“Counsel fees are not mandatory in every action upon a liability or indemnity policy, but rather the trial judge has broad discretion as to when, where, and under what circumstances counsel fees may be proper and the amount to be awarded.” Iafelice ex rel. Wright v. Arpino, 319 N.J. Super. 581, 590 (App. Div. 1999); See also Passaic Valley Sewerage Comm’rs v. St. Paul Fire & Marine Ins. Co., 206 N.J. 596, 619 (2011); Rendine v. Pantzer, 141 N.J. 292 (1995). Szczepanski v. Newcomb Med. Ctr., 141 N.J. 346 (1995). “The judge’s reasons for exercising his discretion should be clearly stated.” Brewster v. Keystone Ins. Co., 238 N.J. Super. 580, 586–87 (App. Div. 1990); See also Walker v. Giuffre, 209 N.J. 124, 148 (2012). A clear statement of reasons is required to permit appellate review of a fee award. See Brewster v. Keystone Ins. Co., supra, 238 N.J. Super. 580, 586–87; Walker v. Giuffre, supra, 209 N.J. at 148.
Recently, in Walker v. Giuffre, supra, 209 N.J. at 129, the New Jersey Supreme Court asserted “that the mechanisms for awarding fees, including contingency enhancements, that we adopted in [Rendine v. Pantzer, 141 N.J. 292 (1995)] shall remain in full force and effect as the governing principles for attorneys’ fee awards made pursuant to fee-shifting provisions in our state statutes and rules.” Id. In Rendine v. Pantzer, supra, 141 N.J. at 334-335, the New Jersey Supreme Court asserted:
The first step in the fee-setting process is to determine the ‘lodestar’: the number of hours reasonably expended multiplied by a reasonable hourly rate. In our view, the trial court’s determination of the lodestar amount is the most significant element in the award of a reasonable fee because that function requires the trial court to evaluate carefully and critically the aggregate hours and specific hourly rates advanced by counsel for the prevailing party to support the fee application. Trial court’s should not accept passively the submissions of counsel to support the lodestar amount.
However, “‘It does not follow that the amount of time actually expended is the amount of time reasonably expended.’” Id. (quoting Copeland v. Marshall, 641 F.2d 880, 891 (D.C. Cir. 1980)(emphasis added)). Moreover, “Hours that are not properly billed to one’s client also are not properly billed to one’s adversary. Id. An hourly rate is reasonable if it is consistent with “the prevailing market rates in the relevant community.” Id. at 337. The trial judge must consider whether “the assigned hourly rates are fair, realistic, and accurate.” Id.
Once the trial court sets the lodestar, the court must decide if an increase or a reduction is warranted. Id. at 336–337. As stated in Walker v. Giuffre, supra, 209 N.J. at 133:
As this Court made clear in Rendine, calculating the lodestar is not the end of the inquiry involved in fixing an appropriate award of fees. After the lodestar has been established, the trial court may increase the fee ‘to reflect the risk of nonpayment in all cases in which the attorney’s compensation entirely or substantially is contingent on a successful outcome.’
[Id. (quoting Rendine, supra, 141 N.J. at 337.]
On the other hand, a reduction is required when an “attorney is paid a portion of his or her hourly fee regardless of results.” Rendine, supra, 141 N.J. at 340–41.