Smith v. Khouri
Smith v. Khouri
Opinion of the Court
In this case, we review a trial court’s award of “reasonable” attorney fees as part of case-evaluation sanctions under MCR 2.403(0) 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
After defendants’ motion for judgment notwithstanding the verdict or for a new trial was denied, plaintiff filed a motion in January 2005 seeking case-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 hours
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
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 Journal
The panel affirmed in an unpublished opinion.
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.
II. STANDARD OF REVIEW
A trial court’s decision whether to grant case-evaluation sanctions under MCR 2.403(0) 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 (1998); Haliw v Sterling Hts, 471 Mich 700, 706; 691 NW2d 753 (2005). Consistently with the American rule, this Court has specifically authorized
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.
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
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 request
(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, 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:
*530 (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).]
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 multifactor 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
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
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.
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.
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.”
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 551. To an extent, we agree; see note 18 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 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 also faults us for using the fee customarily charged in the locality for similar legal services as a starting point. See post at 546. 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 Michigan
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. Randolph, 461 Mich 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, 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.
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 plaintiffs life expectancy. Pursuant to MCL 600.6306, those future noneconomic damages were reduced to their present value.
Plaintiff stipulated a reduction of seven hours from the time Mr. Gittleman claimed after defendants objected to the claim.
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.
Plaintiff was awarded $23,623.99 in costs.
Stiffman, A snapshot of the economic status of attorneys in Michigan, 82 Mich B J 20 (November 2003).
Smith v Khouri, unpublished opinion per curiam, issued November 16, 2006 (Docket No. 262139).
479 Mich 852 (2007).
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.
MCR 2.403(M)(1).
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, 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.
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 ....”).
“Reasonable fees are not equivalent to actual fees charged.” Zdrojewski, 254 Mich App at 72.
Accord Hensley v Eckerhart, 461 US 424, 433; 103 S Ct 1933; 76 L Ed 2d 40 (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).
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 on the record its view of each of the factors.
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.
See n 5, supra. The trial court did not have this report. It was first submitted to the Court of Appeals.
Aforman, 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).
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).
Delaware Valley, 478 US at 565; see also Cleary v Turning Point, 203 Mich App 208, 212; 512 NW2d 9 (1993).
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(0) is to encourage serious consideration of case-evaluation awards and penalize a party that “should have” accepted the case’s 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(0X6). It would be inconsistent with MCR 2.403(0) 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. If we were to do so, the accepting party could have properly evaluated the case’s value, yet be forced to incur additional fees, potentially in excess of the case’s 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(0) penalizes the rejecting party who incorrectly valued the case, not the accepting party who correctly assessed the case’s value at a much earlier and more efficient time. Reducing the accepting party’s reasonable attorney fees on the basis of proportionality simply encourages the inefficiency the rule seeks to combat.
See Stiffman, supra.
Concurring Opinion
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 534 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;
*539 (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.[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(0), 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 evalua
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.
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
I do not contend that fee awards must always be proportional to the results obtained. I simply suggest that considering the results obtained, while not requiring a proportionality rule, is reasonable and prudent. Moreover, it is consistent with federal precedent, including that which the majority cites.
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
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 assessing the reasonableness of attorney fee awards as case evaluation sanctions, along with all the other factors listed in Wood and the MRPC.
Wood, supra at 588 (citation and quotation omitted).
MRPC 1.5(a).
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).
See ante at 527-528.
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).
Dissenting Opinion
(dissenting). Today the majority says much, but changes little, in its attempt at “fine-tuning,” ante at 530, our longstanding method for assessing reasonable attorney fees under MCR 2.403(0), 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).
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.
However, I do agree with the majority that the trial court did not conduct sufficient analysis to support its award of attorney fees regarding plaintiffs 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,” but “the fee applicant must present something more than anecdotal statements to establish the customary fee for the locality.” Ante at 531-532. The majority also requires the claimant to provide more than his attorney’s own affidavit as proof of the attorney’s hourly fee.
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 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
First, the reasonable attorney fee awarded under MCR 2.403(0) 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(0) 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
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 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(0) 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,
As noted earlier, this reality is exactly what the multifactor Wood method recognizes and the retrospective language of MCR 2.403(0) 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.
[Determining 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*552 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. 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 531-532. First, I note that, if the majority insists 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.
Second, regarding empirical data and reliable reports, it is unclear what standard of admittance courts
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
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 more than 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.
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 reliable reports 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
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 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
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
The Wood test for a reasonable attorney fee includes the following factors:
*544 (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.]
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.
The lead 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 531. 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 it, especially when those assertions are not countered by competing evidence.
Indeed, the Snapshot expressly “concerns ... the ‘average’ attorney ... with respect to... hourly billing rates ....” See p 5 of the complete survey report, located at <http://www.michbar.org/ pmrc/articles/0000133.pdf> (accessed June 9, 2008).
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 malee appellate review of these questions more clear, this aspect of its new method is unsuccessful.
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.
The majority attempts to distinguish Randolph so that it may implement 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 plaintiffs actual attorney
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.
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 locality for similar legal services, which, of course, may differ from the actual fee charged ....” Ante at 528 (citations omitted).
The majority acknowledges these purposes of MCR 2.403(0). Ante at 527-528.
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(0) 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.
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
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.
While the majority allows for reference to empirical data found in surveys and other rehable 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 he admissible. Not knowing the answers to those questions, I limit my analysis to the single source that the majority endorses as acceptable.
I also note that this 2003 survey puts the hourly rate for the 95th percentile in the highest paying locality in Michigan at $440.
It is undisputed that the plaintiffs 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.
The third factor of the reasonableness analysis of MRPC 1.5(a) evaluates “the fee customarily charged in the locality for similar legal services.”
If the majority is earnest in its proclamation that it can implement its new version of the lodestar method without affecting Randolph, which expressly rejected such a method, it should pay heed to Randolph’s words regarding the consistency of attorney fee awards:
[Cjourts 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. [Randolph, supra at 767-768.]
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 535. 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. Stated as simply as possible, my position is this: Wood is good.
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