Smith v. Khouri - Case Law

Michigan Supreme Court
Lansing, Michigan
Chief Justice: Justices:

Opinion Clifford W. Taylor Michael F. Cavanagh
Elizabeth A. Weaver
Marilyn Kelly
Maura D. Corrigan
Robert P. Young, Jr.
Stephen J. Markman

FILED JULY 2, 2008

KEVIN SMITH,

Plaintiff-Appellee,

v No. 132823

LOUIE KHOURI, D.D.S., LOUIE
KHOURI, D.D.S., P.C., and ADVANCED
DENTAL CARE CLINIC, L.L.C.,

Defendant-Appellant.

BEFORE THE ENTIRE BENCH

TAYLOR, C. J.

In this case, we review a trial court’s award of “reasonable” attorney fees as

part of case-evaluation sanctions under MCR 2.403(O) calculated under some of

the factors we listed in Wood v Detroit Automobile Inter-Ins Exch, 413 Mich 573;

321 NW2d 653 (1982), and Rule 1.5(a) of the Michigan Rules of Professional

Conduct. We take this opportunity to clarify that the trial court should begin the

process of calculating a reasonable attorney fee by determining factor 3 under

MRPC 1.5(a), i.e., the reasonable hourly or daily rate customarily charged in the

locality for similar legal services, using reliable surveys or other credible
evidence. This number should be multiplied by the reasonable number of hours

expended. This will lead to a more objective analysis. After this, the court may

consider making adjustments up or down in light of the other factors listed in

Wood and MRPC 1.5(a). In order to aid appellate review, the court should briefly

indicate its view of each of the factors.

Given that the trial court made its decision without first determining the

reasonable hourly or daily rate customarily charged in the locality for similar legal

services, we vacate the lower court judgments regarding the case-evaluation

sanctions and remand the case to the trial court to revisit the issue in light of the

opinion we adopt today.

I. STATEMENT OF PROCEEDINGS

Plaintiff sued defendants in 2003 for dental malpractice in the Oakland

Circuit Court. The case went to case evaluation and was evaluated at $50,000.

Plaintiff accepted the award but defendants rejected it. After a 2½-day trial, the

jury returned a verdict in favor of plaintiff. The verdict, reduced to present value,1

was $46,631.18.

After defendants’ motion for judgment notwithstanding the verdict or for a

new trial was denied, plaintiff filed a motion in January 2005 seeking case

1
All but $300 of the verdict consisted of future noneconomic damages,
which were set at $2,800 a year for the remaining 36 years of plaintiff’s life
expectancy. Pursuant to MCL 600.6306, those future noneconomic damages were
reduced to their present value.

evaluation sanctions under MCR 2.403. Plaintiff sought $68,706.50 in attorney

fees for time spent by four lawyers at the firm that represented him. In particular,

plaintiff sought $450 an hour for the 102 hours2 lead trial attorney Robert

Gittleman claimed, $450 an hour for six hours claimed by another partner, $275 an

hour for 59 hours attributable to one associate, and $275 an hour for 14 hours

claimed by another associate. Plaintiff’s motion was supported by several items,

including Mr. Gittleman’s curriculum vitae showing his extensive experience in

trying dental malpractice cases. Plaintiff’s motion also attached copies of three

circuit court judgments awarding Mr. Gittleman attorney fees: a 1985 case

awarding $200 an hour, a 1998 case awarding $300 an hour, and a 2004 case

awarding $400 an hour. Plaintiff also represented that the other partner had been

practicing law for 35 years and had tried numerous cases that resulted in favorable

verdicts. The motion also indicated that the associates had both tried personal

injury cases to conclusion and that $275 an hour was the going rate for their work

and research, which were necessitated by the evaluation rejection.

Defendants presented numerous objections, arguing that the requested

attorney fees would be highly unreasonable if they were awarded and specifically

challenged the rate of $450 an hour and the fact that the fees sought exceeded the

judgment. They contrasted the requested $450 an hour rate and the relatively

2
Plaintiff stipulated a reduction of seven hours from the time Mr. Gittleman
claimed after defendants objected to the claim.

small verdict with a recent Court of Appeals case, Zdrojewski v Murphy, 254 Mich

App 50; 657 NW2d 721 (2002), in which a plaintiff’s attorney had sought $350 an

hour but had only been awarded $150 an hour in case-evaluation sanctions in a

personal injury case where the verdict had been $900,000. An objection was also

made that some of the billings were duplicative, in that it was unnecessary for two

lawyers to jointly try the same relatively simple two-day case.3 Defense counsel

indicated that his challenge was not so much to the hours claimed (other than the

duplication claim), but to the rates sought. However, he did not seek an

evidentiary hearing. Instead, he agreed to have the court decide the motion on the

basis of what had been submitted.

The trial court indicated its belief that $450 an hour was a reasonable rate

for Mr. Gittleman. The court took judicial notice of the fact that senior trial

practitioners in Oakland County bill rates of about $450 an hour. The judge

indicated that he had reviewed the billings and that he did not believe there was

any duplication. The court said that Mr. Gittleman was a recognized practitioner

in the area of dental malpractice and that he had a superlative standing in that area,

having tried numerous cases. The court, however, did not make any findings

relevant to the other partner or the associates. The court concluded by stating that

3
For example, Mr. Gittleman charged eight hours for a full day of trial on
December 17, 2004, and one of the associates also charged eight hours for that
same day. Further, Mr. Gittleman billed five hours for the third day of trial while
an associate charged eight hours for the same day.

the entire amount claimed was reasonable and signed an order granting attorney

fees of $65,556 (the claimed amount of $68,706.50 minus the stipulation to drop

seven hours attributable to Mr. Gittleman).4

Defendants appealed in the Court of Appeals, arguing that the hourly rates

were unreasonable, and attaching an article from the November 2003 issue of the

Michigan Bar Journal5 showing that the median billing rate for equity partners in

Michigan was $200 an hour and $150 an hour for associates.

The panel affirmed in an unpublished opinion.6 It rejected defendants’

claim that the amount of the attorney-fee award was excessive because it was

based on unreasonable hourly rates. The Court of Appeals agreed with the trial

court that $450 an hour was a reasonable rate for Mr. Gittleman. The panel

conceded that the data submitted by defendants showed lower rates, but concluded

that the data did not reflect the range of hourly rates charged by attorneys who

specialize in complex litigation such as dental malpractice. It acknowledged that

the trial court had not made any findings regarding the other three attorneys.

Nevertheless, the panel found sufficient the trial court’s overall statements

regarding the complexity of dental malpractice cases as well as the skill, time, and

cost expended to obtain the favorable verdict. Finally, the Court of Appeals
4
Plaintiff was awarded $23,623.99 in costs.
5
Stiffman, A snapshot of the economic status of attorneys in Michigan, 82
Mich B J 20 (November 2003).
6
Smith v Khouri, unpublished opinion per curiam, issued November 16,
2006 (Docket No. 262139).

refused to follow Zdrojewski because there was evidence that courts of this state

had consistently awarded attorney fees for Mr. Gittleman’s services at hourly rates

higher than the $150 an hour approved in Zdrojewski.

Defendants appealed in this Court, and we granted leave to appeal limited

to the case-evaluation sanction issue, asking the parties to address several issues

relating to the Wood factors and also invited briefs from several amici curiae.7

II. STANDARD OF REVIEW

A trial court’s decision whether to grant case-evaluation sanctions under

MCR 2.403(O) presents a question of law, which this Court reviews de novo.

Casco Twp v Secretary of State, 472 Mich 566, 571; 701 NW2d 102 (2005);

Allard v State Farm Ins Co, 271 Mich App 394, 397; 722 NW2d 268 (2006). We

review for an abuse of discretion a trial court’s award of attorney fees and costs.

Wood, 413 Mich at 588. An abuse of discretion occurs when the trial court’s

decision is outside the range of reasonable and principled outcomes. Maldonado v

Ford Motor Co, 476 Mich 372, 388; 719 NW2d 809 (2006).

III. LEGAL BACKGROUND

A. PURPOSE OF THE RULE

The general “American rule” is that “attorney fees are not ordinarily

recoverable unless a statute, court rule, or common-law exception provides the

contrary.” Nemeth v Abonmarche Dev, Inc, 457 Mich 16, 37-38; 576 NW2d 641

7
479 Mich 852 (2007).

(1998); Haliw v Sterling Hts, 471 Mich 700, 706; 691 NW2d 753 (2005).

Consistently with the American rule, this Court has specifically authorized case

evaluation sanctions through court rule, allowing the awarding of reasonable

attorney fees to promote early settlements.8 The examination of those rules and

the extent fees can be awarded is at issue in this case.

MCR 2.403 is the Michigan court rule regarding case evaluation. The rule

holds that if both parties accept a case evaluation, the action is considered settled

and judgment will be entered in accordance with the evaluation.9 However, if one

party accepts the award and one rejects it, as happened here, and the case proceeds

to a verdict, the rejecting party must pay the opposing party’s actual costs unless

the verdict is, after several adjustments, 10 percent more favorable to the rejecting

party than the case evaluation.10 Actual costs are defined in MCR 2.403(O)(6) as

those costs taxable in any civil action and “a reasonable attorney fee based on a

8
In 2000, the name of the process described in MCR 2.403 was changed
from “mediation” to “case evaluation.” The term “mediation” now applies to the
process described in MCR 2.411 (domestic relations mediation).
9
MCR 2.403(M)(1).
10
MCR 2.403(O)(3) provides that a verdict must be adjusted by adding to it
assessable costs and interest and that, after this adjustment, the verdict is
considered more favorable to a defendant “if it is more than 10 percent below the
evaluation . . . .” As we explained in Haliw, 471 Mich at 711, actual costs do not
include attorney fees incurred when responding to appeals. Moreover, as
explained in Rafferty v Markovitz, 461 Mich 265, 272-273 n 6; 602 NW2d 367
(1999), attorney fees are not allowed under the court rule if they have already been
recovered pursuant to a statute. As we held in Rafferty, double recovery of
attorney fees under two different authorities is not appropriate, even if the
authorities advance different purposes.

reasonable hourly or daily rate as determined by the trial judge for services

necessitated by the rejection of the case evaluation.”

The purpose of this fee-shifting provision is to encourage the parties to

seriously consider the evaluation and provide financial penalties to the party that,

as it develops, “should” have accepted but did not. This encouragement of

settlements is traditional in our jurisprudence as it deters protracted litigation with

all its costs and also shifts the financial burden of trial onto the party who

imprudently rejected the case evaluation. Rohl v Leone, 258 Mich App 72, 75;

669 NW2d 579 (2003); Bennett v Weitz, 220 Mich App 295, 301; 559 NW2d 354

(1996). This rule, however, is not designed to provide a form of economic relief

to improve the financial lot of attorneys or to produce windfalls.11 Rather, it only

permits an award of a reasonable fee, i.e., a fee similar to that customarily charged

in the locality for similar legal services, which, of course, may differ from the

actual fee charged12 or the highest rate the attorney might otherwise command.

As Coulter v Tennessee, 805 F2d 146, 148 (CA 6, 1986), explains, reasonable fees

“are different from the prices charged to well-to-do clients by the most noted

lawyers and renowned firms in a region.”

11
See Pennsylvania v Delaware Valley Citizens’ Council for Clean Air,
478 US 546, 565; 106 S Ct 3088; 92 L Ed 2d 439 (1986) (“[T]hese [attorney-fee
shifting] statutes were not designed as a form of economic relief to improve the
financial lot of attorneys . . . .”).
12
“Reasonable fees are not equivalent to actual fees charged.” Zdrojewski,
254 Mich App at 72.

B. PLAINTIFF WAS ENTITLED TO CASE-EVALUATION SANCTIONS

Defendants here have correctly conceded that case-evaluation sanctions

were applicable because, even ignoring the costs and interest of $23,623.99 that

are to be added to the verdict, the verdict as reduced to its present value of

$46,631.18 was not more than 10 percent less than the $50,000 case-evaluation

amount.

C. DETERMINING A REASONABLE ATTORNEY FEE

As all agree, the burden of proving the reasonableness of the requested fees

rests with the party requesting them. Petterman v Haverhill Farms, Inc, 125 Mich

App 30, 33; 335 NW2d 710 (1983).13 In Michigan, the trial courts have been

required to consider the totality of special circumstances applicable to the case at

hand. Smolen v Dahlmann Apartments, Ltd, 186 Mich App 292, 297; 463 NW2d

261 (1990); Hartman v Associated Truck Lines, 178 Mich App 426, 431;

444NW2d 159 (1989). Wood listed the following six factors were to be

considered in determining a reasonable attorney fee:

(1) the professional standing and experience of the attorney;
(2) the skill, time and labor involved; (3) the amount in question and
the results achieved; (4) the difficulty of the case; (5) the expenses
incurred; and (6) the nature and length of the professional

13
Accord Hensley v Eckerhart, 461 US 424, 433; 76 L Ed 2d 40; 103 S Ct
1933 (1983) (stating that the party seeking the fee award bears the burden of
proving the reasonableness of the hours worked and the hourly rates claimed);
Blum v Stenson, 465 US 886, 896 n 11; 104 S Ct 1541; 79 L Ed 2d 891 (1984).

relationship with the client. [Wood, 413 Mich at 588 (citation
omitted)].[14]

The trial courts have also relied on the eight factors listed in Rule 1.5(a) of the

Michigan Rules of Professional Conduct, see, e.g., Dep’t of Transportation v

Randolph, 461 Mich 757; 610 NW2d 893 (2000), and In re Condemnation of

Private Prop for Hwy Purposes (Dep’t of Transportation v D & T Constr Co), 209

Mich App 336, 341-342; 530 NW2d 183 (1995), which overlap the Wood factors

and include:

(1) the time and labor required, the novelty and difficulty of
the questions involved, and the skill requisite to perform the legal
service properly;
(2) the likelihood, if apparent to the client, that the acceptance
of the particular employment will preclude other employment by the
lawyer;
(3) the fee customarily charged in the locality for similar legal
services;
(4) the amount involved and the results obtained;
(5) the time limitations imposed by the client or by the
circumstances;
(6) the nature and length of the professional relationship with
the client;
(7) the experience, reputation, and ability of the lawyer or
lawyers performing the services; and
(8) whether the fee is fixed or contingent. [MRPC 1.5(a).]

14
These factors were traceable to Crawley v Schick, 48 Mich App 728, 737;
211 NW2d 217 (1973). Crawley relied in part on then-applicable Disciplinary
Rule 2-106(B) of the Code of Professional Responsibility and Ethics.
We also stated in Wood that a trial court is not limited to those factors in
making its determination and that the trial court need not detail its findings on
each specific factor considered. Wood, 413 Mich at 588. We clarify today that in
order to aid appellate review, the court should briefly address its view of each of
the factors on the record.

In determining “the fee customarily charged in the locality for similar legal

services,” the trial courts have routinely relied on data contained in surveys such

as the Economics of the Law Practice Surveys that are published by the State Bar

of Michigan. See, e.g., Zdrojewski, 254 Mich App at 73; Temple v Kelel

Distributing Co Inc, 183 Mich App 326, 333; 454 NW2d 610 (1990). The above

factors have not been exclusive, and the trial courts could consider any additional

relevant factors. Wood, 413 Mich at 588.

IV. ANALYSIS

We conclude that our current multi-factor approach needs some fine tuning.

We hold that a trial court should begin its analysis by determining the fee

customarily charged in the locality for similar legal services, i.e., factor 3 under

MRPC 1.5(a). In determining this number the court should use reliable surveys or

other credible evidence of the legal market. This number should be multiplied by

the reasonable number of hours expended in the case (factor 1 under MRPC 1.5[a]

and factor 2 under Wood). The number produced by this calculation should serve

as the starting point for calculating a reasonable attorney fee. We believe that

having the trial court consider these two factors first will lead to greater

consistency in awards. Thereafter, the court should consider the remaining

Wood/MRPC factors to determine whether an up or down adjustment is

appropriate. And, in order to aid appellate review, a trial court should briefly

discuss its view of the remaining factors.15

The reasonable hourly rate represents the fee customarily charged in the

locality for similar legal services, which is reflected by the market rate for the

attorney’s work. “The market rate is the rate that lawyers of similar ability and

experience in the community normally charge their paying clients for the type of

work in question.” Eddleman v Switchcraft, Inc, 965 F2d 422, 424 (CA 7, 1992)

(citation and quotation omitted). We emphasize that “the burden is on the fee

applicant to produce satisfactory evidence—in addition to the attorney’s own

affidavits—that the requested rates are in line with those prevailing in the

community for similar services by lawyers of reasonably comparable skill,

experience and reputation.” Blum v Stenson, 465 US 886; 895 n 11; 104 S Ct

1541; 79 L Ed 2d 891 (1984). The fees customarily charged in the locality for

similar legal services can be established by testimony or empirical data found in

surveys and other reliable reports. But, we caution that the fee applicant must

present something more than anecdotal statements to establish the customary fee

for the locality. Both the parties and the trial courts of this state should avail

themselves of the most relevant available data. For example, as noted earlier, in

15
Wood, 413 Mich at 588, held that trial courts were “not limited to [the six
listed] factors in making [their] determination[s].” To the extent a trial court
considers any factor not enumerated in Wood or MRPC 1.5(a), the court should
expressly indicate this and justify the relevance and use of the new factor.

this case defendant submitted an article from the Michigan Bar Journal regarding

the economic status of attorneys in Michigan.16 By recognizing the importance of

such data, we note that the State Bar of Michigan, as well as other private entities,

can provide a valuable service by regularly publishing studies on the prevailing

market rates for legal services in this state. We also note that the benefit of such

studies would be magnified by more specific data relevant to variations in locality,

experience, and practice area.

In considering the time and labor involved (factor 1 under MRPC 1.5[a]

and factor 2 under Wood) the court must determine the reasonable number of

hours expended by each attorney.17 The fee applicant must submit detailed billing

records, which the court must examine and opposing parties may contest for

reasonableness. The fee applicant bears the burden of supporting its claimed

hours with evidentiary support. If a factual dispute exists over the reasonableness

of the hours billed or hourly rate claimed by the fee applicant, the party opposing

the fee request is entitled to an evidentiary hearing to challenge the applicant’s

evidence and to present any countervailing evidence.

16
See note 5, supra. The trial court did not have this report. It was first
submitted to the Court of Appeals.
17
Norman v Housing Auth of Montgomery, 836 F2d 1292, 1301 (CA 11,
1988), quoting Hensley, 461 US at 434 (in determining hours reasonably
expended, the Court should exclude “excessive, redundant or otherwise
unnecessary” hours regardless of the attorneys’ skill, reputation or experience).

Multiplying the reasonable hourly rate by the reasonable hours billed will

produce a baseline figure. After these two calculations, the court should consider

the other factors and determine whether they support an increase or decrease in the

base number.

Having clarified how a trial court should go forward in calculating a

reasonable attorney fee, we find it appropriate to vacate the award and remand this

case to the trial court for reconsideration under this opinion. We offer the

following observations in order to provide guidance to the trial court.

In making its ruling, the trial court indicated it was taking judicial notice of

the fact that top trial attorneys in Oakland County charge $450 an hour or more.18

While we do not doubt that some trial attorneys have such rates, the fee

customarily charged in the locality for similar legal services, which likely is

different, should be the measure. That is, reasonable fees are different from the

fees paid to the top lawyers by the most well-to-do clients. Coulter, supra. The

trial court also erred in relying on previous awards Mr. Gittleman obtained without

considering whether those fees might have been justified by the particular

circumstances of the earlier cases, such as the complexity and skill required.

18
We note that the hourly rate charged by top trial attorneys in Oakland
County was not a proper fact for judicial notice. A judicially noticed fact must be
“one not subject to reasonable dispute in that it is either (1) generally known
within the territorial jurisdiction of the trial court or (2) capable of accurate and
ready determination by resort to sources whose accuracy cannot reasonably be
questioned.” MRE 201(b).

Moreover, the trial court erred when it conclusorily stated that Mr. Gittleman had

tried the case in a “professional manner,” without further explanation, because this

is something all attorneys should be expected to do.

As previously noted, the trial court only made findings regarding Mr.

Gittleman. On remand, the court should be careful to perform a separate analysis

with reference to the other three attorneys, considering both the hourly rate and the

number of hours reasonably expended, and should consider whether it was

reasonable for plaintiff’s firm to have two lawyers “on the clock” during the trial.

We reiterate that the goal of awarding attorney fees under MCR 2.403 is to

reimburse a prevailing party for its “reasonable” attorney fee; it is not intended to

“replicate exactly the fee an attorney could earn through a private fee arrangement

with his client.”19 We also caution the courts to avoid duplicative consideration of

the factors mentioned above.20

19
Delaware Valley, 478 US at 565; see also Cleary v The Turning Point,
203 Mich App 208, 212; 512 NW2d 9 (1993).
20
Factor 3 under Wood, 413 Mich at 588, and factor 4 under MRPC 1.5(a),
is “the amount in question and the results achieved.” Although this factor may be
relevant in other situations, we conclude that it is not a relevant consideration in
determining a reasonable attorney fee for case-evaluation sanctions. As stated, the
purpose of MCR 2.403(O) is to encourage serious consideration of case-evaluation
awards and penalize a party that “should have” accepted the case evaluation. The
rejecting party that does not achieve a more favorable result must pay reasonable
attorney fees “for services necessitated by the rejection . . . .” MCR 2.403(O)(6).
It would be inconsistent with MCR 2.403(O) to reduce the accepting party’s
reasonable attorney fees “for services necessitated by the rejection” on the basis of
the amount in question or the results achieved. The accepting party properly
evaluated the case value, yet was forced to incur additional fees, potentially in
(continued…)

V. RESPONSE TO THE DISSENT

The dissent’s primary complaint seems to be that a “reasonable fee” for an

exceptional lawyer cannot be determined by using the fee charged by the average

attorney. But Wood factor 1 mentions the professional standing and experience of

the attorney, Wood factor 2 mentions the skill involved, and MRPC 1.5(a)(7)

speaks of “the experience, reputation, and ability of the lawyer.” These factors

allow an upward adjustment for the truly exceptional lawyer.

The dissent criticizes our use of the market rate for attorney services to

determine a reasonable rate, stating that “the market rate for an individual

attorney’s work is not some figure that can be plucked from a reference manual or

interpolated from a statistical graph.” Post at 10. To an extent, we agree; see note

19 of this opinion, explaining that the fee charged by top trial lawyers in Oakland

County is not a proper fact for judicial notice. This is not an exact science; if it

(…continued)

excess of the case value. Reducing the accepting party’s reasonable attorney fees

necessitated by the rejection because they exceed or are disproportionate to the

value the accepting party correctly assessed undermines the rule. MCR 2.403(O)

penalizes the rejecting party who incorrectly valued the case, not the accepting

party who correctly assessed the case value at a much earlier and efficient time.

Reducing the accepting party’s reasonable attorney fees on the basis of more

proportionally simply encourages the inefficiency the rule seeks to combat.

Although factor 8 under MRPC 1.5(a), “whether the fee is fixed or
contingent,” may be relevant in other situations, we conclude that it is not relevant
in determining a reasonable attorney fee for case-evaluation sanctions. Again,
sanctions under MCR 2.403 are to reimburse a party for reasonable legal fees for
services necessitated by the rejection of the case evaluation. Whether the
attorney-fee agreement is fixed or contingent is unrelated to the legal services
necessitated by the rejection of a case evaluation.

were, no factors or analysis would be required. We merely aim to provide a

workable, objective methodology for assessing reasonable attorney fees that

Michigan courts can apply consistently to our various fee-shifting rules and

statutes. To that end, we are persuaded by the guidance offered by the United

States Supreme Court in Blum, and we note that the dissent offers no similar,

countervailing guidance.

The dissent agrees with the Supreme Court’s assessment in Blum that the

market rate, although not always easily discerned, is a “valid inquiry.” Post at 10.

Nevertheless, it rejects the principled mechanism the Blum Court chose to best

conduct the “valid inquiry” into the market rate. Post at 10-11. We, however,

accept the Blum Court’s resolution, placing the burden on the fee applicant “to

produce satisfactory evidence—in addition to the attorney’s own affidavits—that

the requested rates are in line with those prevailing in the community for similar

services by lawyers of reasonably comparable skill, experience and reputation.”

Blum, supra at 895 n 11. The dissent concedes that “assessing that rate should

include comparisons with rates for similar services,” post at 10, but offers no

rubric to guide Michigan courts in doing so. Unlike the dissent, we choose to

provide the guidance that has been, and the dissent would allow to remain, sorely

lacking for the many Michigan courts that are asked to impose “reasonable

attorney fees” under our fee-shifting rules and statutes.

The dissent also faults us for using the fee customarily charged in the

locality for similar legal services as a starting point. See post at 4-5. We see no

fault in providing an objective baseline, i.e., a starting point, to aid trial and

appellate courts alike in assessing a “reasonable fee.” Whimsy is a double-edged

sword. If a trial court awarded a highly experienced and skilled attorney, such as

Mr. Gittleman, a “reasonable attorney fee” at a rate of $100 an hour—a rate well

below the $150 an hour median rate for associate attorneys in Michigan21—we

would have the same concerns with the absence of an objective framework to

assess such a judgment. An objective starting point, at a minimum, provides a

more concrete basis for setting and reviewing a reasonable attorney fee. Again,

we reject the dissent’s argument to leave Michigan courts without guidance.

The dissent asserts that our decision is somehow inconsistent with

Randolph, in which we rejected the federal lodestar method for calculating the

reasonableness of an attorney fee under our condemnation statute. In Randolph,

we specifically noted that MCL 213.66(3) requires consideration of whether actual

fees are reasonable, and that this is different from fee-shifting statutes that simply

authorize the trial court to award “reasonable attorney fees” without regard to the

fees actually charged. Id. at 765-766. Contrary to the dissent’s assertion, our

opinion today does not contradict, undermine, or overrule Randolph.

VI. CONCLUSION

In determining a reasonable attorney fee, a trial court should first determine

the fee customarily charged in the locality for similar legal services. In general,

21
See Snapshot, supra.

the court shall make this determination using reliable surveys or other credible

evidence. Then, the court should multiply that amount by the reasonable number

of hours expended in the case. The court may consider making adjustments up or

down to this base number in light of the other factors listed in Wood and MRPC

1.5(a). In order to aid appellate review, the court should briefly indicate its view

of each of the factors.

The judgments of the Court of Appeals and the trial court regarding the

attorney-fee issue are vacated, and the case is remanded to the trial court for

reconsideration in light of this opinion.

Clifford W. Taylor
Robert P. Young, Jr.

STATE OF MICHIGAN

SUPREME COURT

KEVIN SMITH,

Plaintiff-Appellee,

v No. 132823

LOUIE KHOURI, D.D.S., LOUIE
KHOURI, D.D.S., P.C., and ADVANCED
DENTAL CARE CLINIC, L.L.C.,

Defendant-Appellant.

CORRIGAN, J.

I concur with the reasoning and result of the lead opinion, with one

exception. I disagree with the conclusion that two factors should be eliminated

from consideration when determining a reasonable attorney fee for case evaluation

sanctions; namely, the “results obtained” and whether the fee is fixed or

contingent. See ante at 15 n 20. Both Wood v Detroit Automobile Inter-Ins Exch,

413 Mich 573; 321 NW2d 653 (1982), and MRPC 1.5(a) specifically list these two

factors as considerations when assessing reasonable attorney fees without

limitation. No principled basis exists for excluding these factors from

consideration in the case evaluation context, nor is there any textual support for

such exclusion in either Wood or MRPC 1.5(a). Therefore, both factors should be

considered, along with all the other factors listed in Wood and the MRPC, when

assessing reasonable attorney fees for case evaluation sanctions. Consideration of
these factors does not, however, affect the trial court’s ultimate authority to

determine which factors, if any, justify an adjustment to the base calculation of

reasonable attorney fees obtained by multiplying the reasonable hourly rate by the

reasonable number of hours expended.

Wood lists the factors a court should consider when awarding reasonable

attorney fees:

(1) the professional standing and experience of the
attorney; (2) the skill, time and labor involved; (3) the amount in
question and the results achieved; (4) the difficulty of the case; (5)
the expenses incurred; and (6) the nature and length of the
professional relationship with the client.[1]

Similarly, MRPC 1.5(a) lists the factors to be considered in determining the

reasonableness of an attorney fee:

(1) the time and labor required, the novelty and difficulty
of the questions involved, and the skill requisite to perform the
legal service properly;

(2) the likelihood, if apparent to the client, that the
acceptance of the particular employment will preclude other
employment by the lawyer;

(3) the fee customarily charged in the locality for similar
legal services;

(4) the amount involved and the results obtained;

(5) the time limitations imposed by the client or by the
circumstances;

1
Wood, supra at 588 (citation and quotation omitted).

(6) the nature and length of the professional relationship
with the client;

(7) the experience, reputation and ability of the lawyer or
lawyers performing the services; and

(8) whether the fee is fixed or contingent.[2]

The lead opinion correctly concludes that trial courts should consider each

of these factors when determining whether to adjust the base reasonable attorney

fee calculation. Nevertheless, it then contradictorily concludes that when

awarding reasonable attorney fees for case evaluation sanctions under MCR

2.403(O), a court is barred from considering factor #3 in Wood (#4 in the MRPC),

concerning the “results obtained,” and factor #8 in the MRPC, “whether the fee is

fixed or contingent.” MCR 2.403(O)(6)(b) requires that a trial court award “a

reasonable attorney fee based on a reasonable hourly or daily rate as determined

by the trial judge for services necessitated by the rejection of the case evaluation.”

The plain language of the rule merely requires that the court award a “reasonable

attorney fee”; it does not suggest that “reasonable attorney fee” means something

different for case evaluation sanctions than for any other situation. Therefore, no

justification exists for the lead opinion’s attempt to deviate from the reasonable

attorney fee calculation when case evaluation sanctions are involved. This carve

out exception appears to arise from its assessment of what is fair rather than from

the plain language of the court rule.

2
MRPC 1.5(a).

Contrary to the assertion in the lead opinion, consideration of whether a fee

is fixed or contingent may be helpful in determining a reasonable attorney fee

award for case evaluation sanctions. If a court establishes that an attorney was

working under a contingency fee agreement, knowledge of the percentage of the

fee may prove to be a useful tool. Contingency fee percentages express an

attorney’s expectations of the case and the risks involved. While the actual

percentage of a contingency fee need not be used in determining a reasonable fee

award, this potentially useful information certainly should not be eliminated

outright from consideration as a factor in a reasonableness analysis.

Likewise, the results obtained can also be a relevant consideration when

determining reasonable attorney fees in a case evaluation situation. Although case

authority specifically addressing the “results obtained” factor primarily involves

situations where an adverse party is ordered to pay the other party’s attorney fees

outside the case evaluation context, in “reasonable attorney fee” cases, courts

consistently acknowledge the relevance of the results obtained.3 The majority

provides no authority for its conclusion that the results obtained should be

excluded from consideration when calculating reasonable attorney fees for case

evaluation sanctions.

3
See, e.g., City of Riverside v Rivera, 477 US 561, 574; 106 S Ct 2686; 91
L Ed 2d 466 (1986); Hensley v Eckerhart, 461 US 424, 433; 103 S CT 1933; 76 L
Ed 2d 40 (1983); Farrar v Hobby, 506 US 103, 115 113 S Ct 566; 121 L Ed 2d
494 (1992); Davis v Southeastern Pennsylvania Transportation Auth, 924 F2d 51
(CA 3, 1991); Kreimes v Dep’t of Treasury, 764 F2d 1186 (CA 6, 1985).

Within the milieu of fee shifting authority, apart from the limited category

of case evaluation sanctions, civil rights cases most frequently articulate how a

court should evaluate the reasonableness of an attorney fee award. In these cases,

the prevailing party is entitled to collect fees from the adverse party. City of

Riverside v Rivera, 477 US 561, 574; 106 S Ct 2686; 91 L Ed 2d 466 (1986),

states in a plurality opinion that the results obtained is “one of [the] many factors

that a court should consider in calculating an award of attorney’s fees.” Id. at 574.

In another civil rights case, Hensley v Eckerhart, 461 US 424, 433; 103 S Ct 1933;

76 L Ed 2d 40 (1983), the United States Supreme Court calls the “results

obtained” factor “crucial” in the analysis of reasonable attorney fees. Id. at 440.

Hensley further specifies that its decision applies in cases not involving civil

rights. Id. at 433.

The Court of Appeals also has expressed concern about the proportionality

of the attorney fees awarded to damages awards. See Petterman v Haverhill

Farms, Inc, 125 Mich App 30, 32; 335 NW2d 710 (1983); Burke v Angies, Inc,

143 Mich App 683, 692-693; 373 NW2d 187 (1985). In Petterman, the Court of

Appeals noted that the $9,304 attorney fee that was charged for a claim evaluated

at $12,500 raised serious questions regarding the reasonableness of the attorney

fee award. In Burke, the Court of Appeals again considered this aspect but held

that the $17,750 attorney fee was not excessive in light of the $175,000 damages

award, i.e., approximately 10 percent of the amount of the damages award, and did

not rise to the level of Petterman, where the attorney fees were 75 percent of the

amount of the damages award.

The lead opinion seems to argue that case evaluation sanctions are

singularly distinguishable from all other fee shifting cases. I disagree. An award

for attorney fees in a case evaluation sanction context is not so unlike an award for

attorney fees in a civil rights case as to render the consideration of the

proportionality “crucial” in one context and not a factor at all in the other. Both

types of cases involve fee shifting. The majority describes the purpose of case

evaluation sanctions as punishment of the party who did not accept the case

evaluation and encouragement of parties to take the process seriously.4 But any

situation where one party is ordered to pay the other’s attorney fees is inherently

punitive. Civil rights cases allow the prevailing party to collect from the “losing”

party, at least in part, to punish the losing party for necessitating the suit in the first

place and to discourage both civil rights infringements and frivolous suits and

defenses. Case evaluation situations are not so different from other attorney fee

shifting cases to eliminate a factor from consideration that has otherwise

consistently been included in the analysis.

I do not contend that fee awards must always be proportional to results

obtained. I simply suggest that considering the results obtained, while not

4
See ante at 8.

requiring a proportionality rule, is reasonable and prudent. Moreover, it is

consistent with federal precedent, including that which the majority cites.5

The lead opinion suggests that when a party rejects a case evaluation that it

“should” have accepted, the adverse party necessitated the accumulation of

additional fees, perhaps fees above and beyond the true value of a case.

Therefore, the lead opinion asserts that the rejecting party should be responsible

for fees even if they are, as in this case, completely disproportionate to the

damages award. It is true that some cases will involve parties who correctly

valued their claims, accepted case evaluation, and were then forced to incur more

fees than they could expect to receive in damages because the other party rejected

the case evaluation. It is also conceivable, however, that some attorneys will, after

accepting a case evaluation that the other side has rejected, proceed in a way that

escalates the fees beyond any damages that could reasonably be expected in the

case. To avoid such potential abuse, a trial court must consider whether fees may

be disproportionate to a damages award as a part of the overall analysis.

I see no principled reason for altering the factors that should be considered

when assessing reasonable attorney fees for case evaluation sanctions. Therefore,

I respectfully disagree with the lead opinion. Both the “results obtained” and

“whether a fee is fixed or contingent” are appropriate factors to consider in

5
See, e.g., Riverside, supra; Hensley, supra; Davis, supra (considering
results obtained as a factor but rejecting per se proportionality rule); and Kreimes,
supra (holding that proportionality should not be the sole deciding factor).

assessing the reasonableness of attorney fee awards as case evaluation sanctions,

along with all the other factors listed in Wood and the MRPC.

Maura D. Corrigan
Stephen J. Markman

STATE OF MICHIGAN

SUPREME COURT

KEVIN SMITH,

Plaintiff-Appellee,

v No. 132823

LOUIE KHOURI, D.D.S., LOUIE KHOURI,
D.D.S., P.C., and ADVANCED DENTAL
CARE CLINIC, L.L.C.,

Defendant-Appellant,

CAVANAGH, J. (dissenting).

Today the majority says much, but changes little, in its attempt at “fine

tuning,” ante at 11, our longstanding method for assessing reasonable attorney

fees under MCR 2.403(O), which has remained unchanged since this Court

unanimously adopted it 25 years ago in Wood v Detroit Automobile Inter-Ins

Exch, 413 Mich 573; 321 NW2d 653 (1982).1 In fact, despite the majority’s

attempt to aid appellate review and increase the consistency of reasonable

attorney-fee awards, its new variation of the Wood-factors method changes little

1
The Wood test for a reasonable attorney fee includes the following factors:
(1) the professional standing and experience of the attorney;
(2) the skill, time and labor involved; (3) the amount in question and
the results achieved; (4) the difficulty of the case; (5) the expenses
incurred; and (6) the nature and length of the professional
relationship with the client. [Wood, supra at 588.]
because, in the end, it still leaves the trial court with broad discretion in awarding

reasonable attorney fees under the rule. Accordingly, I would not tinker with the

Wood factors simply because in this case a contingency-fee attorney was awarded

an hourly-rate fee that some on this Court would not have accepted had they been

the trial judge. The Wood-factors method is not broken; therefore, I respectfully

dissent from the majority’s attempt to fix it.

In applying the Wood factors to this case, I would affirm the trial court’s

determination regarding the reasonable attorney fee for plaintiff’s lead attorney,

Mr. Gittleman, because that ruling was not an abuse of discretion, as it was guided

by several of the Wood factors.2 Further, the trial court’s reasoning was supported

by the information presented to the trial court, which included Mr. Gittleman’s

curriculum vitae, previous decisions supporting similar fee awards for his services,

and plaintiff’s billing records. Also, defendant was offered an opportunity to

contest these assertions at a hearing, but he expressly waived the opportunity.

2
The trial court stated:
There’s no question Mr. Gittleman’s a recognized practitioner
in the area of dental malpractice and has superlative standing in that
area, has tried numerous cases. His skill, time and labor involved
here was evidence [sic] from the professional way in which this case
was tried. The amount in question, the results achieved . . . that was
significant. The case was of difficulty because of the complexity of
the issues involved. . . . There were significant expense [sic] incurred
based on my review of the billings and taking all of those factors
into account, I think that the 450 dollars rate is reasonable.

Thus, I do not agree with the majority’s assertion that the attorney-fee award

regarding Mr. Gittleman’s services requires further analysis.

However, I do agree with the majority that the trial court did not conduct

sufficient analysis to support its award of attorney fees regarding plaintiff’s

second, third, and fourth chair attorneys. Thus, regarding those awards, I would

remand to the trial court for further analysis under our longstanding precedent in

Wood.

Turning to the majority’s new fine-tuned method, this new method begins

by determining the fee customarily charged in the locality for similar legal

services. The majority limits what may be used to establish the customary fee to

“testimony or empirical data found in surveys and other reliable reports . . . [b]ut .

. . the fee applicant must present something more than anecdotal statements to

establish the customary fee for the locality.” Ante at 12. The majority also

requires the claimant to provide more than his attorney’s own affidavit as proof of

the attorney’s hourly fee.3 Then, as an example of a reliable report, the majority

accepts the Snapshot of the Economic Status of Attorneys in Michigan (Snapshot)

3
The majority opinion states: “We emphasize that ‘the burden is on the fee
applicant to produce satisfactory evidence—in addition to the attorney’s own
affidavits—that the requested rates are in line with those prevailing in the
community for similar services by lawyers of reasonably comparable skill,
experience and reputation.’” Ante at 12. The majority does not explain why a
sworn affidavit by an officer of the court and member of the bar is not sufficient
proof of the facts attested to within, especially when those assertions are not
countered by competing evidence.

that was published in the November 2003 issue of the Michigan Bar Journal. In

essence, the majority directs lower courts to use this report to start their analyses

by finding the hourly rate for the average attorney in the applicable field and

locality.4 Next, the majority requires this average fee to be multiplied by the

reasonable number of hours expended in the case to give a baseline fee amount.

Then, the majority allows trial courts to adjust the fee award upward or downward

by applying “the remaining Wood/MRPC factors.” Ante at 11.5 Finally, the trial

court must “briefly discuss its view of the remaining factors” in order to aid

appellate review. Ante at 12.6

I see several problems with this new method that make its results no more

consistent and reviewable than the Wood-factors method that it aims to fine tune.

First, I am not convinced that the starting point for this issue should be the
4
Indeed, the Snapshot expressly “concerns . . . the ‘average’ attorney . . .
with respect to . . . hourly billing rates . . . .” Snapshot at 5 of the survey report,
located at: (accessed June 9,
2008).
5
Under the lead opinion, it is unclear which “remaining factors” are usable
in this adjustment calculation. Recall that under Wood, any of the enumerated
factors were usable, as well as any other relevant factors. Wood, supra at 588.
Also, MRPC 1.5(a), which the lead opinion expressly incorporates, enumerates
several factors that are distinct from the Wood factors. Thus, it is unclear whether
the “remaining factors” usable for this adjustment are those from Wood, MPRC
1.5(a), any other relevant factor, or all of the above. If the majority aims to make
appellate review of these questions more clear, this aspect of its new method is
unsuccessful.
6
It is illogical that a trial court would be required to articulate its analysis
of the remaining factors that it found to be inapposite. I would not require the trial
court to state that it found a particular factor inapplicable, when simply not
discussing that factor would suffice to convey that point.

customary fee in the locality, multiplied by the hours expended on the case. While

that figure is undoubtedly a valid factor in the reasonable-attorney-fee analysis, I

disagree with the majority’s attempt to give that one factor inordinate emphasis by

making it the baseline amount from which all adjustments must be made. I note

that this starting point method is very similar to the federal lodestar method, which

begins its analysis by taking the reasonable hourly fee and multiplying it by the

hours expended. In Pennsylvania v Delaware Valley Citizens’ Council for Clean

Air, 478 US 546, 564; 106 S Ct 3088; 92 L Ed 2d 439 (1986), the United States

Supreme Court adopted the lodestar method and stated that the “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.” But my

inclination against such a starting-point method, or lodestar method, is neither

novel nor contrary to the views of all members of this very Court. Indeed, just

eight years ago every justice in today’s majority joined the opinion per curiam in

Dep’t of Transportation v Randolph, 461 Mich 757; 610 NW2d 893 (2000), in

which we unequivocally stated that we “reject the . . . argument that the ‘lodestar’

method is the ‘preferred’ way of determining the reasonableness of requested

attorney fees.” Id. at 766 n 11. Thus, by fine tuning the Wood-factors method, the

majority has effectively adopted some version of the lodestar method and

overruled Randolph in part.7

7
The majority attempts to distinguish Randolph so that it may implement
(continued…)

To be clear, I am not opposed to giving the average fee equal weight in this

multifactor reasonable fee analysis; but I am opposed to it playing a paramount

role by being the starting point because the average fee does not represent the

reality that a reasonable attorney fee under MCR 2.403(O) is not preliminarily

(…continued)
its new average-fee method (which is a modified version of the federal lodestar
method that Randolph rejected) and claim that Randolph is not affected by today’s
decision. While I agree that Randolph dealt with a different fee-shifting statute
than the case-evaluation court rule at issue here, I note that the differences are
irrelevant—at least with respect to the question of reasonableness.
Indeed, the statute in Randolph, MCL 213.66(3), mandates that the fee
question hinge on the reasonableness of plaintiff’s actual attorney fees, whereas
the case-evaluation court rule only allows a reasonable attorney fee for the
services the aggrieved party was forced to procure as a result of the other party’s
rejection of case evaluation. In other words, this difference is only significant in
the context that the fee analysis occurs: in MCL 213.66(3), the reasonableness of
the fee actually charged is evaluated; and under the case-evaluation court rule, the
reasonableness of the services necessitated is evaluated. However, that difference
does not change the main issue, which is reasonableness. Indeed, the opinion per
curiam in Randolph stated that “[i]nitially, the court must determine whether the
‘owner’s’ attorney fees are ‘reasonable.’” Randolph, supra at 765. Further, in this
reasonableness analysis, the Randolph Court went on to include the factors in
MRPC 1.5(a), id. at 766, which are the very factors that the majority now adds to
the case-evaluation fee analysis. Accordingly, despite the majority’s attempt to
say otherwise, the reasonableness analysis from Randolph is not so unlike that in
today’s case. Additionally, Randolph expressly rejected any average-fee starting
point. Thus, the majority cannot have it both ways. Either the reasonableness
analysis under either fee-shifting provision includes an average-fee starting point
and Randolph is partially overruled, or Randolph’s holding precludes the
majority’s new fine-tuned average-fee starting point because it expressly rejected
such a method.

derived from an average attorney fee charged in a locality.8 This is evidenced in

several respects.

First, the reasonable attorney fee awarded under MCR 2.403(O) is

retrospective in its analysis; whereas the average rate charged in a locality is

prospective in its focus. In other words, attorney fees awarded under MCR

2.403(O) depend heavily on, among other things, what work was required because

of the other party’s rejection of the case-evaluation award, the outcome of the

case, and the skill that the outcome required—all of which depend on the trial’s

outcome. This stems from the text of the court rule, which expressly limits its

award to “the opposing party’s actual costs . . . ,” MCR 2.403(O)(1) (emphasis

added), which are defined as “a reasonable attorney fee based on a reasonable

hourly or daily rate as determined by the trial judge for services necessitated by

the rejection of the case evaluation.” MCR 2.403(O)(6)(b) (emphasis added).

Accordingly, the reasonable attorney fee is what the trial court recognizes, after

completion of the trial, as the reasonable value of that particular attorney’s service

in that particular trial. This award is not necessarily what the client and his

attorney agreed to as the fee, but it could be as high as the agreed-to amount.9

8
While it is true that MCR 2.403(O)(6)(b) relies on the reasonable hourly
rate, it nowhere mandates, or even references, a starting point that hinges on the
average hourly rate.
9
The majority accepts as much in stating that the rule “only permits an
award of a reasonable fee, i.e., a fee similar to that customarily charged in the
(continued…)

In contrast, the average rate charged in a locality, which the majority’s rule

initially relies on, involves a prospective focus because it uses the fees on which

the parties and their lawyers have agreed before the pending litigation. Thus,

while this average rate is a relevant factor in the reasonable-fee analysis, it should

not be the starting point any more than any other relevant factor should be,

because it does not share the retrospective focus that MCR 2.430(O) expressly

requires.

Also, the majority’s average-rate method wrongly assumes that the average

rate exists for any given legal service performed. While an average rate may exist

for some repetitive or general legal services, it does not exist for the work

conducted in prosecuting a claim through formal litigation, as is required in every

case involving case-evaluation sanctions. In other words, every time a party

imprudently rejects a case-evaluation award, the opposing party is forced to

subject its claim to the slower, more expensive rigors of trial.10 And it is

undisputed that no two trials are the same; thus, no two reasonable trial fees are

the same. In essence, the majority rule asks us to accept the illogical premise that

legal services provided at trial are like manufactured products that the consumer

can take off a store’s shelf, each identical product being equally valuable. But,

(…continued)

locality for similar legal services, which, of course, may differ from the actual fee

charged . . . .” Ante at 8 (citations omitted).

10
The majority acknowledges these purposes of MCR 2.403(O). Ante at 8.

even within the very same attorney’s cases, the average billing rate does not

necessarily equate to the reasonable value of the attorney’s performance at a given

trial.11

As noted earlier, this reality is exactly what the multifactor Wood method

recognizes and the retrospective language of MCR 2.403(O) requires. The

majority’s starting-point rule does not recognize this and makes the illogical

assumption that the average rate charged by similarly skilled advocates is

presumptively reasonable, and only then adjustable for individual circumstances. I

would not start the analysis with the average attorney fee because that construct is

not in accord with the language of the court rule or its purpose.12

11
It is true that in the “real world” one must assume that the value of the
attorney’s trial advocacy is the same from one trial to the next because attorneys
do not set their fees after trial by adjusting them for the results delivered. But,
MCR 2.403(O) is not constrained to the pretrial analysis like the average fee is;
the rule depends on the reasonable fee for the services that were necessitated by a
party’s rejection of a case-evaluation award.
12
I am also not persuaded by the majority’s unsupported intimations that
the Wood factors have been applied inconsistently and that they need a fine-tuned
starting point. Nor do I accept the majority’s new requirement that trial courts
discuss each and every factor in order to make appellate review possible. I note
that the majority sees these very problems as inconsequential in other contexts.
For instance, in Kreiner v Fischer, 471 Mich 109, 133-134; 683 NW2d 611
(2004), the majority accepted a similarly subjective list of court-made,
nonexclusive factors as giving acceptable guidance to a similar fact-intensive
analysis. I dissented in Kreiner, but the majority in that case adopted a list of
factors that, like the Wood factors, give no starting point, have led to seemingly
disparate results, and have confounded appellate courts, as evidenced in this
Court’s several peremptory reversals of the genuine attempts by the Court of
Appeals to apply Kreiner’s amorphous factors. For the most recent examples of
this reality see Jones v Olson, 480 Mich 1169 (2008), and Minter v Grand Rapids,
(continued…)

Also, I question the majority’s assertion that the average attorney fee for a

particular attorney’s services is easily ascertainable. In conclusory fashion, the

majority states that “[t]he reasonable hourly rate represents the fee customarily

charged in the locality for similar legal services, which is reflected by the market

rate for the attorney’s work.” Ante at 12. But, contrary to the majority’s assertion,

the market rate for an individual attorney’s work is not some figure that can be

plucked from a reference manual or interpolated from a statistical graph. The

fallacy of such a proposition has been noted by the United States Supreme Court

when, in a similar context, it stated:

[D]etermining an appropriate “market rate” for the services of
a lawyer is inherently difficult. Market prices of commodities and
most services are determined by supply and demand. In this
traditional sense there is no such thing as a prevailing market rate for
the service of lawyers in a particular community. The type of
services rendered by lawyers, as well as their experience, skill, and
reputation, varies extensively—even within a law firm.
Accordingly, the hourly rates of lawyers in private practice also vary
widely. The fees charged often are based on the product of hours
devoted to the representation multiplied by the lawyer’s customary
rate. . . . Nevertheless . . . the critical inquiry in determining
reasonableness is now generally recognized as the appropriate
hourly rate. And the rates charged in private representations may
afford relevant comparisons. [Blum v Stenson, 465 US 886, 895 n
11; 104 S Ct 1541; 79 L Ed 2d 891 (1984).]

I agree with the Court in Blum; the appropriate hourly rate is a valid inquiry, and

assessing that rate should include comparisons with rates for similar services.

(…continued)

480 Mich 1181 (2008). It is not clear why the Kreiner-factors method is not

flawed for the same reasons that the Wood method is held to be today.

And, like the Court in Blum, I recognize that the market rate for any given attorney

is simply not an easily grasped number; thus, I disagree with the majority’s

attempt to initially set the appropriate hourly rate at the average rate for attorneys

in a particular locality.

Nonetheless, assuming that such an average rate, or market rate, for a given

attorney is easily ascertainable, the majority gives little guidance regarding how its

new rule adds to what trial courts have already been using in evaluating reasonable

attorney fees. The majority states that the average rate, or market rate, can be

established by “testimony or empirical data found in surveys and other reliable

reports.” Ante at 12. First, I note that, if the majority is insistent on finding the

market rate, one of the best indicators of the market rate for a service is what a

consumer agreed to pay for it, i.e., the hourly rate on which this particular attorney

and his client agreed. I would not require an attorney and his client to give

testimony to prove they agreed to a certain hourly fee when the court can deduce

as much by simply looking at the billing documents, as the trial court did in this

case.13

Second, regarding empirical data and reliable reports, it is unclear what

standard of admittance courts are to apply to such sources. Apparently by way of

13
Moreover, this testimonial requirement has no effect on this case because
defendant expressly waived an evidentiary hearing on the fee issue when the trial
court offered him one.

example, the majority points to the Snapshot survey conducted by the state bar.14

While the state bar’s surveys are very useful in giving a broad picture of the

financial status of the practice of law in Michigan, I would not cede our courts’

discretion in assessing reasonable attorney fees to surveys that derive their

conclusions from voluntary submissions. In fact, the survey was only sent to 25

percent of the members of the Michigan bar. What is more, only 20 percent of

those surveys were returned. Thus, this “reliable” source is based on the responses

of only 5 percent of the legal practitioners in this state. This is a stunningly low

sample from which to assess the “fees customarily charged in the locality for

similar legal services.” Ante at 12. Also, the survey’s ability to give average

hourly fees in a particular locality is limited because in many of its localities it

received only a small number of responses. For instance, in Muskegon County the

hourly fee is based on a paltry four responses, which supposedly gives the average

of all types of practices in that locality. In fact, in 12 of the 30 localities sampled,

the survey reports less than 10 responses.15

14
While the majority allows for reference to empirical data found in
surveys and other reliable reports, it only directly endorses one such report. It is
unclear if there are other such acceptable reports, and what standard any other
reports must meet to be admissible. Not knowing the answers to those questions, I
limit my analysis to the single source that the majority endorses as acceptable.
15
I also note that this 2003 survey puts the hourly rate for the 95th
percentile in the highest paying locality in Michigan at $440.

The majority also does not describe how the survey is to be used to

determine the customary fee for similar legal services. This lack of direction

creates a problem in this case because the survey does not include a category for

dental malpractice; in fact, it does not even include the broader category of

medical malpractice. Accordingly, I question this survey’s ability to give any

guidance beyond that already available to the trial court, especially regarding this

case’s unique practitioner.16 In this regard, the majority concedes that its lone

example of a reliable report is of small utility: “the benefit of such studies would

be magnified by more specific data relevant to variations in locality, experience,

and practice area.” Ante at 13. Nevertheless, the majority gives the lower courts

no direction on how to use this survey while they wait for more specific surveys.

I am also troubled by the ramifications of the majority’s rule because any

practitioner who reads this opinion now realizes that his voluntary submissions to

surveys are powerful enough to affect the future results of attorney-fee awards. In

other words, the majority unwittingly invites inflated survey submissions. Further,

I do not understand why the majority chooses a survey that was conducted over

four years ago. Noting that the trial in this case occurred in December 2004, it is

not clear why the 2003 version of this survey is preferable to a later version.

16
It is undisputed that the plaintiff’s lead attorney is a specialist in the field
of dental malpractice. He has extensive experience in this state and around the
country in this field.

Thus, while I have no qualms with trial courts using these types of surveys

for broad guidance on this multifactor analysis, I would not elevate this survey as

the lone representative of a reliable report that courts should use in beginning their

reasonable fee analysis.

The majority also does not define the scope of its new rule. The majority

has articulated a new rule for attorney-fee awards under MCR 2.403; yet, that new

test’s application to other attorney-fee contexts is left for its readers to ponder.

Indeed, the majority’s new test specifically incorporates the third factor under

MRPC 1.5(a).17 Does this now mean that the third factor of MRPC 1.5(a) is the

starting point for all proceedings under that provision of our ethical code? Further,

does this new rule apply to other fee-shifting provisions? For example, does the

majority’s test apply to the fee-shifting provisions of the Uniform Condemnation

Procedures Act, MCL 213.66, and the Michigan Civil Rights Act, MCL 37.2802,

each of which involves reasonable attorney fees? And if today’s rule only applies

to MCR 2.403, what is the basis for such a limited application of the new rule? I

would not forge ahead in the name of consistency and ease of appellate review

while concomitantly creating these uncertainties in the wake.

I also note that the majority mandates that the trial court decide whether it

was reasonable for plaintiff to have two attorneys representing him at trial. I am

17
The third factor of the reasonableness analysis of MRPC 1.5(a) evaluates
“the fee customarily charged in the locality for similar legal services.”

aware of no authority that casts doubt upon the reasonableness of a party’s

decision to retain the services of multiple attorneys at trial. In addition, if this

multiple-attorney analysis is a new court-made factor in every reasonable-fee

analysis, the majority should state as much. See note 5, supra. It should also note

if this element, like all earlier elements, must also always be discussed by the trial

court. See note 6, supra.

In the end, I can empathize with the majority in its desire to bring

consistency to attorney-fee awards under MCR 2.403. But that desire is

inconsistent with the rule’s inherently subjective analysis; and, with that in mind,

the majority has gone to great lengths while changing little.18 The instant case is a

perfect example of this. It is probable that when this case returns to the trial court,

under the majority’s new test, that court will use the Snapshot, find an average rate

for the locality, and then adjust that rate to comport with its original award. What

is more, the trial court can support a reiteration of the fee award by simply

restating its original rationale for its first award. Thus, I would not expend such

effort and make these changes to our current method because they add little to the

18
If the majority is earnest in its proclamation that it can implement its new
version of the lodestar method without affecting Randolph, supra, which expressly
rejected such a method, it should pay heed to Randolph’s words regarding the
consistency of attorney fee awards:

[C]ourts can and will reach different decisions concerning
reimbursement of attorney fees. However, that is the nature of
discretionary decisions. The key in each case is that the trial court
provide a reasoned basis for its decision. [Id. at 767-768.]

analysis while propagating the numerous questions I have noted. Instead, I would

do as courts have been doing for the 25 years since Wood: simply evaluate the

several factors that guide a court in assessing “a reasonable attorney fee based on a

reasonable hourly or daily rate as determined by the trial judge for services

necessitated by the rejection of the case evaluation.” MCR 2.403(O)(6)(b).19

Simply put, this analysis cannot be molded into the mathematical precision

that the majority seeks because, in the end, under either the Wood method or the

majority’s fine-tuned method, a trial court still exercises its discretion in assessing

the reasonable value of the services that a particular advocate delivered in a

particular trial. Not all attorneys are created equal, and the reasonable attorney-fee

awarded under MCR 2.403(O) should recognize as much. Because the new

method adopted by the majority does not reflect this as well as the Wood-factors

method does, I respectfully dissent.

Michael F. Cavanagh
Elizabeth A. Weaver
Marilyn Kelly

19
The majority misunderstands me when it claims that my protestations are
based on the proposition that “a ‘reasonable fee’ for an exceptional lawyer cannot
be determined by using the fee charged by the average attorney.” Ante at 16. This
is not true. Again, my main contention is that the majority’s average-fee starting
point gives inordinate weight to that factor, when the rule does not mandate such a
starting point. I find that the Wood-factors method provides sufficient guidance.
As simply as possible, my position is this: Wood is good.