on the difference in market treatment
- of contingent fee cases as a class, rather than on an assessment
- of the `riskiness' of any particular case" (emphasis in
- original). Ibid. As I understand her opinion, Justice O'Connor
- further agreed that a court considering an enhancement must
- determine whether and to what extent the attorney's compensation
- was contingent, as well as whether and to what extent that
- contingency was, or could have been, mitigated. Her concurrence
- added, however, an additional inquiry designed to make the
- market-based approach "not merely justifiable in theory but also
- objective and nonarbitrary in practice."- Id., at 732. She
- suggested two additional -constraints on a court's discretion- in
- determining whether, and how much, enhancement is warranted.
- First, "district courts and courts of appeals should treat a
- determination of how a particular market compensates for
- contingency as controlling future cases involving the same
- market," and varying rates of enhancement among markets must be
- justifiable by reference to real differences in those markets.
- Id., at 733. Second, the applicant bears the burden of
- demonstrating that without an adjustment for risk "the prevailing
- party would have faced substantial difficulties in finding
- counsel in the local or other relevant market" (internal
- quotations omitted). Ibid.
-
- II
-
- After criticizing at some length an approach it admits
- respondents and their amici do not advocate, see ante, at 5-6,
- and after rejecting the approach of the Delaware Valley II
- concurrence, see ante, at 6-7, the Court states that it "see[s] a
- number of reasons for concluding that no contingency enhancement
- whatever is compatible with the fee-shifting statutes at issue."
- Ante, at 7. I do not find any of these arguments persuasive.
-
- The Court argues, first, that "[a]n attorney operating on a
- contingency-fee basis pools the risks presented by his various
- cases" and uses the cases that were successful to subsidize those
- that were not. Ante, at 7-8. "To award a contingency
- enhancement under a fee-shifting statute," the Court concludes,
- would -in effect- contravene the prevailing-party limitation, by
- allowing the attorney to recover fees for cases in which his
- client does not prevail. Ante, at 8. What the words -in effect-
- conceal, however, is the Court's inattention to the language of
- the statutes: The provisions at issue in this case, like
- fee-shifting provisions generally, authorize fee awards to
- prevailing parties, not their attorneys. See 33 U. S. C.
- 1365(d); 42 U. S. C. 6972(e); see also Venegas v. Mitchell, 495
- U. S. 82, 87 (1990). Respondents simply do not advocate awarding
- fees to any party who has not prevailed. Moreover, the Court's
- reliance on the -prevailing party- limitation is somewhat
- misleading: the Court's real objection to contingency enhancement
- is that the amount of an enhanced award would be excessive, not
- that parties receiving enhanced fee awards are not prevailing
- parties entitled to an award. In prior cases the Court has been
- careful to distinguish between these two issues. See, e.g.,
- Hensley v. Eckerhart, 461 U. S., at 433 ("the 'prevailing party'
- determination only -brings the plaintiff . . . across the
- statutory threshold. It remains for the district court to
- determine what fee is `reasonable.'").
-
- Second, the Court suggests that -both before and since Delaware
- Valley II, `we have generally turned away from the contingent-fee
- model'-which would make the fee award a percentage of the value
- of the relief awarded in the primary action-`to the lodestar
- model.'- Ante, at 8, quoting Venegas v. Mitchell, 495 U. S., at
- 87. This argument simply plays on two meanings of -contingency.-
- Most assuredly, respondents -who received no damages for their
- fee-bearing claims -do not advocate "mak[ing] the fee award a
- percentage" of that amount. Rather, they argue
- that the lodestar figure must be enhanced because their
- attorneys' compensation was contingent on prevailing, and because
- their attorneys could not otherwise be compensated for assuming
- the risk of nonpayment.
-
- Third, the Court suggests that allowing for contingency
- enhancement "would make the setting of fees more complex and
- arbitrary" and would likely lead to -burdensome satellite
- litigation- that this Court has said should be avoided. Ante, at
- 9. The present case is an odd one in which to make this point:
- the issue of enhancement hardly occupied center stage in the fees
- portion of this litigation, and it became a time-consuming matter
- only after the Court granted certiorari, limited to this question
- alone. Moreover, if Justice O'Connor's standard were adopted,
- the matter of the amount by which fees should be increased would
- quickly become settled in the various district courts and courts
- of appeals for the different kinds of federal litigation. And in
- any event, speculation that enhancement determinations would be
- -burdensome- does not speak to the issue whether they are
- required by the fee-shifting statutes.
-
- The final objection to be considered is the Court's contention
- that any approach that treats contingent-fee cases as a class is
- doomed to failure. The Court's argument on this score has two
- parts. First, the Court opines that -for a very large proportion
- of contingency-fee cases--cases in which only equitable relief is
- sought--there is no `market treatment,'- except insofar as
- Congress has created an -artificial- market with the fee-shifting
- statutes themselves. It is circular, the Court contends, to
- -loo[k] to that `market' for the meaning of fee-shifting.- Ante,
- at 6-7. And even leaving that difficulty aside, the Court
- continues, the real -risk- to which lawyers respond is the
- riskiness of particular cases. Because under a class-based
- contingency enhancement system the same enhancement will be
- awarded whether the chance of prevailing was 80% or 20%, -all
- cases having above-class-average chance of success will be
- overcompensated- (emphasis in original). Ante, at 7. Both
- parts of this argument are mistaken. The circularity objection
- overlooks the fact that even under the Court's unenhanced
- lodestar approach, the district court must find a relevant
- private market from which to select a fee. The Court offers no
- reason why this market disappears only when the inquiry turns to
- enhancement. The second part of the Court's argument is mistaken
- so far as it assumes the only relevant incentive to which
- attorneys respond is the risk of losing particular cases. As
- explained above, a proper system of contingency enhancement
- addresses a different kind of incentive: the common incentive of
- all lawyers to avoid any fee-bearing claim in which the plaintiff
- cannot guarantee the lawyer's compensation if he does not
- prevail. Because, as the Court observes, "no claim has a 100%
- chance of success," ante, at 5, any such case under a pure
- lodestar system will offer a lower prospective return per hour
- than one in which the lawyer will be paid at the same lodestar
- rate, win or lose. Even the least meritorious case in which the
- attorney is guaranteed compensation whether he wins or loses will
- be economically preferable to the most meritorious fee-bearing
- claim in which the attorney will be paid only if he prevails, so
- long as the cases require the same amount of time. Yet as noted
- above, this latter kind of case "in which potential plaintiffs
- can neither afford to hire attorneys on a straight hourly basis
- nor offer a percentage of a substantial damage recovery" is
- exactly the kind of case for which the fee-shifting statutes were
- designed.
-
- III
-
- Preventing attorneys who bring actions under fee-shifting
- statutes from receiving fully compensatory fees will harm far
- more than the legal profession. Congress intended the
- fee-shifting statutes to serve as an integral enforcement
- mechanism in a variety of federal statutes-most notably, civil
- rights and environmental statutes. The amicus briefs filed in
- this case make clear that we can expect many meritorious actions
- will not be filed, or, if filed, will be prosecuted by less
- experienced and able counsel. Today's decision weakens the
- protections we afford important federal rights.
-
-
- /* In fact the congress refers from time to time to the attorneys
- who file suits to enforce such statutes as "private attorney's
- general. */
-
- I dissent.
- ---------------------------------------------------------------------------
-
- Justice O'Connor, dissenting.
-
- I continue to be of the view that in certain circumstances a
- -reasonable- attorney's fee should not be computed by the purely
- retrospective lodestar figure, but also must incorporate a
- reasonable incentive to an attorney contemplating whether or not
- to take a case in the first place. See Pennsylvania v. Delaware
- Valley Citizens' Council for Clean Air, 483 U. S. 711, 731-734
- (1987) (Delaware Valley II) (O'Connor, J., concurring in part and
- concurring in judgment). As Justice Blackmun cogently explains,
- when an attorney must choose between two cases-one with a client
- who will pay the attorney's fees win or lose and the other who
- can only promise the statutory compensation if the case is
- successful -the attorney will choose the fee-paying client,
- unless the contingency-client can promise an enhancement of
- sufficient magnitude to justify the extra risk of nonpayment.
- Ante, at 2-3. Thus, a reasonable fee should be one that would
- -attract competent counsel,- Delaware Valley II, supra, at 733
- (O'Connor, J., concurring in part and concurring in judgment),
- and in some markets this must include the assurance of a
- contingency enhancement if the plaintiff should prevail. I
- therefore dissent from the Court's holding that a -reasonable-
- attorney's fee can never include an enhancement for cases taken
- on contingency.
-
- In my view the promised enhancement should be -based on the
- difference in market treatment of contingent fee cases as a
- class, rather than on an assessment of the `riskiness' of any
- particular case.- Id., at 731 (emphasis omitted). As Justice
- Blackmun has shown, the Court's reasons for rejecting a
- market-based approach do not stand up to scrutiny. Ante, at 8.
- Admittedly, the courts called upon to determine the enhancements
- appropriate for various markets would be required to make
- economic calculations based on less-than-perfect data. Yet that
- is also the case, for example, in inverse condemnation and
- antitrust cases, and the Court has never suggested that the
- difficulty of the task or possible inexactitude of the result
- justifies forgoing those calculations altogether. As Justice
- Blackmun notes, these initial hurdles would be overcome as the
- enhancements appropriate to various markets became settled in the
- district courts and courts of appeals. Ante, at 7.
-
- In this case, the District Court determined that a 25%
- contingency enhancement was appropriate by reliance on the
- likelihood of success in the individual case. App. to Pet.
- for Cert. 132-133. The Court of Appeals affirmed on the basis of
- its holding in Friends of the Earth v. Eastman Kodak Co., 834 F.
- 2d 295 (CA2 1987), which asks simply whether, without the
- possibility of a fee enhancement, the prevailing party would not
- have been able to obtain competent counsel. 935 F. 2d 1343, 1360
- (CA2 1991) (citing Friends of the Earth, supra). Although I
- believe that inquiry is part of the contingency enhancement
- determination, see Delaware Valley II, supra, at 733 (O'Connor,
- J., concurring in part and concurring in judgment), I also
- believe that it was error to base the degree of enhancement in
- case-specific factors. Because I can find no market-specific
- support for the 25% enhancement figure in the affidavits
- submitted by respondents in support of the fee request, I would
- vacate the judgment affirming the fee award and remand for a
- market-based assessment of a suitable enhancement for
- contingency.
-