contingent fee basis. Id. at 1400. In this case, defendant has submitted the affidavit of one attorney, Arnold Shep Cohen, who states that his firm, which handles employment cases, "does not turn away contingency plaintiffs with meritorious claims because a 'multiplier' is unavailable." (Affidavit, para. 5).
The affidavits submitted on plaintiff's behalf do not provide the court with a basis to make a market-based, quantitative finding. Unlike the record before Judge Giles, the record herein simply does not include any substantiated amount by which fees need be enhanced. Thus, the court has insufficient "market" evidence to quantify the amount of enhancement necessary to ensure an adequate supply of competent counsel in employment discrimination cases.
Nevertheless, the court derives from the record the following conclusions with respect to the availability of counsel in employment discrimination cases: Many persons are unable to pay attorneys on an hourly basis. Classic contingent fee arrangements are not practicable when a person has not suffered substantial monetary damage. The prospect of a lodestar amount alone is insufficient to induce competent attorneys to undertake these matters. Based on the affidavits on record, the court finds that (1) the local market regularly rewards contingency in excess of hourly rates, and (2) without an expectation of enhancement for risk, persons who have suffered discrimination in the workplace will face substantial difficulties in finding competent counsel.
The Third Circuit has stated that, under Delaware Valley II, the "ultimate inquiry in establishing a reasonable fee must be the rate necessary to attract competent counsel, and that contingency multipliers should be awarded only when necessary to attract such counsel." SPIRG, 842 F.2d at 1451. As discussed above, supra at 495-96, to ensure adequate legal representation for plaintiffs whose damages are limited by statute, the amount for enhancement must be based on the facts of the particular case, although the need arises from a market-wide analysis. From the beginning, this case promised to be difficult, lengthy, and risky. Plaintiffs' case rested in substantial part on statistical analysis of data obtained only through discovery. This proof could not have been established until long after plaintiffs' counsel had undertaken representation. Thus, the outcome was by no means clear at the outset of the litigation. For these reasons, the lodestar fee does not adequately compensate plaintiffs' counsel for the contingency inherent in this case.
The court has carefully reviewed the affidavits submitted in this matter as to the expectations of counsel in undertaking these matters generally, and reconsidered the specific risks confronted by counsel in this particular matter. Based upon such consideration, the court is satisfied that its original award was inadequate and that a 50 per cent enhancement is required to attract competent counsel and adequately compensate counsel here. Although the court is unable to establish a general standard, it is satisfied that greater compensation is warranted in this matter than originally determined. Furthermore, the granting of any multiplier less than 50 per cent might serve to discourage counsel from undertaking representation in other similar matters. Accordingly, a 50 per cent multiplier will be allowed.
Enhancement for Delay.
Although the issue of enhancement for delay was not before the Supreme Court in Delaware Valley II, none of the justices found an adjustment for delay inconsistent with the typical fee-shifting statute. The Third Circuit has likened such enhancement to an award of interest. SPIRG, 842 F.2d at 1453. Computing the appropriate compensation for delay depends upon "economic factors encompassing the cost to the plaintiff's law firm of waiting for its fee." Id. at 1453. The Third Circuit noted the "crucial importance of making an adequate showing" on this claim. Id. The appellate court has stated that market interest rates and the time value of money are relevant to this showing. See Institutionalized Juveniles v. Secretary of Public Welfare, 758 F.2d 897, 923 (3rd Cir. 1985); see also SPIRG, 842 F.2d at 1453.
The Magistrate found that plaintiffs had not made an adequate showing to justify a multiplier for delay. Plaintiffs had submitted calculations based on increases in the cost of living during the litigation. Plaintiffs have since submitted a chart containing interest rates for each year during the relevant time period, as determined by an independent investor service. The lodestar has been broken down by year, based upon affidavits of services rendered, until the date of judgment.
Applying the interest rates to the lodestar figures, plaintiffs arrive at the figure $ 14,818.63. (Exhibit A to Plaintiff's Objections).
Plaintiffs point to Judge Giles' decision in Black Grievance Committee, 690 F. Supp. at 1403, in which the court calculated the delay enhancer on the basis of uncontested market interest rates. Plaintiffs also offer the certification of Philip Sobel, a member of the law firm that represented plaintiffs, to document the costs of delay. (Exhibit B to Plaintiff's Objections). Mr. Sobel states that in non-contingency cases, the firm sometimes required clients who were late in payment to pay interest on any outstanding balance. Mr. Sobel states that "the cost to us of the delay of payment of our fee in this matter was significant." During the period between commencement of representation and payment, the firm borrowed money to cover the shortfall. These loans were used to pay basic operating expenses, such as secretarial salaries. (Supplemental Certification of Philip Sobel, Exhibit C to Supplemental Certification of John M. Esposito). Mr. Sobel states that "the approximate amount of interest paid on all these loans during the period from the beginning of the first loan on June 26, 1984 through December 31, 1986 was $ 6,200.00." (Supplemental Certification of Philip Sobel).
Defendant states that plaintiff is foreclosed by the "law of the case," namely this court's finding that movant failed to produce sufficient evidence as to their entitlement to a multiplier for delay. (See opinion of April 21, 1986, at 14-15). The court rejects this contention. This court's original enhancement of 20 per cent treated delay and risk together. This determination has been vacated and remanded, in order for this court to apply the instructions of the Supreme Court. Delaware Valley II's holding that delay must be examined separately dictates that this court reconsider both bases for enhancement.
Defendant also attacks the statements by Mr. Sobel relating to loans taken by the law firm as incomplete and insufficiently linked to the costs associated with this case. The court finds that the evidence provided as to loans merely corroborates plaintiff's showing that the delay in payment requires compensation based on prevailing market interest rates.
Finally, defendant asserts that the lodestar already compensates plaintiffs for delay and that an additional award would constitute a windfall. This argument is without merit, since delay is not considered in determining the lodestar amount. The court concludes that plaintiffs' proofs on delay are both timely and adequate. Accordingly, plaintiffs' attorney is entitled to an additional $ 14,818.63 as compensation for delay in payment.
On remand, the court has differentiated between enhancement for delay and enhancement for risk, in accordance with the instructions of the Third Circuit and the Supreme Court. The court has concluded that it would not be feasible for plaintiff to retain an expert to develop and apply an econometric model to this case. The court is satisfied that the affidavits submitted on behalf of plaintiff provide adequate support for the court's findings.
The court finds that the lodestar amount should be enhanced by 50 per cent, or $ 56,657.25, to ensure an adequate supply of competent attorneys in employment discrimination cases and to compensate for the particular risks encountered in this case. In addition, plaintiffs' counsel should be awarded an additional $ 14,818.63 as compensation for costs related to the delay in payment.
Counsel for plaintiffs should submit an order consistent with this opinion.