Senate panel advances Jeff Brandes bill limiting attorneys’ fees in insurance claims cases

The Senate Banking and Insurance Committee approved legislation Tuesday via a 5-3 vote that would limit the amount of attorneys’ fees awarded in cases involving property insurance policies.

Republican Sen. Jeff Brandes sponsored the measure (SB 914).

“We’re simply trying to reflect the jurisprudence of federal law and essentially what almost every other state does as it relates to contingency risk multipliers,” Brandes said.

At issue are cases where insurance companies are seeking to deny a claim by an insured individual. Those individuals may sue in response, seeking a claim payout.

But in some circumstances, insured individuals can struggle to afford competent counsel, forcing an attorney to take a case on contingency. In those cases, should an insured individual prevail, a court can award a contingency fee multiplier to, in essence, compensate the attorney for taking a risk on the case.

Brandes and those supporting the bill argue the state’s existing fee sharing structure already provides enough of a safety net to ensure individuals can obtain competent counsel, even without the contingency multiplier.

“The fee shifting statute was put into place to level the playing field,” said attorney Aram Megerian of CSK Legal in support of the bill.

“The contingency fee multiplier is to address the availability of competent counsel so that attorneys are more willing in accepting smaller value cases or difficult cases.”

Megerian said he believes enough lawyers are willing to take these cases that the contingency multiplier is rarely needed.

Still, Brandes’ legislation was softened a bit with an amendment approved by the committee Tuesday.

The original bill language attempted to eliminate the use of contingency risk multipliers altogether.

“In awarding attorney fees under this section for a claim arising under a property insurance policy, the maximum fee a court may award is a lodestar fee,” the original language read.

“A court may not consider contingency risk in determining the lodestar fee or use a contingency risk multiplier to increase the lodestar fee.”

But the amendment adopted in Tuesday’s hearing allowed for the use of contingency risk multipliers in limited instances.

“In an award of attorney fees under this section for a claim arising under a property insurance policy, a strong presumption is created that a lodestar fee is sufficient and reasonable,” the most current form of the bill reads.

“Such presumption may be rebutted only in a rare and exceptional circumstance with evidence that competent counsel could not be retained in a reasonable manner.”

The legislation follows a fight last Session regarding the “assignment of benefits,” which involves policyholders signing over claims to contractors, who then seek payment from insurance companies.

Insurers contended the process had become riddled with lawsuits, driving up property-insurance costs. Lawmakers passed a measure that included limits on attorney fees in so-called AOB cases.

Those opposing the new Brandes bill argue that without that multiplier, attorneys may be less willing to take on a risky case. That could leave individuals either without competent counsel or could force them to hire an attorney at a non-contingency rate — even if they can’t necessarily afford to do so.

“I believe it limits access to the courts and that access should not be restricted upon who can afford it,” said Sen. Darryl Rouson in opposition to the bill Tuesday.

“There are only a minute number of cases where the multiplier is awarded. And I’m persuaded by the question: what are we trying to fix? And I’m also persuaded by the statement that the threat of the multiplier being awarded aids in settlements of cases.”

Michael Carlson, President and CEO of the Personal Insurance Federation of Florida, said his group will support the bill moving forward.

“Use of the fee multiplier is already severely limited at the Federal level, yet today in Florida, attorneys taking on routine residential property claims are asking to be paid twice or even three times their hourly rate, not because they deserve it but because they can,” Carlson said.

“And those costs are passed on to insurance consumers.”

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Material from the News Service of Florida was used in this post.