Defense counsel in employment cases — in any fee-shifting case, actually — are going to be crying in their beer over yesterday's decision by the NJ Supreme Court in two consolidated cases. The cases are Walker v. Giuffre and Humphries v. Powder Mill Shopping Plaza. Interestingly, neither is an employment case, but their combined impact upon employment cases is undeniable.
For the past 17 years, under a case called Rendine, attorneys who represent plainitffs under contingency fee agreements in fee-shifting cases under NJ law have been permitted to seek enhancements of their fees under certain circumstances. For instance, if the base fee is $100,000, and the court decides that a Rendine enhancement of 25% is appropriate, the attorney's fee becomes $125,000. The theory is that allowing fee enhancements incentivizes attorneys to take on difficult cases, or ones that seek to vindicate important policies, where there is a significant risk of non-payment.
The law in NJ seemed settled. Then enter the US Supreme Court, with its 2010 decision in Perdue v. Kenny A, a civil rights case. The Court there held that fee ehancements are only appropriate to award superior attorney performance in extraordinary cases. That standard is far more restrictive than the Rendine standard, and it is undeniably the law of the land in cases that are decided under federal law.
The Perdue standard then seeped down into a couple of cases decided under NJ state law. In the Walker and Humphries cases, panels of the NJ Appellate Division adopted the Perdue “extraordinary circumstances” test to deny fee enhancements to successful plaintiffs, who appealed.
In no uncertain terms the NJ Supreme Court reversed the Appellate Division, holding that
the mechanisms for awarding fees, including contingency enhancements, that we adopted in Rendine shall remain in full force and effect as the governingprinciples for attorneys' fee awards made pursuant to fee-shiftingprovisions in our state statutes and rules.
Take that, US Supremes!
The opinion is long, but it is required reading for attorneys who handle contingency cases. It clarifies all of the standards that are used to award fees in contingency fee cases, not just fee enhancements. Among other things, folks, there is going to be little excuse for not keeping detailed, contemporaneous time records — if you want to get paid.
There's a good chance that we're all going to be citing to Walker and Humphries from now on. Rendine will still be cited, but we'll be arguing the cases decided on January 25, 2012.