No. 88-533
IN THE SUPREME COURT OF THE STATE OF MONTANA
1989
-
ROSE N. BUCKMAN,
Claimant and Appellant,
-vs-
MONTANA DEACONESS HOSPITAL,
Employer,
and
STATE COMPENSATION INSURANCE FUND
Defendant and Respondent.
APPEAL FROM: The Workers' Compensation Court,
The Honorable Timothy Reardon, Judge presiding.
COUNSEL OF RECORD:
For Appellant:
Lloyd E. Hartford; Billings, Montana
For Respondent:
Michael McCarter, Hughes, Kellner, Sullivan & Alke;
Helena, Montana
Submitted on Briefs: May 11, 1989
Decided: June 27, 1989
JUfi 27 1389
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CLERK OF SUPREIblE COURT
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Clerk
Mr. Chief Justice J. A. Turnage delivered the Opinion of the Court.
Claimant appeals the decision of the Workers' Compensation
Court reducing the hourly rates charged for attorney fees. The
decision came on remand from the opinion of this Court in Buckman
v. Montana Deaconess Hospital (Mont. 1986), 730 P.2d 380, 43
St.Rep. 2216. We affirm.
The issues on appeal are: (1) whether the Workers' Compensa-
tion Court abused its discretion in reducing the attorney fees
requested by claimant from $225 per hour to $80 per hour; and (2)
whether the Workers' Compensation Court erred in awarding attorney
fees only for those issues upon which claimant prevailed.
Claimant, Rose Buckman, was injured in 1981 in the course and
scope of her employment. It was stipulated that she was permanent-
ly, totally disabled and she requested a lump sum advance of
benefits. The Workers' Compensation Court denied the application
of lump sum benefits pursuant to section 39-71-741, MCA (1985).
On appeal, this Court stated that retroactive application of
section 39-71-741 (2) was unconstitutional for injuries occurring
prior to 1985. The case was remanded to the Workers' Compensation
Court for reconsideration of claimant's lump sum request.
On remand, partial lump sum benefits of $15,000 were advanced
claimant on January 11, 1988, and upon a contingent fee arrangement
between Buckman and her attorney, 40 percent was awarded for
attorney fees. Moreover, the court found that claimant was
entitled to reasonable attorney fees on the remainder of the
compensable claim and directed claimant's attorney to prepare and
submit a statement concerning costs and the attorney's customary
and current hourly fee.
Claimant's attorney, Lloyd Hartford, submitted a statement of
an hourly rate and the time spent representing claimant. He sought
$225 per hour for 154.8 hours worked, equalling a total of $34,830
in attorney fees. On March 31, 1988, a hearing was held to discuss
the attorney fees requested. Three issues were presented to the
Workers' Compensation Court. The first was whether attorney fees
should be limited to the contingency fee agreement. From the
$15,000 lump sum the attorney's fee was $6,000 (40 percent). The
second issue was whether the number of hours claimed by the
attorney was reasonable. The third issue questioned the reason-
ableness of the hourly rate claimed.
The Workers1 Compensation Court found that a reasonable hourly
rate was $80 per hour and a reasonable time spent by the attorney
in this case was 80 hours.
The first issue with which we are faced is whether this
determination the court reduce the attorney's submitted
hourly rate was an abuse of discretion.
Section 39-71-614, MCA, provides:
Calculation of attorney fees -- limitation.
(1) The amount of an attorney's fee assessed
against an insurer under 39-71-611 or 39-71-
612 must be based exclusively on the time
spent by the attorney in representing the
claimant on the issues brought to hearing.
The attorney must document the time spent, but
the judge is not bound by the documentation
submitted.
(2) The judge shall determine a reasonable
attorney fee and assess costs. The hourly
rate applied to the time spent must be based
on the attorney's customary and current hourly
rate for legal work performed in this state,
subject to a maximum established by the divi-
sion.
(3) This section does not restrict a claimant
and an attorney from entering into a contin-
gency fee arrangement under which the attorney
receives a percentage of the amount of compen-
sation payments received by the claimant
because of the efforts of the attorney.
However, an amount equal to any fee and costs
assessed against an insurer under 39-71-611 or
39-71-612 and this section must be deducted
from the fee an attorney is entitled to from
the claimant under a contingency fee arrange-
ment.
The Workers1 Compensation Court requested that counsel submit
a statement detailing the attorney's "customary and current hourly
rate." Mr. Hartford himself asserted that he does not charge an
hourly rate in the regular course of business, stating that he
works upon contingent fee arrangements. Regardless, Hartford
submitted a claim for $225 an hour, claiming that if he were to
charge hourly fees, this rate would be necessary to support the
cost of doing business.
Respondent requested a hearing to discuss the propriety of the
hourly rate alleged by Mr. Hartford. Testimony was taken regarding
a proper hourly fee to be charged in workers1 compensation cases.
The testimony was considered in reducing claimant's attorney's rate
from $225 per hour to $80 per hour. The court found that a
reasonable fee in a workers1 compensation case is between $70 and
$90 per hour.
In determining attorney fees in the case at bar, the Workers'
Compensation Court relied on the factors set out in Wight v. Hughes
Livestock Co., Inc. (1983), 204 Mont. 98, 114, 664 P.2d 303, 312.
We stated there:
. .. that in every retainer contract, be it
personal or public, hourly, fixed fee or
contingent fee, each such contract is in
reality based on the market value of the
lawyer's services.
Claimant contends that, according to Gullet v. Stanley
Structures (Mont. 1986), 722 P.2d 619, 621, 43 St.Rep. 1335, 1337,
We must note that the statute [section 39-71-
614, MCA] does not require that fee awards be
based on an average rate of Montana attorneys,
but rather awards must be based on the par-
ticular attorney's customary hourly rate.
In this respect, claimant alleges that the Workers' Compensation
Court incorrectly relied on the testimony in determining an hourly
rate for the average Montana attorney.
While the hourly rate of the particular attorney is the proper
test, Gullet cannot be relied upon specifically here. Hartford
does not have a customary and current hourly fee, although he
claims an equivalent would be $225. As we showed in Paulsen v.
Bonanza Steak House (Mont. 1987), 733 P.2d 335, 44 St.Rep. 159, the
Workers' Compensation Judge can look to evidence submitted by both
parties to determine a reasonable rate. Without a customary and
current hourly fee, the judge cannot wholly rely on the claimant's
attorney's testimony of what he believes his fee would be.
Section 39-71-614(2), MCA, states that "[tlhe judge shall
determine a reasonable attorney fee and assess costs. The hourly
rate applied to the time spent must be based on the attorney's
customary and current hourly rate for legal work performed in this
state. .. Therefore, it is within the discretion of the Workers1
Compensation Judge to determine reasonable attorney fees. In cases
where a successful claimant's attorney does not charge a customary
and current hourly rate, the judge's discretion is broad. This
Court will not interfere with the decision of the Workers' Compen-
sation Court absent an abuse of discretion. Swan v. Sletten
Construction Co. (Mont. 1986), 726 P.2d 1170, 43 St.Rep. 1926. In
this case, there is substantial credible evidence to support the
findings of the Workers' Compensation Court and we will not
substitute its judgment with our own. Intermountain Insurance Co.
v. Church Mutual Insurance Co. (Mont. 1987), 740 P.2d 682, 44 St.
Rep. 1317; Coles v. Seven Eleven Stores (1985), 217 Mont. 343, 704
P.2d 1048. An attorney who charges contingency fees cannot expect
to reap the same benefits from hourly rates as they may from
successful contingent fee cases. As we stated in Wisht,
The experience of the marketplace indicates
that lawyers generally will not provide legal
representation on a contingent basis unless
they receive a premium for taking that risk.
Ordinarily, when lawyers undertake a represen-
tation on a contingency basis, they bargain
for a percentage of the recovery. That per-
centage is sufficiently high to compensate the
lawyer not only for the reasonable value of
the time he or she anticipates devoting to the
particular lawsuit, but also for the time
devoted to other lawsuits undertaken on the
same basis but unsuccessful in result. Thus,
in a rough and arbitrary way, the contingent
percentage fee accounts for the risk of non-
recovery. Berger, Court Awarded Attorneyst
Fees: What is Reasonable? 126 Univ. Pa. Law
Review 281, 324-325 (1977); Clark v. Sage
(1981), 102 Idaho 261, 629 P.2d 656, 661.
An attorney who charges a customary and current hourly fee
does not take the same risk nor expect the same high compensation
in return. The court took this into consideration and decided
accordingly that $80 per hour is reasonable for attorney fees in
this case. We hold that the Workers1 Compensation Court did not
abuse its discretion in reducing claimant's attorney's fees from
$225 to $80 per hour.
The second issue is whether the Workers' Compensation Court
erred in awarding claimant's attorney attorney fees only for those
issues upon which claimant prevailed.
Mr. Hartford claimed that he spent, initially, 154.8 hours
handling claimant's case. He then added another 82.3 hours
previously overlooked, totaling 236 hours. The fee for this case,
over and above the contingent fee, was calculated at $53,100. In
considering these hours submitted, the court found that the
attorney should not receive prevailing fees for those issues upon
which he was not successful. Hartford looks to section 39-71-614,
MCA, which states that llattorneylfees assessed against an insurer
s
under 39-71-611 or 39-71-612, must be based exclusively on the time
spent by the attorney in representing the claimant on the issues
brought to hearing.## As alleged, attorney fees would then be paid
for any time spent on any issue, compensable or illusory.
The Workers1 Compensation Court considered the hours submitted
by Mr. Hartford on all the issues brought before the court. A
substantial amount of time was spent concerning an annuity from a
total lump sum award, which was denied. More hours were spent on
a penalty issue against the insurer, which claimant states was
withdrawn, and on the attorney fee issue. All of these hours, as
the court pointed out, did not relate to the partial lump sum
advance or the constitutional issues, prevailed upon in Buckman I.
Section 39-71-614(1) states that "the judge is not bound by the
documentation submitted." For the same reason that an attorney
would not receive attorney fees in a case where he did not prevail
on any issues, an attorney will not be awarded attorney fees for
issues upon which he did not prevail here. We held in Krause v.
Sears Roebuck & Co. (1982), 197 Mont. 102, 641 P.2d 458, that under
section 39-71-612, MCA, a claimant is entitled to attorney fees and
costs in relation only to his proof on prevailing issues.
Similarly, under section 39-71-612, MCA, ff[i]f a dispute in
amount owed is resolved in favor of claimant, this Court inevitably
finds that an award of attorney's fees is appropriate. Polich v.
Whalenls 0. K. Tire Warehouse (1983), 203 Mont. 280, 661 P.2d 38;
Walker v. H. F. Johnson (1978), 180 Mont. 405, 591 P.2d 181,
Catteyson v. Falls Mobile Home Center (1979), 183 Mont. 284, 599
P.2d 341." Lamb v. Missoula Imports (Mont. 1988), 748 P.2d 965,
967-968, 45 St.Rep. 127, 131.
Furthermore, in Milander v. Carpenter (Mont. 1987), 748 P.2d
932, 44 St.Rep. 2204, pursuant to section 39-71-611, MCA, the state
fund denied a claim for benefits. Only after the claim was later
adjudged compensable by the Workerst Compensation Court was the
award of attorney fees proper.
Therefore, the Workerst Compensation Court did not err in
finding that the claimant's attorney should not receive attorney
fees for issues upon which he did not prevail and the number of
hours found by the court as reasonable to spend in this case is
upheld.
Af firmed.
We concur:
Justices
Mr. Justice R. C. McDonough did not participate.
Mr. Justice John C. Sheehy, dissenting:
Counsel for the claimant Buckman, Lloyd Hartford,
brought two cases to this Court which were consolidated for
oral argument in 1986. They were Buckman v. Montana
Deaconess ~ospital (Mont. 1986), 730 P.2d 380, 43 St.Rep.
2216, and stelling v. ~ivercrestRanches (Mont. 1986), 730
P.2d 388, 43 St.Rep. 2212. Each of these cases had
essentially one prime issue, that is whether the 1985
legislative amendment of 5 39-71-741, MCA, could be applied
retroactively.
Hartford was successful in Buckman, establishing that
retroactivity was improper. He was unsuccessful in stelling,
although stelling adopted Buckman on retroactivity. The
reason Hartford was unsuccessful in Stellinq was that his
client had no standing to raise a further constitutional
issue. Both cases established definitively that the
amendment to 5 39-71-741, MCA, had no retroactive
application.
The reason for my dissent here is the obvious disparate
treatment of counsel for the claimants and counsel for the
insurer in each of these cases. In Buckman, a case which
counsel for the insurer lost, the state counsel recovered an
attorneys fee based on 110 hours. The Workers' Compensation
Court, however, allowed Hartford only 80 hours for his
efforts on the same case. The Court manages to do this by
eliminating from Hartford's claim the hours that he spent on
an issue on which he was unsuccessful. That can occur only
because this Court and the Workers' Compensation Court have
effected a judicial amendment of S 39-71-614, MCA, relating
to the calculation of attorneys fees.
Under the attorneys fees statute, the fee assessed
against an insurer "must be based exclusively on the time
spent by the attorney in representing the claimant on the
issues brought to hearing." If Hartford were entirely
unsuccessful, of course, he is entitled to no fee. Because
he was successful, he is entitled under the statute to
compensation for his time spent on "the issues brought to
hearing." Any reduction of that time by eliminating hours
spent on unsuccessful issues is a violation of 5 1-2-101,
MCA, which states that the function of a judge in declaring
the substance of a statute is "not to insert what has been
omitted or to omit what has been inserted.''
The legislature and the administrators of the Workers'
Compensation Fund have thus far terribly bungled that fund
and put it in a precarious financial position. The
legislature has already done much to reduce the recoverable
fees by attorneys who represent claimants in Workers'
Compensation cases. There is no need for us to find reasons
which make claimants' attorneys subsidize the impoverished
State Fund. However heroic our efforts, we can never catch
up with the errors of management.
If counsel for the Fund in this case spent 110 hours
losing a Supreme Court case and an important issue of
retroactivity, certainly the attorney for the successful
claimant is entitled to at least 110 hours. I dissent.
.-"--\
k 42.
u Justice
i 2-
Mr. Justice William E. Hunt, Sr.:'/t
I concur in the foregoing dissent.