Friday, November 12, 2010

New Maryland Court of Appeals Case on Contractual Attorneys' Fees

In the recent Monmouth Meadows Homeowners Association v. Hamilton case, a copy of which can be found here, the Maryland Court of Appeals clarified the method by which trial courts can calculate attorneys’ fee awards in contractual fee-shifting cases (as distinguished from statutory fee-shifting cases). Specifically, the Court held that the “lodestar” method of calculating attorneys’ fees does not apply to contractual fee-shifting cases, and that, instead, courts must look to the standard for determining appropriate attorneys’ fees under Rule 1.5 of the Maryland Lawyers’ Rules of Professional Conduct. While the distinction may seem subtle, a fee award under lodestar can be quite different from a fee award under Rule 1.5. That is because a fee award under the lodestar method of calculation takes into account the “importance of the right vindicated.” This means that in an appropriate case with a statutory fee-shifting clause a $10,000.00 judgment for money damages can justify a much larger fee award. In the contractual fee-shifting situation, the courts in Maryland will be required to review the fee requested in the context of the principal amount in controversy in the litigation. Therefore, in a breach of contract case where $10,000.00 is at stake, it will be difficult for a court to justify a fee of $10,000.00.

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