Use of Lodestar Goes Back to 1973 Third Circuit Opinion, With Recent Second Circuit Opinion Actually Abandoning Its Use In Some Contexts.
“Lodestar” is a much used term in fee proceedings, referring to the product of the attorney’s usual hourly rate and the number of hours expended on behalf of a client. This measure is used as the base for awarding fees in normal civil, class action, and numerous stautory fee-shifting cases.
Because Marc Alexander used to be a history professor, he throws out a challenge to his contributor Mike Hensley—how did the term “lodestar” come to be used in the fee proceeding area? That sent Mike to work, and work he did to answer Marc’s question. In the process, he learned that some recent courts do not like the term in some contexts.
At first, he found only dictionary definitions that, while interesting from a word derivation context, did not help on answering the specific inquiry. “Lodestar” goes back to middle English use, meaning “the star that guides.” Nice etymology, but hardly the answer that Marc was looking for. More work.
After some more searching, Mike found a delightful exchange between United States Supreme Court Justices and Petitioner’s counsel in City of Burlington v. Dague, 505 U.S. 557 (1992). In that case, a justice asked Michael B. Clapp, Petitioner’s counsel, if he knew where the term “lodestar” came in the fee award context. Mr. Clapp responded that the term was coined by the Third Circuit Court of Appeals in the early development of fee calculation methodology, although Mr. Clapp did not identify the particular case. Otherwise, Mr. Clapp could not explain the derivation. One of the justices indicated that it struck him/her as a “strange kind of term.” This colloquy then transpired:
“Q: But it nevertheless was adopted by this Court, wasn’t it?”
“(Laughter.)
“A: The term was adopted by this Court.
“Q: Well, we do do strange things.”
So, what was the case? Mike did some more research and determined that “lodestar” was first used by the Third Circuit way back in 1975, in the venerable decision of Lindy Bros. Builders, Inc. v. Am. Radiator & Stnd. Sanitary Corp., 487 F.2d 161 (3d Cir. 1973).
Mike’s discovery was confirmed in 2006 by the Second Circuit in Arbor Hill Concerned Citizens Neighborhood Ass’n v. County of Albany, 484 F.3d 162 (2d Cir. 2007) (where one of the panelists was Retired Associate Justice O’Connor sitting by designation). However, the Second Circuit also observed that the “lodestar” term has shifted in meaning over time such that it has become unhelpful, even indicating that the use of the term would be abandoned in the opinion. The federal appellate court confirmed that district courts should use a wide range of case-specific variables in setting a reasonable hourly rate, meaning that even out-of-district rates could be used for the appropriate case.
Although some might be alarmed by the Arbor Hill abandonment of the term, we believe that “lodestar” is too firmly entrenched in the jurisprudence. We do not predict that it will dwindle in use given the frequency with which jurists have used the term since 1973