Citations
- 578 S.W.3d 469
Full opinion text
Justice Green delivered the opinion of the Court.
In this case, we must decide whether a tenant can terminate a commercial lease contract for the landlord's prior material breach. We hold that under Davidow v. Inwood North Professional Group-Phase I , 747 S.W.2d 373 (Tex. 1988), termination is a justified remedy when the landlord breaches the commercial lease. We also must consider whether the evidence offered to prove attorney's fees is sufficient under our precedent for fee-shifting awards. We hold that it is not. When a fee claimant seeks to recover attorney's fees from an opposing party, it must put on evidence of reasonable hours worked multiplied by a reasonable hourly rate, yielding a base figure that can be adjusted by considerations not already accounted for in either the hours worked or the rate. Because the record does not contain this evidence, we affirm the court of appeals' judgment in part, reverse as to the award of attorney's fees, and remand the case to the trial court for further proceedings.
I. Background
Landlord Rohrmoos Venture executed a commercial lease with tenant UT Southwestern DVA Healthcare, LLP (UTSW), for a commercial building in Dallas, Texas. UTSW used the commercial building for a dialysis clinic. At some point UTSW began experiencing water penetration in the building's concrete foundation and installed ceramic floor tiles because of the moisture problems.
Around September 2007, state health inspectors evaluated UTSW's dialysis clinic and criticized the facility because some ceramic floor tiles had come loose from the concrete slab and moisture could be seen under the tiles. UTSW notified Rohrmoos of the inspection results and over the following months, the two exchanged extensive communication in an attempt to diagnose and fix the issue. Neither party accepted responsibility. Multiple engineers and contractors were called in, but the issue persisted into 2009 and then began to worsen as the building apparently suffered significant water penetration.
Because UTSW viewed the commercial building as unsuitable for its intended commercial purpose, UTSW terminated its lease early, vacated the premises, and relocated to Irving, Texas, while still allegedly owing approximately $ 250,000 in unpaid rent. UTSW then sued Rohrmoos and the joint-venturers behind it for breach of contract and breach of the implied warranty of suitability. UTSW also sought declaratory judgment that: (1) a casualty occurred in accordance with the lease, (2) Rohrmoos failed to remedy the casualty, and (3) UTSW had the right to terminate the lease. Rohrmoos answered with several affirmative defenses, including waiver and prior material breach. Rohrmoos also counterclaimed for negligence and breach of contract. UTSW asserted its own affirmative defenses to Rohrmoos's counterclaims.
The case was submitted to a jury. The jury found that UTSW and Rohrmoos both failed to comply with the lease, that Rohrmoos failed to comply first, and that Rohrmoos breached the implied warranty of suitability. Although UTSW initially sought money damages, it did not submit that claim to the jury. Accordingly, no money damages were awarded to UTSW.
Regarding attorney's fees, the parties' lease agreement provided for a fee-shifting arrangement whereby "the prevailing party shall be entitled to an award for its reasonable attorneys' fees" from the non-prevailing party "[i]n any action to enforce the terms of [the] Lease." In an attempt to prove the reasonableness and necessity of the requested attorney's fees at trial, UTSW's attorney, Wade Howard, testified that he had twenty years of litigation experience, the standard rate he charges is $ 430 per hour, he has handled cases similar in nature to this one before, and a reasonable and necessary number of hours to spend on this case would be around 750 to 1,000. Those hours multiplied by his standard hourly rate equals between $ 322,500 and $ 400,000, so he testified that a reasonable and necessary fee would be between $ 300,000 and $ 400,000. But then Howard went on to state, "This case, for whatever reason, has not been worked up in a reasonable fashion.... But because of that, the fees in this case are much closer -- my fees are much closer to 800 -- over $ 800,000." He gave some examples of why the cost of this litigation was so high-searching through "millions" of emails and reviewing "hundreds of thousands" of documents during discovery, over forty depositions taken, and a forty-page motion for summary judgment. Howard did not explain how much time was spent on each of those tasks, however, and it was clear that not all the tasks he performed were included in his testimony. Rather, he stated that the factors relevant to his attorney's fees were (1) the amount in controversy, (2) the complexity of the case, and (3) his knowledge and experience-three of the eight factors set out in Arthur Andersen & Co. v. Perry Equipment Corp. , 945 S.W.2d 812, 818 (Tex. 1997). The jury determined reasonable attorney's fees for both UTSW and Rohrmoos at $ 800,000 for representation in the trial court, $ 150,000 in the court of appeals, and $ 75,000 for representation in this Court.
The trial court entered final judgment against Rohrmoos, stating:
1. [Rohrmoos] materially breached the lease agreement first.
2. [Rohrmoos] breached the implied warranty of suitability.
3. Because [Rohrmoos] materially breached the lease agreement first and breached the implied warranty of suitability, UTSW had the right to terminate the lease agreement.
4. Rohrmoos Venture takes nothing on all of its claims against UTSW and Counter-Defendants....
The trial court awarded UTSW attorney's fees in the amount determined by the jury-totaling $ 1,025,000 with the conditional appellate awards. Rohrmoos moved to reform the judgment or, alternatively, for a new trial. The trial court denied the motion.
Because the trial court's judgment authorized UTSW to terminate the commercial lease, Rohrmoos, on appeal, attacked the jury's finding that it breached the implied warranty of suitability established under Davidow . See Davidow , 747 S.W.2d at 377 (holding that "there is an implied warranty of suitability by the landlord in a commercial lease that the premises are suitable for their intended commercial purpose"). Rohrmoos reasoned that unless Davidow is waived under the lease or the lease contains a provision that supersedes Davidow 's implied warranty of suitability, a tenant can terminate a commercial lease only by proving a breach of the implied warranty of suitability. Otherwise, posited Rohrmoos, why would a commercial tenant go through the rigors of proving a Davidow breach if instead it could obtain the same remedy-termination-by merely convincing a jury that the landlord had materially breached the lease? Rohrmoos therefore devoted most of its briefing to challenging the jury's finding that it breached Davidow 's implied warranty of suitability. Rohrmoos did not challenge the jury's finding that it materially breached the lease.
The court of appeals initially missed Rohrmoos's primary argument under Davidow , largely because Rohrmoos did not brief the Davidow issue fully. On this point, the court of appeals held:
All of [Rohrmoos's Davidow arguments] are irrelevant unless Rohrmoos also defeats the answers to questions one through three [of the jury charge], which support [UTSW]'s prior material breach of contract defense to Rohrmoos's counterclaim. But, as discussed later, Rohrmoos does not properly challenge the sufficiency of the evidence to support the jury's breach of contract findings. And unchallenged jury findings are binding on this court.
559 S.W.3d 155, 160 (Tex. App.-Dallas 2015, pet. granted) (mem. op.) (footnote omitted) (citation omitted).
Rohrmoos filed a motion for reconsideration, asserting that the court of appeals overlooked Rohrmoos's primary argument under Davidow that a material breach of contract does not support the termination of a commercial lease. The court of appeals withdrew its opinion, vacated its judgment, and published a new opinion with the following language:
Rohrmoos's motion for reconsideration improperly now argues that we should ignore the answers to Questions One through Three [of the jury charge] because the right to terminate a commercial lease for failure to make repairs exists only with respect to a breach of the implied warranty of suitability that the Supreme Court established in Davidow v. Inwood North Professional Group-Phase I , 747 S.W.2d 373, 376-77 (Tex. 1988) and does not exist for a prior material breach of an express duty [to] repair contained in the lease. But Rohrmoos did not assert that objection to Questions One through Three in the trial court, or otherwise preserve the point in the trial court. See TEX. R. CIV. P. 274 ("A party objecting to a charge must point out distinctly the matter to which he objects and the grounds of his objection.").
Id. at 163. The court of appeals decided Rohrmoos's remaining points of error against Rohrmoos and affirmed the trial court's judgment. See id. at 160-64, 169.
Regarding the $ 1,025,000 in attorney's fees, Rohrmoos challenged the award in the court of appeals on two grounds: (1) UTSW was not a "prevailing party" under the lease and therefore was not entitled to recover attorney's fees, and (2) the evidence was insufficient to support the fee award. Id. at 164-66. The court of appeals disagreed with Rohrmoos on both counts, holding that UTSW was a "prevailing party" under the lease, and that El Apple I, Ltd. v. Olivas , 370 S.W.3d 757 (Tex. 2012), and its progeny, which use the "lodestar method" for calculating attorney's fees, do not apply in this case. 559 S.W.3d at 165-68. The court of appeals further held that billing records are not required to prove attorney's fees, and testimony about the attorney's experience, the total amount of fees, and the reasonableness of the fees complied with Arthur Andersen and supported the fee award. Id. at 167-68. Rohrmoos petitioned this Court for review, and we granted the petition. 61 Tex. Sup. Ct. J. 1505 (June 22, 2018).
II. Davidow 's Implied Warranty of Suitability
Rohrmoos raises many arguments in this Court involving the Davidow implied warranty of suitability. Rohrmoos argues primarily that the court of appeals incorrectly assumed that a material breach of a commercial lease can justify termination, resulting in a holding that is contrary to our decision in Davidow . However, there are preservation concerns surrounding this issue, which we address first before turning to the applicability of Davidow 's implied warranty of suitability.
A. Preservation
Rohrmoos maintains that the issue of whether a tenant can terminate a commercial lease based on the landlord's prior material breach is properly preserved for our review. Refuting the court of appeals' holding that Rohrmoos did not object to the jury charge based on its Davidow theory, or otherwise preserve the point in the trial court, Rohrmoos contends that the issue is legal and not factual-meaning it can be raised at any time, including on appeal. Rohrmoos also claims that it nevertheless did raise the issue repeatedly in the trial court and correctly preserved the issue for review in the court of appeals and this Court.
UTSW, on the other hand, argues that the Davidow issue is not properly before this Court. First, UTSW argues that Rohrmoos did not object to the jury charge regarding material breach and assert its Davidow theory in the trial court, thereby waiving the right to appeal the issue. Second, even if the Davidow argument had been preserved in the trial court, UTSW argues that Rohrmoos did not adequately brief the issue in the court of appeals, thus waiving the issue there. And finally, UTSW asserts that Rohrmoos waived the issue in this Court by not challenging the court of appeals' application of the law on preservation and waiver in its petition for review.
After a careful review of the record, we agree with Rohrmoos that the Davidow issue is preserved for our review. Importantly, the availability of termination as a remedy did not become an issue until the trial court entered judgment authorizing termination. When that happened, Rohrmoos promptly filed a motion to reform the judgment or, alternatively, for a new trial. In that motion, Rohrmoos asserted that "under Texas law, a tenant claiming material breach of lease is not entitled to terminate the lease unless the lease expressly provides for that remedy." Rohrmoos cited Davidow , saying that "[t]his is still the law in Texas today." This gave the trial court notice of Rohrmoos's complaint that the verdict and judgment were at least partially based on a theory of recovery that Rohrmoos contends did not support termination as a matter of law. Cf. United Scaffolding, Inc. v. Levine , 537 S.W.3d 463, 482 (Tex. 2017) (holding that the preservation requirement was satisfied because the defendant raised the issue of an improper theory of recovery that could not support the judgment in a motion for judgment notwithstanding the verdict). Regarding the jury charge, there was no need to object because it did not mention termination as a remedy or ask whether UTSW was entitled to terminate.
Furthermore, whether a tenant can terminate a commercial lease under Davidow for material breach is a question of law for the court to decide, and it is not one which must be resolved before the jury can properly perform its fact-finding role. See Holland v. Wal-Mart Stores, Inc. , 1 S.W.3d 91, 94 (Tex. 1999) (per curiam) (holding that a party's failure to object at the charge conference regarding attorney's fees was not fatal because "[t]he availability of attorney's fees under a particular statute is a question of law for the court" and is not one that must be answered before the jury can properly determine the facts in the case). A jury can determine whether there was a breach of contract, which party breached first, and whether there was a breach of the implied warranty of suitability-as the jury did here-and it can do all of this whether or not termination is an available remedy under Davidow for material breach of a commercial lease.
Additionally, the record indicates that Rohrmoos raised its argument under Davidow in the trial court. In a trial brief, Rohrmoos stated specifically that a commercial tenant "may not terminate the lease" unless it proves a breach of the implied warranty of suitability. Likewise, during trial, Rohrmoos's counsel explained:
Their allegation on [breach of contract] is that the landlord failed in his duty to repair, that's their allegation. Under Texas law, that does not entitle a party to terminate the contract. It entitles them to repair it and then to collect back from the landlord, there's an offset for rent.... So, if we breached because we did not do repairs, if that's what the jury agrees to, it does -- they aren't entitled to terminate, that's a remedy they aren't entitled to. They're entitled to damages.
When the trial court pressed for case law supporting this position, Rohrmoos's counsel responded, "I'm hanging my hat on Davidow , ... [which says] as a matter of Texas law, a breach of the duty to repair is only remediable by damages." In no sense can we say that Rohrmoos failed to inform the trial court of its theory under Davidow . Indeed, our law on preservation is built almost entirely around putting the trial court on notice so that it can cure any error. See Burbage v. Burbage , 447 S.W.3d 249, 258 (Tex. 2014) ("Preservation of error reflects important prudential considerations recognizing that the judicial process benefits greatly when trial courts have the opportunity to first consider and rule on error." (citing In re B.L.D. , 113 S.W.3d 340, 350 (Tex. 2003) )). Affording trial courts an opportunity to correct errors conserves judicial resources and prevents an appeal by ambush or otherwise having to order a new trial. Id. Here, there is no such concern because the trial court was given an opportunity to cure any error when it entered judgment and later in response to Rohrmoos's post-judgment motion. Rohrmoos properly preserved this issue in the trial court.
Rohrmoos also raised the argument in the court of appeals. We have firmly mandated that courts broadly construe issues to encompass the core questions and to reach all issues subsidiary to and fairly included within them. See Ditta v. Conte , 298 S.W.3d 187, 190 (Tex. 2009) ; see also TEX. R. APP. P. 38.9 ("Because briefs are meant to acquaint the court with the issues in a case and to present argument that will enable the court to decide the case, substantial compliance with [briefing rules] is sufficient...."). This mandate must be applied "reasonably, yet liberally," so that the merits of an appeal are addressed whenever "reasonably possible." Ditta , 298 S.W.3d at 190 (citing Perry v. Cohen , 272 S.W.3d 585, 587 (Tex. 2008) (per curiam)). Fairly subsumed in Rohrmoos's briefing to the court of appeals is the challenge to the trial court's judgment based on Rohrmoos's contention that, under Davidow , UTSW was not entitled to terminate the lease based on the landlord's prior material breach. The argument also clearly appears in Rohrmoos's reply brief to the court of appeals, although that is neither controlling nor dispositive regarding a litigant's duty to brief issues before appellate courts. See TEX. R. APP. P. 38.1(f) (stating that the appellant's opening brief "must state concisely all issues or points presented for review"). And while Rohrmoos may not have briefed Davidow 's holding as a specifically enumerated issue, we have long rejected any form-over-substance approach that leads to a rigid application of our preservation rules. See Thota v. Young , 366 S.W.3d 678, 690 (Tex. 2012) ; see also Burbage , 447 S.W.3d at 258 (holding that our "procedural rules are technical, but not trivial," and courts must "construe such rules liberally so that the right to appeal is not lost unnecessarily"). The entirety of Rohrmoos's briefing rests on the premise that Davidow does not allow UTSW to terminate the lease for Rohrmoos's material breach. This was sufficient to put the court of appeals on notice of Rohrmoos's understanding regarding Davidow , and to invite the court of appeals to correct any error of law as to Davidow and the availability of termination as a remedy.
Rohrmoos likewise adequately presented the argument in its petition for review and briefing in this Court. We now turn to the merits of Rohrmoos's Davidow argument and the availability of termination for material breach of a commercial lease.
B. Remedy of Termination
Rohrmoos's position is that Davidow expressly prohibits termination as a remedy for material breach of a commercial lease. All this Court said in Davidow , however, is that there is an implied warranty of suitability in commercial leases, and what the implied warranty means:
Therefore, we hold there is an implied warranty of suitability by the landlord in a commercial lease that the premises are suitable for their intended commercial purpose. This warranty means that at the inception of the lease there are no latent defects in the facilities that are vital to the use of the premises for their intended commercial purpose and that these essential facilities will remain in a suitable condition. If, however, the parties to a lease expressly agree that the tenant will repair certain defects, then the provisions of the lease will control.
747 S.W.2d at 377. The Court did not, as Rohrmoos contends, make an absolute statement that a material breach of a commercial lease will never justify termination. In fact, if anything, the holding in Davidow leans the other way.
In Davidow , this Court addressed the implications of independent covenants in our property law, concluding that they were antiquated and unworkable in the modern lease setting. See id. at 375-77. The opinion begins with the observation that "[a]t common law, the lease was traditionally regarded as a conveyance of an interest in land, subject to the doctrine of caveat emptor. " Id. at 375. Once the landlord delivered the right of possession to the tenant, the tenant had a duty to pay rent as long as he was in possession. Id. This was true "even if the buildings on the leasehold were destroyed or became uninhabitable." Id. All lease covenants at common law were thus considered independent because the tenant, being in possession of everything he was entitled to under the lease, had to pay rent no matter what lease covenant the landlord breached. Id.
This outdated common law concept, Davidow noted, "is no longer indicative of the contemporary relationship between the tenant and landlord." Id. at 376. Therefore, this Court first did away with independent covenants in residential leases in Kamarath v. Bennett , 568 S.W.2d 658, 660-61 (Tex. 1978), superseded by statute , Act of May 28, 1979, 66th Leg., R.S. ch. 780, §§ 1-18, 1979 Tex. Gen. Laws 1978. In that case, the Court implicitly held that the residential tenant's obligation to pay rent is dependent upon the landlord's performance under the then newly created warranty of habitability. See id.
The Court then extended Kamarath 's reasoning to commercial leases in Davidow :
We recognized in Kamarath that the primary objective underlying a residential leasing arrangement is "to furnish [the tenant] with quarters suitable for living purposes." The same objective is present in a commercial setting. A commercial tenant desires to lease premises suitable for their intended commercial use. A commercial landlord impliedly represents that the premises are in fact suitable for that use and will remain in a suitable condition. The tenant's obligation to pay rent and the landlord's implied warranty of suitability are therefore mutually dependent.
747 S.W.2d at 377 (alteration in original) (citation omitted). Although the last sentence refers to the tenant's obligation to pay rent as being dependent on the landlord's implied warranty of suitability, there is no reason to conclude that the Court in Davidow did not intend to extend that same dependency to the landlord's obligations under the lease.
Indeed, the courts of appeals that have addressed a landlord's material breach in residential lease settings have held that termination is an available remedy. See, e.g. , Pala v. Maxim , No. 01-01-00618-CV, 2002 WL 188567, at *4-5 (Tex. App.-Houston [1st Dist.] Feb. 7, 2002, no pet.) (not designated for publication) (holding that the tenant was excused from all obligations to perform under the lease when the landlord materially breached the lease by not replacing the countertops in the premises). And the courts of appeals that have addressed this issue in commercial lease settings have held the same. See, e.g. , Clark v. Porter , No. 04-08-00520-CV, 2009 WL 2618359, at *3-4 (Tex. App.-San Antonio Aug. 26, 2009, pet. denied) (mem. op.) (noting that the tenant's obligations under the commercial lease could terminate and be excused by the landlord's earlier material breach); Parts Indus. Corp. v. A.V.A. Servs., Inc. , 104 S.W.3d 671, 680-81 (Tex. App.-Corpus Christi-Edinburg 2003, no pet.) (approving the tenant's proper use of non-payment of rent as a remedy for breach of the landlord's express obligations under the commercial lease to repair a leaky roof). Rohrmoos cites no authority that has interpreted Davidow to mean that a tenant cannot terminate a commercial lease for material breach of the contract. This is because there is none, and we see no reason to hold otherwise.
To be clear, Davidow stands for the proposition that in a commercial lease, a landlord warrants that the property is suitable for the tenant's intended commercial purpose. 747 S.W.2d at 377. This implied warranty exists separately and apart from any obligation the landlord may have under the lease. See id. As a matter of law, the implied warranty is limited only by specific terms in the parties' commercial lease whereby a tenant expressly agrees to repair certain defects. Id. Parties are also free to contract out of the implied warranty by expressly waiving it in their contract. See Gym-N-I Playgrounds, Inc. v. Snider , 220 S.W.3d 905, 912 (Tex. 2007) (holding that an "as is" clause that expressly waived Davidow 's implied warranty of suitability was sufficient to waive the implied warranty). Termination is available as a remedy for breach of the implied warranty of suitability. See Davidow , 747 S.W.2d at 377. The same holds true for a landlord's material breach of the commercial lease.
Because we agree with the court of appeals that Rohrmoos did not properly preserve its challenge as to UTSW's breach of contract claim, as discussed below, the jury's finding that Rohrmoos materially breached the lease stands, and we cannot disturb that part of the trial court's judgment. We need not and do not address Rohrmoos's remaining arguments regarding the implied warranty of suitability under Davidow .
III. Breach of Commercial Lease
After the court of appeals issued its opinion holding that Rohrmoos did not properly challenge the sufficiency of the evidence supporting the jury's breach of contract finding, Rohrmoos argued in its motion for reconsideration in the court of appeals that it did, in fact, challenge the jury's finding that Rohrmoos materially breached the lease. That is, notwithstanding Rohrmoos's clear headings in its opening briefing to the court of appeals and ensuing arguments-all challenging the implied warranty of suitability-Rohrmoos claims that the evidence UTSW used to prove that Rohrmoos breached the implied warranty of suitability is the same evidence UTSW used to prove that Rohrmoos materially breached the lease. A challenge to one is a challenge to all, argues Rohrmoos.
We disagree. At no point in its briefing to the court of appeals did Rohrmoos challenge the sufficiency of the evidence with respect to the jury's finding that Rohrmoos materially breached the lease. Nothing in Rohrmoos's briefing put the court of appeals on notice of such a challenge, even when read liberally. Moreover, we are not prepared to do away with our preservation requirements altogether by holding that Rohrmoos's challenge to the evidence supporting a breach of the implied warranty of suitability fairly subsumes a challenge to the evidence supporting a breach of contract. The two causes of action are different, each with entirely different elements that must be specifically pled, argued, and proved with supporting evidence. A challenge as to whether the plaintiff satisfied its burden of proof for one cause of action does not, by implication, challenge the evidence as to a separate cause of action. Had Rohrmoos not intended to base its challenge solely on Davidow , it should have argued alternative theories in the court of appeals to include a sufficiency challenge regarding material breach. Rohrmoos did not do so. This issue is not preserved for our review.
IV. Attorney's Fees
In Texas, as in the federal courts, each party generally must pay its own way in attorney's fees. See Perdue v. Kenny A. ex rel. Winn , 559 U.S. 542, 550, 130 S.Ct. 1662, 176 L.Ed.2d 494 (2010) ("The general rule in our legal system is that each party must pay its own attorney's fees and expenses."); Ashford Partners, Ltd. v. ECO Res., Inc. , 401 S.W.3d 35, 41 (Tex. 2012) ("As a general rule, litigants in Texas are responsible for their own attorney's fees and expenses in litigation."). But there are certain circumstances in which the prevailing party can recover fees from the opposing party. See Baker Botts LLP v. ASARCO LLC , --- U.S. ----, 135 S.Ct. 2158, 2164, 192 L.Ed.2d 208 (2015) ("Our basic point of reference when considering the award of attorney's fees is the bedrock principle known as the American Rule: Each litigant pays his own attorney's fees, win or lose, unless a statute or contract provides otherwise." (quoting Hardt v. Reliance Standard Life Ins. Co. , 560 U.S. 242, 252-53, 130 S.Ct. 2149, 176 L.Ed.2d 998 (2010) )); In re Nat'l Lloyds Ins. Co. , 532 S.W.3d 794, 809 (Tex. 2017) (orig. proceeding) ("Texas follows the American rule on attorney's fees, which provides that, generally, 'a party may not recover attorney's fees unless authorized by statute or contract.' " (quoting Wheelabrator Air Pollution Control, Inc. v. City of San Antonio , 489 S.W.3d 448, 453 n.4 (Tex. 2016) )). When fee-shifting is authorized, whether by statute or contract, the party seeking a fee award must prove the reasonableness and necessity of the requested attorney's fees. See, e.g. , Kinsel v. Lindsey , 526 S.W.3d 411, 427 (Tex. 2017) ("The party seeking recovery bears the burden of proof to support the award."); Nat'l Lloyds , 532 S.W.3d at 809 ("When fee-shifting is authorized, the party seeking to recover those fees bears the burden of establishing the fees are reasonable and necessary." (citing In re Bent , 487 S.W.3d 170, 184 (Tex. 2016) (orig. proceeding); Stewart Title Guar. Co. v. Sterling , 822 S.W.2d 1, 10 (Tex. 1991) )).
With that in mind, we consider the two arguments Rohrmoos raises against the $ 1,025,000 award of attorney's fees. First, Rohrmoos argues that UTSW is not a "prevailing party" under this Court's precedent and is therefore not entitled to attorney's fees. Second, even if UTSW could be considered a prevailing party, Rohrmoos contends there was legally insufficient evidence to support UTSW's award of attorney's fees. We address each in turn.
A. Prevailing Party
The parties' contract provided that "[i]n any action to enforce the terms of this Lease, the prevailing party shall be entitled to an award for its reasonable attorneys' fees." The lease did not further define the term "prevailing party." Rohrmoos cites our decision in Intercontinental Group Partnership v. KB Home Lone Star LP , 295 S.W.3d 650 (Tex. 2009), to assert that courts should apply section 38.001 of the Texas Civil Practice and Remedies Code when a contract leaves the term "prevailing party" undefined. See id. at 653 (analyzing the applicability of Chapter 38 to a contract that did not define the term "prevailing party"); see also TEX. CIV. PRAC. & REM. CODE § 38.001(8) ("A person may recover reasonable attorney's fees from an individual or corporation, in addition to the amount of a valid claim and costs, if the claim is for ... an oral or written contract."). We have held that "[t]o recover attorney's fees under section 38.001, a party must (1) prevail on a cause of action for which attorney's fees are recoverable, and (2) recover damages." Green Int'l, Inc. v. Solis , 951 S.W.2d 384, 390 (Tex. 1997). But here, no damages were sought or awarded under the jury charge.
Although instructive, Chapter 38 and Green International are not controlling in this case. "Parties are free to contract for a fee-recovery standard either looser or stricter than Chapter 38's."
KB Home , 295 S.W.3d at 653. The commercial lease here plainly states that "[i]n any action to enforce the terms of this Lease, the prevailing party shall be entitled to an award for its reasonable attorneys' fees." Nothing in that contract provision requires that a party receive any damages, as we have held is required under Chapter 38. See Green Int'l , 951 S.W.2d at 390. The operative event under the contract is that a party prevail "[i]n any action to enforce the terms of [the] Lease." That is sufficiently different and less stringent than Chapter 38's standards, rendering section 38.001 inapplicable. The question remains, however, whether UTSW is a prevailing party under the contract when it did not seek or obtain monetary damages.
In KB Home , we considered whether the plaintiff prevailed for purposes of attorney's fees when the jury found that the defendant violated the contract but awarded no money damages to the plaintiff. 295 S.W.3d at 652. Like the commercial lease in this case, the contract in KB Home did not define "prevailing party." Id. We held, after looking to the plain meaning of the term "prevailing party," that the plaintiff did not prevail for purposes of attorney's fees because to prevail requires a plaintiff to "prove compensable injury and secure an enforceable judgment in the form of damages or equitable relief." Id. The plaintiff recovered no damages, secured no declaratory or injunctive relief, obtained no consent decree or settlement in its favor, and received nothing of value of any kind. Id. at 655. No misconduct was deterred or punished, nor did we "perceive any manner in which the outcome materially altered the legal relationship between" the plaintiff and defendant. Id. (citing Farrar v. Hobby , 506 U.S. 103, 111-12, 113 S.Ct. 566, 121 L.Ed.2d 494 (1992), which held that to prevail for a claimant means obtaining actual and meaningful relief, something that materially alters the legal relationship of the parties). KB Home, the plaintiff, sought more than $ 1,000,000 in damages, but instead left the courthouse with nothing. Id.
At first blush, KB Home 's holding appears damning to UTSW, but in that case we examined only what a plaintiff must prove to be a "prevailing party." See id. at 652 (holding that "a plaintiff must prove compensable injury and secure an enforceable judgment in the form of damages or equitable relief"). Here, although UTSW was the original plaintiff, it argues that it successfully defended-as a defendant -against Rohrmoos's breach of contract counterclaim. This is true. In an attempt to relieve itself of its future obligations to perform under the contract, UTSW sought a jury finding that Rohrmoos breached the lease first. The jury found that both Rohrmoos and UTSW breached the lease but that Rohrmoos breached first. The trial court entered judgment accordingly and ordered that Rohrmoos take nothing on its counterclaim for approximately $ 250,000 in back rent. The court of appeals employed this logic to hold that UTSW, as counter-defendant, was the prevailing party because it was vindicated by the court's judgment. 559 S.W.3d at 166 (citing Johnson v. Smith , No. 07-10-00017-CV, 2012 WL 140654, at *3 (Tex. App.-Amarillo Jan. 18, 2012, no pet.) (mem. op.)).
Interestingly, this specific question regarding prevailing defendants presented itself in KB Home , but we did not address it because it was not preserved for our review. See 295 S.W.3d at 659 ("The issue of whether a breaching-but-nonpaying defendant can be a 'prevailing party' under an attorney's-fees provision like this is interesting legally, but not before us procedurally."). We did hold, however, that to prevail means to "obtain actual and meaningful relief, something that materially alters the parties' legal relationship." Id. at 652 (citing Farrar , 506 U.S. at 111-12, 113 S.Ct. 566 ). Since KB Home , courts of appeals have held that a defendant who did not recover actual damages can be a prevailing party for defending against a plaintiff's breach of contract claim when it achieves a material alteration in its legal relationship with the plaintiff. See, e.g. , SEECO, Inc. v. K.T. Rock, LLC , 416 S.W.3d 664, 674 (Tex. App.-Houston [14th Dist.] 2013, pet. denied) (holding that a successful breach of contract defense entitled the defendant to attorney's fees as the prevailing party); Fitzgerald v. Schroeder Ventures II, LLC , 345 S.W.3d 624, 629 (Tex. App.-San Antonio 2011, no pet.) (concluding that there was no basis for denying the defendants attorney's fees under the contract with a "prevailing party" provision after analyzing and agreeing with another intermediate appellate court that held KB Home did not apply to attorney's fees sought by a defendant defending against a claim for breach of contract).
We agree. A defendant can obtain actual and meaningful relief, materially altering the parties' legal relationship, by successfully defending against a claim and securing a take-nothing judgment on the main issue or issues in the case. Our holding is consistent with the United States Supreme Court's interpretation of what it means to prevail as a defendant. See CRST Van Expedited, Inc. v. Equal Emp't Opportunity Comm'n , --- U.S. ----, 136 S.Ct. 1642, 1651, 194 L.Ed.2d 707 (2016) ("The defendant may prevail even if the court's final judgment rejects the plaintiff's claim for a nonmerits reason."). Here, UTSW was not just a plaintiff; it also successfully defended against Rohrmoos's breach of contract counterclaim, and the trial court rendered a take-nothing judgment in UTSW's favor as a counter-defendant. The jury's finding and the trial court's judgment altered the legal relationship between the parties. UTSW is therefore a "prevailing party" under the lease and is entitled to reasonable and necessary attorney's fees.
B. Legal Sufficiency
The jury awarded $ 800,000 in attorney's fees for trial work and conditional fee awards of $ 150,000 for appeal to the intermediate appellate court and $ 75,000 for appeal to this Court. The trial court's judgment awarded UTSW fees according to the verdict and ordered that Rohrmoos take nothing. In this Court, Rohrmoos challenges the evidence offered by UTSW's attorney, Wade Howard, as legally insufficient to support the fee awards, claiming that the lodestar method applies and Howard should have submitted detailed proof, likely in the form of billing records, so the jury could have conducted a meaningful review to determine the reasonableness of the fees. Howard did not attempt to introduce billing records into evidence, nor did he testify to the details of his work, which Rohrmoos claims prevented the jury from determining whether the hundreds of hours spent were reasonable or necessary. Rohrmoos asserts that this award of more than $ 1,000,000 in attorney's fees cannot be based on the ipse dixit of the testifying expert. UTSW, on the other hand, argues that Howard's testimony is sufficient to support the fee award under Arthur Andersen because Howard testified to the total amount of fees, the reasonableness of the fees, and his experience.
Before addressing the parties' arguments and the evidence presented in this case, we first examine the law governing attorney's fees in a fee-shifting situation. In short, to secure an award of attorney's fees from an opponent, the prevailing party must prove that: (1) recovery of attorney's fees is legally authorized, and (2) the requested attorney's fees are reasonable and necessary for the legal representation, so that such an award will compensate the prevailing party generally for its losses resulting from the litigation process.
1. Legally Authorized
Legal authorization begins, as we have mentioned, with the American Rule, which provides that a prevailing party has no inherent right to recover attorney's fees from the non-prevailing party unless there is specific statutory or contractual authority allowing it. E.g. , Nat'l Lloyds , 532 S.W.3d at 809 ; Tony Gullo Motors I, LP v. Chapa , 212 S.W.3d 299, 310-11 (Tex. 2006) (observing that Texas law has followed the American Rule for more than a century). When fee-shifting is authorized, whether by statute or contract, there are a few key principles that serve as the basis for our attorney's fee jurisprudence.
First, the idea behind awarding attorney's fees in fee-shifting situations is to compensate the prevailing party generally for its reasonable losses resulting from the litigation process. See generally In re Nalle Plastics Family Ltd. P'ship , 406 S.W.3d 168, 173 (Tex. 2013) (orig. proceeding) (observing that although attorney's fees are not awarded as damages, they can be viewed as compensating the prevailing party for its losses because the award helps make the party whole). The award and the ability to enforce it thus belongs to the party, not the attorney, absent express statutory or contractual text mandating otherwise. See, e.g. , TEX. FAM. CODE § 6.708(c) (providing that the court may award reasonable attorney's fees and expenses in suits for the dissolution of marriage, and "[t]he court may order the fees and expenses and any postjudgment interest to be paid directly to the attorney, who may enforce the order in the attorney's own name by any means available for the enforcement of a judgment for debt").
Second, because such fee awards are compensatory in nature, fee-shifting is not a mechanism for greatly improving an attorney's economic situation. Cf. Pennsylvania v. Del. Valley Citizens' Council for Clean Air , 478 U.S. 546, 565, 106 S.Ct. 3088, 92 L.Ed.2d 439 (1986) (noting that fee-shifting statutes are enacted to "enable private parties to obtain legal help in seeking redress for injuries" and not to improve significantly the financial lot of attorneys as a form of economic relief, "nor were they intended to replicate exactly the fee an attorney could earn through a private fee arrangement with his client"). Thus, only fees reasonable and necessary for the legal representation will be shifted to the non-prevailing party, and not necessarily the amount contracted for between the prevailing party and its attorney, as a client's agreement to a certain fee arrangement or obligation to pay a particular amount does not necessarily establish that fee as reasonable and necessary. See Arthur Andersen , 945 S.W.2d at 818 ("[W]e cannot agree that the mere fact that a party and a lawyer have agreed to a contingent fee means that the fee arrangement is in and of itself reasonable for purposes of shifting that fee to the defendant."). Stated differently, an amount incurred or contracted for is not conclusive evidence of reasonableness or necessity. See id. The fee claimant still has the burden to establish reasonableness and necessity. Nat'l Lloyds , 532 S.W.3d at 809.
Third, a party must be represented by an attorney to secure an award of attorney's fees. For example, courts have held that a corporate client can be awarded fees for representation by its in-house counsel. See, e.g. , Tesoro Petrol. Corp. v. Coastal Ref. & Mktg., Inc. , 754 S.W.2d 764, 766-67 (Tex. App.-Houston [1st Dist.] 1988, writ denied) ("[T]he award of reasonable attorney's fees for services performed by in-house counsel compensates the prevailing party for time counsel could have spent on other corporate matters." (citing Textor v. Bd. of Regents of N. Ill. Univ. , 711 F.2d 1387, 1396-97 (7th Cir. 1983) )). Likewise, courts have held that a law firm can be awarded fees for representation by its own attorney. See, e.g. , Campbell, Athey & Zukowski v. Thomasson , 863 F.2d 398, 400 (5th Cir. 1989) (citing Tesoro to hold that "[j]ust as the corporation should be entitled to compensation for the time which in-house counsel could have spent on other corporate matters, so is a law firm entitled to compensation for the time which the representing attorney could have spent on other client matters"). Attorneys have been awarded fees for their own pro se representation. E.g. , Beckstrom v. Gilmore , 886 S.W.2d 845, 847 (Tex. App.-Eastland 1994, writ denied) (awarding fees to an attorney representing himself pro se). But see Jackson v. State Office of Admin. Hearings , 351 S.W.3d 290, 299-300 (Tex. 2011) (denying attorney's fees to a pro se attorney because the attorney did not incur the fees as required by the applicable statute). And the State of Texas can be awarded fees under certain statutes for representation by Attorney General's Office attorneys. See, e.g. , TEX. GOV'T CODE § 402.006(c) ("In a case in which the state is entitled to recover a penalty or damages the attorney general is entitled, on behalf of the state, to reasonable attorney's fees and court costs."); Merchs. Fast Motor Lines, Inc. v. State , 917 S.W.2d 518, 523-24 (Tex. App.-Waco 1996, writ denied) (upholding the State's attorney's fee award under section 402.006(c) ).
Here, the parties' contract provides for a fee-shifting arrangement by stating, "In any action to enforce the terms of this Lease, the prevailing party shall be entitled to an award for its reasonable attorneys' fees." The contract does not define "reasonable" attorney's fees, so we turn to our attorney's fee jurisprudence in considering reasonableness.
2. Reasonable and Necessary
As an initial matter, we note that parties in their contracts and the Legislature in its enabling statutes will often loosely employ a reasonable and necessary standard, sometimes using both terms "reasonable and necessary" and other times just "reasonable." Compare TEX. BUS. & COM. CODE § 17.50(d) ("Each consumer who prevails [under the Deceptive Trade Practices Act] shall be awarded court costs and reasonable and necessary attorneys' fees."), with TEX. CIV. PRAC. & REM. CODE § 38.001 (providing that "[a] person may recover reasonable attorney's fees from an individual or corporation, in addition to the amount of a valid claim and costs" for, among other things, breach of contract). The distinction between such provisions is immaterial. When a claimant wishes to obtain attorney's fees from the opposing party, the claimant must prove that the requested fees are both reasonable and necessary. See Nat'l Lloyds , 532 S.W.3d at 809 (stating that a party seeking recovery of attorney's fees from the losing party "bears the burden of establishing the fees are reasonable and necessary" (emphasis added)). Both elements are questions of fact to be determined by the fact finder and act as limits on the amount of fees that a prevailing party can shift to the non-prevailing party. See Transcon. Ins. Co. v. Crump , 330 S.W.3d 211, 231 (Tex. 2010) (observing that generally the reasonableness of particular fees presents a fact question that the fact finder must decide, as does necessity); see also Bocquet v. Herring , 972 S.W.2d 19, 21 (Tex. 1998) (explaining that reasonableness is a question of fact for the jury, and that "[t]he second limitation, that fees must be necessary, is likewise a fact question" (citing Gen. Motors Corp. v. Bloyed , 916 S.W.2d 949, 961 (Tex. 1996) )).
Furthermore, some enabling statutes have an explicit reference to attorney's fees that are "incurred." See, e.g. , TEX. CIV. PRAC. & REM. CODE § 74.351(b)(1) (allowing the recovery of "reasonable attorney's fees and costs of court incurred by the physician or health care provider" for certain situations under the Texas Medical Liability Act); id. § 27.009(a)(1) (providing for recovery of "court costs, reasonable attorney's fees, and other expenses incurred in defending against the legal action as justice and equity may require" under the Texas Citizens Participation Act). In those instances, we have held that the word "incurred," just as the word "reasonable," acts to limit the amount of fees the court may award, and "[a] fee is incurred when one becomes liable for it." Garcia v. Gomez , 319 S.W.3d 638, 642 (Tex. 2010) (holding that "[b]oth the adjective 'reasonable' and the verb 'incurred' [in section 74.351(b)(1) ] act to limit the amount of attorney's fees the trial court may award"); see also Jackson , 351 S.W.3d at 299-300 (denying a pro se attorney fees under the Texas Public Information Act, which has an "incurred" requirement, because he "did not incur attorney's fees as that term is used in its ordinary meaning because he did not at any time become liable for attorney's fees"). As we have explained, attorney's fee awards are compensatory in nature, intended generally to make the prevailing party whole as to reasonable and necessary fees for successfully prosecuting or defending against a claim. See Nalle Plastics , 406 S.W.3d at 173. But when statutes do not contain an explicit requirement that fees be "incurred," e.g. , TEX. CIV. PRAC. & REM. CODE § 38.001, we do not imply such a term; rather, we evaluate whether legally sufficient evidence supports that the amount of attorney's fees awarded is reasonable and necessary for the legal representation, so that an award of such fees will compensate the prevailing party generally for its losses resulting from the litigation process. See, e.g. , Long v. Griffin , 442 S.W.3d 253, 255 (Tex. 2014) (per curiam). And when contracts provide for recovery of attorney's fees, we similarly do not imply terms but adhere to the parties' intent as expressed in the language of the contract. See URI, Inc. v. Kleberg Cty. , 543 S.W.3d 755, 763 (Tex. 2018) (noting that "our primary objective is to ascertain and give effect to the parties' intent as expressed in the instrument"). Here, because there is no "incurred" requirement on the face of the contract, we evaluate whether legally sufficient evidence supports that the amount of attorney's fees awarded is reasonable and necessary for the legal representation, so that a fee-shifting award will compensate the prevailing party generally for its losses resulting from the litigation process.
Historically, claimants have proven reasonableness and necessity of attorney's fees through an expert's testimony-often the very attorney seeking the award-who provided a basic opinion as to the requested attorney's fees. See generally Penn Mut. Life Ins. v. Maner , 101 Tex. 553, 109 S.W. 1084, 1084 (1908). In recent years, Texas law has developed with references to the Arthur Andersen method (sometimes referred to as the "traditional" method) and the lodestar method for proving the reasonableness and necessity of attorney's fees. See, e.g. , Metroplex Mailing Servs. , 410 S.W.3d at 900 (suggesting that "[u]nder the traditional method of awarding fees, [as opposed to the lodestar method,] documentary evidence is not a prerequisite"). The court of appeals in this case referenced both methods, distinguishing them and concluding that "Rohrmoos does not assert, and the record does not show, that the lodestar method was statutorily required or that [UTSW] 'chose to prove up attorney's fees using this method.' " 559 S.W.3d at 167 (citations omitted). The court of appeals then affirmed the attorney's fee award, holding that "Howard's testimony concerning his experience, the total amount of fees, and the reasonableness of the fees charged was sufficient to support the award" under Arthur Andersen . Id. at 168.
These two seemingly different methods for evaluating claims for attorney's fees have created confusion for practitioners and courts alike. As explained below, however, the lodestar method developed as a "short hand version" of the Arthur Andersen factors and was never intended to be a separate test or method. With that in mind, we clarify the law governing recovery of attorney's fees in Texas courts. We begin by reviewing fee-shifting and attorney's fee jurisprudence in the federal courts.
a. Johnson Factors and Lodestar in Federal Courts
To assist district courts in awarding attorney's fees, the Fifth Circuit in Johnson v. Georgia Highway Express, Inc. , 488 F.2d 714 (5th Cir. 1974), set out twelve factors that a court should consider in determining a reasonable fee. Id. at 717-19. Those factors, consistent with the American Bar Association's Code of Professional Responsibility then in effect, included:
(1) the time and labor required;
(2) the novelty and difficulty of the questions;
(3) the skill requisite to perform the legal service properly;
(4) the preclusion of other employment by the attorney due to acceptance of the case;
(5) the customary fee;
(6) whether the fee is fixed or contingent;
(7) time limitations imposed by the client or the circumstances;
(8) the amount involved and the results obtained;
(9) the experience, reputation, and ability of the attorneys;
(10) the "undesirability" of the case;
(11) the nature and length of the professional relationship with the client; and
(12) awards in similar cases.
Id. Johnson was widely followed by other courts. E.g. , Reynolds v. Coomey , 567 F.2d 1166, 1167 (1st Cir. 1978) (observing that the district court properly applied the Johnson factors as a guide in determining the amount of attorney's fees); Allen v. Amalgamated Transit Union Local 788 , 554 F.2d 876, 884 (8th Cir. 1977) (approving the Johnson factors for determining the reasonableness of attorney's fee claims). But as the United States Supreme Court observed, this method "gave very little actual guidance to district courts" and "[s]etting attorney's fees by reference to a series of sometimes subjective factors placed unlimited discretion in trial judges and produced disparate results." Del. Valley Citizens' Council , 478 U.S. at 563, 106 S.Ct. 3088.
For this reason, the Third Circuit developed the lodestar method for calculating reasonable attorney's fees. See Lindy Bros. Builders, Inc. of Phila. v. Am. Radiator & Standard Sanitary Corp. (Lindy I ), 487 F.2d 161, 167-68 (3d Cir. 1973) ; see also Del. Valley Citizens' Council , 478 U.S. at 563-65, 106 S.Ct. 3088 (providing a historical analysis of the development of the lodestar method). This method involved two steps. See Lindy I , 487 F.2d at 167-68. First, for each attorney involved, the court was to multiply the hours reasonably spent on the case by a reasonable hourly rate of compensation to form a base number or "lodestar." Id. Second, the court could then adjust this lodestar figure to account for whether the expenses incurred and hours invested were based on a contingent agreement (i.e., without assurances of compensation), as well as the quality of the work performed, as evidenced by the recovery obtained and complexity of the case. See Lindy Bros. Builders, Inc. of Phil. v. Am. Radiator & Standard Sanitary Corp. (Lindy II ), 540 F.2d 102, 117 (3d Cir. 1976). This lodestar formulation produced a more focused analysis than the Johnson factors by emphasizing the objective consideration of amount of time expended by the attorneys. See Del. Valley Citizens' Council , 478 U.S. at 563, 106 S.Ct. 3088 (explaining that the lodestar "formulation emphasized the amount of time expended by the attorneys, and provided a more analytical framework for lower courts to follow than the unguided 'factors' approach provided by Johnson "). It also allowed for greater consistency in awards of attorney's fees, although "allowing the courts to adjust the lodestar amount based on considerations of the 'riskiness' of the lawsuit and the quality of the attorney's work could still produce inconsistent and arbitrary fee awards." Id.
The United States Supreme Court refined the lodestar method in Hensley v. Eckerhart , 461 U.S. 424, 103 S.Ct. 1933, 76 L.Ed.2d 40 (1983), adopting a hybrid approach for calculating reasonable attorney's fees that shared elements of both the lodestar method and Johnson factors. See id. at 433-35, 103 S.Ct. 1933. The Court explained: "The most useful starting point for determining the amount of a reasonable fee is the number of hours reasonably expended on the litigation multiplied by a reasonable hourly rate. This calculation provides an objective basis on which to make an initial estimate of the value of a lawyer's services." Id. at 433, 103 S.Ct. 1933. The Court's analysis was consistent with the lodestar's first step described by the Third Circuit, but then the Court we went on to state: "The product of reasonable hours times a reasonable rate does not end the inquiry. There remain other considerations that may lead the district court to adjust the fee upward or downward...." Id. at 434, 103 S.Ct. 1933. The "other considerations" included, but were not limited to, the Johnson factors, but the Court made clear that many of the factors listed in Johnson would usually be "subsumed within the initial calculation of hours reasonably expended at a reasonable hourly rate." Id. at 434 n.9, 103 S.Ct. 1933 (citation omitted).
The Court further refined its views on the appropriate method for determining a reasonable fee award in Blum v. Stenson , 465 U.S. 886, 104 S.Ct. 1541, 79 L.Ed.2d 891 (1984), again affirming its preference for the lodestar method. See id. at 888, 104 S.Ct. 1541. Consistent with previous rulings, Blum explained that the proper first step in determining a reasonable attorney's fee is to multiply "the number of hours reasonably expended on the litigation times a reasonable hourly rate." Id. But the Court went a step further, emphasizing that this base calculation is not an initial approximation of the final award to be made but is instead a presumed reasonable fee if the applicant "has carried his burden of showing that the claimed rate and number of hours are reasonable." Id. at 897, 104 S.Ct. 1541. The Blum Court also restricted the adjusting factors courts could use to increase or decrease the base lodestar amount. See id. at 898-900, 104 S.Ct. 1541. That is, after affirming Hensley 's position that many of the Johnson factors "are subsumed within the initial calculation" of the lodestar, the Court specifically held in Blum that the "novelty and complexity of the issues," "the special skill and experience of counsel," the "quality of representation," and the "results obtained" from the litigation generally cannot serve as independent bases for increasing the base fee award because those considerations are fully reflected in the lodestar amount. Id. Upward adjustments of the lodestar figure, although still permissible, are proper only in certain "rare" and "exceptional" cases, supported by both detailed findings by the lower courts and specific evidence on the record. See id. at 898-901, 104 S.Ct. 1541. And in a later ruling, the Court clarified that contingent fee arrangements also should not enhance the base lodestar:
We note at the outset that an enhancement for contingency would likely duplicate in substantial part factors already subsumed in the [base] lodestar. The risk of loss in a particular case (and, therefore, the attorney's contingent risk) is the product of two factors: (1) the legal and factual merits of the claim, and (2) the difficulty of establishing those merits. The second factor, however, is ordinarily reflected in the lodestar-either in the higher number of hours expended to overcome the difficulty, or in the higher hourly rate of the attorney skilled and experienced enough to do so. Taking account of it again through lodestar enhancement amounts to double counting.
The first factor (relative merits of the claim) is not reflected in the [base] lodestar, but there are good reasons why it should play no part in the calculation of the award. It is, of course, a factor that always exists (no claim has a 100% chance of success), so that computation of the lodestar would never end the court's inquiry in contingent-fee cases.
Burlington v. Dague , 505 U.S. 557, 562-63, 112 S.Ct. 2638, 120 L.Ed.2d 449 (1992) (citations omitted).
In its most current form, the lodestar method as described in Blum has achieved dominance in the federal courts and has "become the guiding light" for fee-shifting jurisprudence. See Gisbrecht v. Barnhart , 535 U.S. 789, 801, 122 S.Ct. 1817, 152 L.Ed.2d 996 (2002) (quoting Burlington , 505 U.S. at 562, 112 S.Ct. 2638 ). As recently as 2010, the Court again outlined the value of the lodestar calculation. See Perdue , 559 U.S. at 551-57, 130 S.Ct. 1662. The Court explained:
Although the lodestar method is not perfect, it has several important virtues. First, in accordance with our understanding of the aim of fee-shifting statutes, the lodestar looks to "the prevailing market rates in the relevant community." Developed after the practice of hourly billing had become widespread, the lodestar method produces an award that roughly approximates the fee that the prevailing attorney would have received if he or she had been representing a paying client who was billed by the hour in a comparable case. Second, the lodestar method is readily administrable; and unlike the Johnson approach, the lodestar calculation is "objective" and thus cabins the discretion of trial judges, permits meaningful judicial review, and produces reasonably predictable results.
Id. at 551-52, 130