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The Taxing of Attorney Fees In A Civil Lawsuit – Part 2

In Part 1, we explained the basic rule governing an award of attorney’s fees to the prevailing party[1] in a lawsuit.  In Part 2 we’ll discuss the factors approach, by which the court can vary awards, lower or higher than the presumptively reasonable formula.

Alaska Rule of Civil Procedure 82(c) provides that the court may vary an award based on the following factors:

(A) the complexity of the litigation;

(B) the length of trial;

(C) the reasonableness of the attorneys’ hourly rates and the number of hours expended;

(D) the reasonableness of the number of attorneys used;

(E) the attorneys’ efforts to minimize fees;

(F) the reasonableness of the claims and defenses pursued by each side;

(G) vexatious or bad faith conduct;

(H) the relationship between the amount of work performed and the significance of the matters at stake;

(I) the extent to which a given fee award may be so onerous to the non-prevailing party that it would deter similarly situated litigants from the voluntary use of the courts;

(J) the extent to which the fees incurred by the prevailing party suggest that they had been influenced by considerations apart from the case at bar, such as a desire to discourage claims by others against the prevailing party or its insurer; and

(K) other equitable factors deemed relevant.

Hard fought battles have been over (C), whether the rates and number of hours spent were reasonable; (F) whether claims and defenses were reasonable; and (G) vexatious or bad faith conduct by a party and/or its attorney.  We’ll focus on these in turn.

First we’ll look at C).  When determining whether an attorney’s rates and hours spent were reasonable, courts tend to look to Alaska Bar Rule 35, requiring an attorney’s fees to be reasonable.  Bar Rule 35 has its own factors test, as follows:

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

(2) the likelihood that the acceptance of the particular employment will preclude other employment by the attorney;

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

(4) the amount involved and the results obtained;

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

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

(7) the experience, reputation, and ability of the attorney or attorneys performing the services; and

(8) whether the fee is fixed or contingent.

Factors (1) and (3) are the central focus in many disputes.[2]  As of this writing, it is my observation that market rates vary by area of practice and source of referral, ranging from $140 to a high of $400 per hour.  Hourly fees of $300 and more are routinely deemed reasonable by Alaska state court judges.[3]  While these rates tend to be affirmed, results vary greatly when assessing how many hours of labor is “reasonable” in a given case.

Turning to Rule 82(c) factors (F) the reasonableness of claims and defenses, and (G) vexatious or bad faith conduct, one guidepost is Civil Rule 11’s requirement that when filing a document the signer attests that the allegations are supported by an objectively reasonable investigation of the facts and the law.  If at the conclusion of the litigation the court deems a claim or defense frivolous, or unduly strained, then a higher award of attorney fees is appropriate. Awards up to 80% have been upheld on appeal for unreasonable claims or defenses, and awards of 100% have been upheld if the court specifically finds vexatious or bad faith conduct in the proceedings.

_______________

[1] A prevailing party is one who prevails on the main issue(s) in the case, even if not on all issues.

[2] The author has served on the Alaska Bar Association’s Fee Arbitration Panel since 1994.

[3] For example, in 2011, Judge Andrew Guidi ruled that the value of counsel’s services was $350 per hour, although the attorney’s contract rate was $140 per hour.  This order was reversed on appeal in Lee v. Konrad, 337 P.3d 510 (Alaska 2014), in the particular circumstances of the case.  Justice Craig Stowers wrote the opinion of the court.  As a trial judge the same jurist Stowers observed five years earlier that attorneys charged $300 and more per hour for litigation work.

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