No. 86-049
IN THE SUPREME COURT OF THE STATE OF MONTANA
1986
CLIFFORD GULLETT,
Claimant/Respondent,
STANLEY STRUCTURES,
Employer,
and
AETNA COMMERCIAL INSURANCE DIVISION,
Defendant/Appellant.
APPEAL FROM: Workers' Compensation Court
of the State of Montana
The Honorable Timothy Reardon, Judge presiding.
COUNSEL OF RECORD:
For Appellant:
Poore, Roth and Robinson; C. Richard Anderson,
Butte, Montana,
For Respondent:
Robert L. Kelleher, Billings, Montana
Submitted on Briefs: March 28, 1986
Decided: July 2 5 , 1986
Filed:
Clerk
Mr. Justice William E. Hunt, Sr., delivered the Opinion of
the Court.
Clifford Gullett's employer, Stanley Structures, and its
insurer, Aetna, appeal the Order of the Workers' Compensation
Court awarding attorney's fees to Gullett's counsel in the
amount of $17,959.00 based upon an hourly fee of $125.00 per
hour and a paralegal fee of $35.00 per hour. We affirm the
Workers' Compensation Court's award.
The single issue presented by this appeal is whether the
award of attorney's fees was properly calculated under §
39-71-614, MCA (1985) .
The award of attorney's fees arose in the context of
litigation concerning the amount of permanent partial
disability benefits to which Gullett was entitled. On April
23, 1985 the Workers' Compensation Court filed its Findings
of Fact, Conclusions of Law and Judgment awarding Gullett 480
weeks of permanent partial disability benefits at the rate of
$93.07 per week. The Court also found that Gullett was
entitled to an award of reasonable costs and attorney's fees
pursuant to § 39-71-612, MCA. Consistent with the Order of
the court, Gullett's counsel submitted a record of the costs
and of the hours compiled in preparing and trying the case,
with supporting affidavits. Counsel also submitted the
contingent fee contract between himself and his client,
Gullett. Finally, counsel also submitted a Proposed Order
specifying the amount of attorney's fees claimed and
including his customary and current hourly fee used to
determine the amount. The calculation submitted by Gullett's
counsel included 150.8 hours of attorney work at $125.00 per
hour ($17,612.50) and 9.90 hours of paralegal time at $35.00
per hour ($346.50) for a total of $17,959.00.
Aetna filed a motion opposing the proposed calculation
of attorney's fees to be awarded to Gullett's counsel. Aetna
argued that 150.8 hours of attorney time was an unreasonably
high calculation for the nature of the case. Aetna further
contended that $125.00 per hour was an unreasonably high
hourly fee. Aetna urged the Workers' Compensation Court not
to award attorney's fees based on this calculation which
Aetna believed to be engineered to garner an award roughly
equal to what Gullett's counsel would have received if the
court could have awarded fees based on the contingency
contract between Gullett and his counsel.
On April 22, 1985, one day before the Workers'
Compensation Court issued its Findings of Facts and
Conclusions of Law, a recent amendment to 5 39-71-614, MCA,
went into effect. Previous to the amendment, contingency
contracts could be considered by the court in awarding
attorney's fees. Wight v. Hughes Livestock Company, Inc.
(Mont. 1983), 664 P.2d 303, 40 St.Rep. 696. The statute, as
amended, now states:
(1) The amount of an attorney's fee assessed
against an employer or 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 before the workers'
compensation judge. The attorney must document the
time spent and give the documentation to the judge.
The judge shall determine a reasonable attorney fee
and assess costs. He is not bound by the
documentation submitted to him. The hourly fee the
judge applies to the time spent must be based on
the attorney's customary and current hourly fee for
legal work performed in this state.
(2) This section does not restrict a claimant and
an attorney from entering into a contingency fee
arrangement under which the attorney receives a
percentage of the amount of compensation payments
received by the claimant because of the efforts of
the attorney. However, an amount equal to any fee
and costs assessed against an employer or 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
arrangement.
The statute clearly provides that award of attorney's
fees must be based on the hourly rate of the attorney and the
hours expended. Gullett's counsel submitted records and
affidavits supporting the hours claimed and his fee. Aetna
contends this fee impermissibly contains a factor to
compensate for the risk involved in contingency situations,
that is: losing the case and hence not being paid any fee.
A more reasonable fee, Aetna argues, would be what it
considers to be the common rate of $85.00 per hour.
We must note that the statute does not require that fee
awards be based on an average rate of Montana attorneys, but
rather awards must be based on the particular attorney's
customary hourly rate. How the individual attorney
calculates what would be an adequate hourly rate to cover
overhead, expenses and compensation is not of concern. There
is substantial credible evidence in the record to support the
lower court's finding that:
As to the reasonableness of the fee, all of the
time that was spent by claimant's counsel has been
documented and is on file with this Court. Since
the claimant prevailed on every issue except the 20
percent penalty, this Court cannot find that the
time spent was unreasonable. Claimant's attorney
should be compensated for 150.8 hours of time. He
should be paid at the rate he commands in the open
market, which he reports to be $125/hour for his
services and $35/hour for his paralegal services.
Claimant's attorney fee is $17,959.
The order of the Workers' Compensation Court is
affirmed.
We Concur:
Chief Justice
Mr. Justice Fred J. Weber dissents as follows:
I dissent from the majority opinion in its conclusion
that there is substantial credible evidence to support the
lower court's determination of attorney's fee.
Section 39-71-614, MCA, requires that an amount of an
attorney's fee must be based exclusively on the time spent.
While the record supports the time determination of the
Workers' Compensation Court, I do not believe that the record
meets the requirements of the last sentence of paragraph (1)
of § 39-71-614, MCA, which states:
The hourly fee the judge applies to the time spent
must be based on the attorney's customary and
current hourly fee for legal work performed in this
state.
The affidavit of Robert C. Kelleher, Sr., dated May 2, 1985,
established that Robert E. Kelleher, Jr., passed the Montana
and California bar exams in 1984, and detailed various expe-
rience which he had. In addition it stated the following:
. . . that because all of the work of said OFFICE
is on a contingent fee basis, an hourly rate has to
be set on the basis of overhead, attorney's skills,
and the fact that occasionally a case is lost,
resulting in the OFFICE absorbing not only lost
attorney and staff salaries but invariably several
thousand dollars in costs for medical exams, medi-
cal consultations, medical expert witness fees,
vocational rehabilitation expert studies and attor-
ney consultations, vocational rehabilitation expert
witness fees, deposition charges, air plane fares,
motel bills, long distance telephone calls, copy-
ing, etc.; that the hourly rate of Robert L.
Kelleher, Jr., has a value of $125.
The statement that the hourly rate has a value of $125 does
not meet the statutory requirement that the hourly fee which
the judge applies must be based upon the attorney's "custom-
ary and current hourly fee for legal work performed in this
state." It may well be that this deficiency resulted in part
from the recent amendment made to $ 39-71-614, MCA, which
took effect one day prior to the findings of fact and conclu-
sions of the court.
In addition, I conclude that the affidavits submitted by
the attorneys for the insurance company are not satisfactory
because they set forth the customary and current hourly fee
for defense legal work which may be significantly different
than plaintiff's work in this type of case.
I would therefore reverse the determination by the
Workers' Compensation Court and remand the case with instruc-
tions for a redetermination of the fee in accordance with the
provisions of the statute.
Chief Justice J.A. Turnage and Justice L.C. Gulbrandson
join in the foregoing dissent of Justice Fred J. Weber.