QUINTEN DODSON SMITH—In recent years, South Florida has seen an unprecedented explosion of economic growth, namely from businesses, professionals, and capital migrating since the onset of the COVID-19 pandemic in 2020. From Big Tech to financial services firms, the area has attracted an ever-growing corporate presence due to its unique lifestyle and climate, business-friendly taxes, and proximity to emerging Latin American markets. Massive multinational “Big Law” firms have followed in-tow. What was once the location for selectively staffed Big Law outposts and satellite offices, Miami has quickly become an elite legal market—housing large full-service offices that now rival and outpace those in more traditional, established markets such as New York, San Francisco, and Chicago.
With the influx of Big Law firms bringing their clients, influence, and (most importantly) attorneys into the region, one must ask a secondary question: have their Big Law rates followed? The short answer—absolutely. According to the National Association of Legal Fee Analysis, 18 percent of Miami attorneys now bill their clients “Tier Four” rates: running upwards from $951 to over $1,300 per hour. The city now ranks second nationally in this metric—tied with New York and only behind Washington DC. Although attorneys may command these high rates when charging clients directly, a massive disparity exists when courts contemplate “reasonable” rates when awarding attorney’s fees.
As stated by the Supreme Court in Buckhannon v. West Virginia DHHR, each party must bear their own attorney’s fees under the “American Rule.” That is, the prevailing party cannot be awarded their attorney’s fees, paid for by the losing party, absent specific conditions. The Eleventh Circuit recognizes three exceptions to this rule: (1) when statute permits fee-shifting; (2) when a contract between parties dictates that the losing party will pay the prevailing party’s fees; and (3) when a court orders sanctions for bad-faith litigation. When a court grants a prevailing party’s motion for attorney’s fees under one of the aforementioned exceptions, a court then utilizes the “lodestar method” for calculating the final award: one’s reasonable hourly rate multiplied by the reasonable number of hours worked. Thus, when awarding attorney’s fees, a court’s first step—and usually most disputed facet—is determining one’s reasonable hourly rate.
The U.S. District Court for the Southern District of Florida has recently dealt with the issue of what constitutes a reasonable rate. In a report and recommendation authored by Chief Magistrate Judge Edwin G. Torres and later adopted by Judge Darrin P. Gayles, the court contemplated a request for attorney’s fees and, in doing so, underscored the disparity between a Big Law attorney’s “market” rate and “reasonable” rate. After a start-up’s lawsuit alleging numerous security violations against its lender was dismissed by Judge Gayles, defendant’s Gibson Dunn attorneys moved for fees pursuant to a contractual provision stipulating fee shifting. The two Gibson Dunn partners on the case billed their client more than $1,800 per hour and nearly halved their requested rates to $950 for the purposes of the motion. However, the court found the requested $950 per hour for two senior Big Law partners to be unreasonable and well-above the prevailing market rate.
The court determined that it “remain[ed] an expert on the issue of hourly rates in its community and may properly consider ‘its own knowledge and experience concerning reasonable and proper fees’” pursuant to 11th Circuit caselaw. The court then held that while the defendants “hired five excellent lawyers from Gibson Dunn . . . it cannot force the loser to pay for the luxury of unusually well-qualified counsel.” Instead, the court reasoned that “a balance must be struck between the types of rates commanded by premium lawyers in outside markets versus the rates that have been approved for [similar] litigation in this district.”
Recognizing, in part, the “number of large market firms that have relocated to Miami,” the Court awarded the partners a reasonable hourly rate of $700—a significant raise from the $425 rate deemed reasonable by the court for similar litigation a decade earlier. Thus, the court stuck to its previous declaration “comparing attorneys to either a Ferrari, a BMW, or a Ford Fusion and [one] can only recover the cost of the Ford Fusion because “[i]t is quite reliable, consistent, and effective for the task at hand, and will not break the bank.” It is important to note, however, that judges have immense discretion in determining reasonable rates under (primarily) the Johnson factors. For instance, Magistrate Judge Lisette Reid found that $850 was a reasonable hourly rate in the Southern District a year prior to Judge Torres’ determination, both utilizing the same caselaw and Eleventh Circuit precedent.
So—has Big Law permanently brought its four-figure hourly rates to the Miami legal market? To use every attorney’s favorite answer—it depends. Without question, Big Law has significantly raised the average hourly rate billed to clients in South Florida as described above; however, local courts have yet to truly recognize this monumental change in the region’s legal landscape. Accounting for inflation, the increase of what constitutes a court-awarded reasonable rate is nominal, at best. Even though many of the firms and their constituent attorneys have migrated to Miami from markets like New York, where courts regularly award hourly rates of $1,500 and more, South Florida courts appear ready to take their time in raising what they consider to be the “prevailing market rate.” Thus, the disconnect between billed rates and awarded rates is likely to continue even as Big Law firms become entrenched in Miami. For elite firms and attorneys charging “Ferrari” rates, know that South Florida courts will likely only award “Ford Fusion” rates—however disappointing that may be. For prospective clients, the most economical decision may therefore be to retain one of the numerous boutique or mid-size firms located in South Florida that charge “BMW” rates and nevertheless provide superb representation
