This article will first analyze different approaches to compensation rates in light of various theories of attorney fees. Second, it will review the case law developing the compensation formulas for court awarded fees and will consider the legislative history of statutory fee shifting. Finally, it will explore the meaning of the prevailing market rate formula and will show that courts using such a formula commonly misapply market rate analysis and fail to appreciate the need for a determination of reasonableness. While encouragement of litigation through fee shifting is a policy articulated in present statutes, awards based on the conventional (yet, in the view of this author, erroneous) theory of "prevailing" market rates may well lead to excessive fees, thus creating incentives for excessive litigation.
Marshall J. Breger, Compensation Formulas for Court Awarded Attorney Fees, 47 LAW & CONTEMP. PROBS. 249 (1984).