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Civil Procedure – arbitration — attorney fees

By: WISCONSIN LAW JOURNAL STAFF//March 18, 2013//

Civil Procedure – arbitration — attorney fees

By: WISCONSIN LAW JOURNAL STAFF//March 18, 2013//

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United States Court of Appeals For the Seventh Circuit

Civil

Civil Procedure – arbitration — attorney fees

Where a party to a contract succeeded in arbitration and in defending the arbitration in court, the district court did not abuse its discretion in awarding its attorneys a one-third contingency fee.

“In Matthews we explained that the commercial reasonableness of an award pursuant to a contractual fee shift should be determined with reference to “the aggregate costs in light of the stakes of the case and opposing party’s litigation strategy.” Id. at 572. The district court’s analysis supports its determination that the 33.3% contingent fee here was commercially reasonable. Edman submitted affidavits from two experts stating that a 1/3 contingent fee is common for commercial arbitration cases in Florida, where the arbitration took place. And the court noted that “commercially reasonable” contingent fees may be higher than a commercially reasonable lodestar rate because a contingent arrangement may include a premium that captures the attorney’s upfront investment as well as the risk of losing the case. Johnson declined to disclose the fees it incurred (a sum that it presumably believed was reasonable) for the purpose of comparing Edman’s contingent fees to its own expenses. Nor did Johnson provide any evidence showing Edman’s 33% contingent fee is higher than the fee typically charged for comparable work in the relevant area and therefore unreasonable. Id. The court did not an abuse its discretion in concluding that Edman was entitled to a 33.3% contingent fee.”

Affirmed.

12-2308 & 12-2623 Johnson Controls Inc. v. Edman Controls Inc.

Appeals from the United States District Court for the Eastern District of Wisconsin, Adelman, J., Wood, J.

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