Karma is a B****, or What Goes Around Comes Around
April 7, 2015 § 1 Comment
John Bowen got into the habit around 2005 of not paying his child support. His ex, Patricia, had to retain an attorney to file repeated petitions for contempt. When he did begin complying — more or less — with the court’s child support orders, he did so by paying the child support into the registry of the court, which required Patricia to retain an attorney to get a judge to sign a court order authorizing the Chancery Clerk to disburse the funds to her.
In 2009, the chancellor found John in contempt and slapped him with $10,000 in attorney’s fees. John appealed, and the COA, in Bowen v. Bowen, 107 So.3d 166 (Miss. App. 2012), affirmed the finding of contempt, but remanded for the chancellor to make findings on the McKee factors.
On remand, the chancellor awarded Patricia $7,350 in attorney’s fees. John again appealed.
In Bowen v. Bowen, handed down March 24, 2015, the COA affirmed. Judge Roberts, hitting the nail on the head, wrote for the unanimous court:
¶5. John’s sole issue on appeal is that the chancery court erred in awarding Patricia $7,350 in attorney’s fees. On appeal, we employ the abuse-of-discretion standard when reviewing a trial court’s grant or denial of attorney’s fees. Proctor v. Proctor, 143 So. 3d 615, 623 (¶34) (Miss. Ct. App. 2014) (citing Miss. Power & Light Co. v. Cook, 832 So. 2d 474, 478 (¶7) (Miss. 2002)). In McKee v. McKee, 418 So. 2d 764, 767 (Miss. 1982), the Mississippi Supreme Court provided factors for consideration when determining the proper amount of attorney’s fees to award:
The fee depends on consideration of, in addition to the relative financial ability of the parties, the skill and standing of the attorney employed, the nature of the case and novelty and difficulty of the questions at issue, as well as the degree of responsibility involved in the management of the cause, the time and labor required, the usual and customary charge in the community, and the preclusion of other employment by the attorney due to the acceptance of the case.
¶6. Following this Court’s mandate, the chancery court held a hearing on the issue of attorney’s fees. Nancy Liddell, Patricia’s attorney, submitted into evidence an itemized bill for her work related to the case. She testified that in any instance where modification was mentioned in the bill, she halved the fee charged; thus, only the time spent working on the contempt action remained. Liddell additionally submitted an affidavit from a local attorney confirming that the range of $150-$200 per hour was the usual and customary rate for DeSoto County. John’s attorney did not dispute that these were the customary rates for DeSoto County. Patricia testified that she believed Liddell’s rate was reasonable, and that she “probably worried [Liddell] to death” with her constant communication. Patricia further elaborated that without Liddell’s aid, she would have been unable to get the owed child support from John. Liddell also testified that she expended many hours on this case, as it was more than just an average contempt action, and she had to turn away potential clients to handle this particular case.
¶7. In addressing the McKee factors in its oral ruling, the chancery court noted that the case was a novel case for a contempt action and had been ongoing since 2005. According to the chancery court, Patricia had to repeatedly file petitions for contempt because John would not obey court orders to pay child support. The chancery court explained that each time John failed to pay child support, Patricia “would have to talk to her attorney, have a petition filed, and after the petition [was] filed, after [John or his attorney were] served, then before [they] actually would have a trial, [John] would pay that child support. But he would not pay it directly to [Patricia].” When John did pay the child support, he would pay it to the chancery court, which required a signed order to release the check to Patricia, again requiring Liddell to prepare a motion for release of funds and an order to release the funds. The chancery court further stated that John, “by his repeated intentional misconduct[,] caused [Patricia] to incur attorney[’s] fees that she did not have money to pay[, o]ver and over and over again[,]” and Liddell successfully obtained relief for Patricia each time John failed to pay. The chancery court also found that Liddell was a skilled lawyer with over twenty years of experience, who missed other employment opportunities due to the constant work and preparation of this case. According to the chancery court, while this amount of attorney’s fees appeared high for an average contempt action, the $150-$200 per hour was a reasonable fee, and the bill would not have been as high if it were not for John’s repeated misconduct.
Patricia’s lawyer did a nice job of addressing the McKee factors with substantial proof. That gave the chancellor an adequate basis to support her ruling.
Remember that proof of McKee factors is not, strictly speaking, required to support an award of attorney’s fees in a contempt action; however, there must be some evidence of reasonableness. In other words, the chancellor has to have some basis to say that the award is reasonable. The best and most expeditious way to do that is via the McKee factors, as the COA ordered in this case.
Oh, and getting back to our starting point, did you notice how spiteful and intransigent John appeared to be in how he responded to the court’s orders to pay child support? Well, that’s where karma comes into play. Judge Roberts addressed the karma factor:
¶8. Based upon the evidence presented, we find that the chancery court did not abuse its discretion in awarding Patricia $7,350 in attorney’s fees. As the supreme court noted in Mabus v. Mabus, 910 So. 2d 486, 489 (¶8) (Miss. 2005), in contempt actions, “[w]here a party’s intentional misconduct causes the opposing party to expend time and money needlessly, then attorney[’s] fee and expenses should be awarded to the wronged party.” The chancery court found that the itemized expensed entered into evidence were reasonably incurred due to John’s repeated misconduct.
Karma is, indeed, a B****. Or, as we say in chancery court: Who seeks equity must do equity.
How Not to Prove Attorney’s Fees
November 24, 2014 § Leave a comment
Allene Crowell died in 2006. Her two surviving daughters, Caron Crowell and Jackie Trotter, were named co-executrixes.
Jackie filed a complaint charging that Caron had unduly influenced Allene to gift her an unfair share of Allene’s estate, and with converting the mother’s assets.
The chancellor did find undue influence and granted the estate a judgment against Caron. She filed a R59 motion, based on which the court added $100,000 to the judgment, on its own motion, finding that Caron had spent more than $100,000 of estate assets “on more than 40 lawyers” looking for legal opinions to support her position. The court ruled her actions to be a dissipation of estate assets.
Caron appealed, and the MSSC affirmed the chancellor’s ruling on the undue influence and judgment, but reversed on the $100,000 addition for attorney’s fees.
Here’s what Justice Randolph said for the unanimous court in the case of Estate of Crowell: Crowell v. Trotter, handed down November 6, 2014:
¶20. Caron argues that the trial court’s finding that she spent $100,000 of the estate’s money on attorney fees is contrary to the facts in evidence. Caron further argues that ordering her to pay $100,000 increases the value of the estate by $100,000 over the value established by Jackson.
¶21. We find that the trial court erred in sua sponte, post-judgment, increasing the judgment by $100,000 for Caron’s estimated expenditures on attorney fees. The record is inconclusive about both the amount of money spent on attorney fees, and from whose money the funds to pay the legal fees came. The trial court noted that Caron testified that the money came from her own funds, which was the only evidence presented.
¶22. At trial, Caron testified that she had seen at least forty-two lawyers. When asked how much she had spent on legal fees, Caron testified “It’s a lot.” When asked if she had paid for legal fees out of her own money, Caron responded:
A. Well, it depends – as long as Mother was alive, I think I used her funds. I didn’t spend that much really. You know, I was trying to get good legal advice for her and get her totally protected. A lot of the attorneys didn’t charge. But I don’t know how much. I don’t know how much it was. I don’t think it was all that much. Then since her, I have paid my own attorneys fees, and it’s been a lot. I – you know, there’s – it’s been a lot.
Q. Well, give me an estimate.
A. $100,000, I think.
Q. In attorney fees?
A. Yes, that’s a guesstimate, estimate.
¶23. The record does not disclose substantial evidence to support a $100,000 increase in judgment. Caron “guesstimated” the attorney fees to be around $100,000. No testimony of bank statements, canceled checks, bills from attorneys, or any other form of evidence was offered to support or contest Caron’s “guesstimate.”
¶24. If Caron actually spent $100,000 on legal fees, the only testimony before the court was that she paid most of the fees out of her own pocket. The $100,000 “guesstimate” followed her statement that she has paid “a lot” of her “own” legal fees. After Caron testified that she had spent a lot of her own money, counsel asked Caron for an estimate. “$100,000.00, I think” was responsive to a question asking how much of her own money she had spent, which is not substantial evidence to support the trial court’s finding.
* * *
¶26. The record lacks substantial evidence supporting that Caron actually spent $100,000 of the estate’s money. Caron’s ambiguous and unsupported $100,000 “guesstimate” is not substantial evidence. We find such a conclusion is in error.
No surprise here. The reason I am pointing this out is that Caron’s testimony is not too far off what I hear sometimes from witnesses on the issue of attorney’s fees. Vague, indefinite, ballpark figures, unsubstantiated with proof of payment and other supporting evidence, is simply not adequate to prove a claim for attorney’s fees that will stand up on appeal.
Attorney’s Fees Directed by the Will
October 1, 2014 § Leave a comment
B.D. Benoist included a provision in his will that any beneficiary who contested his will “shall pay all attorneys fees and court costs associated with the Will contest or related action.”
The will was, indeed, unsuccessfully contested by Bronwyn Parker, B.D.’s daughter and a beneficiary, and the executor demanded award of an attorney’s fee.
Before we go any further, we’ve posted twice before here about this case. One post addressed the question as to when a temporary administrator should be appointed. The second post set out the MSSC’s new rule that there is a good faith and probable cause exception to enforceability of in terrorem clauses in wills.
As to that later point, you will recall that the MSSC reversed the chancellor’s ruling that Bronwyn was disinherited because she challenged the will. Due to the fact that she acted in good faith and with probable cause to believe her position was correct, neither she nor the executor were bound by the in terrorem clause.
But what about where a will directs, as in the language above, simply that the contestant must pay the fees and court costs, without language that the challenging beneficiary will be disinherited? Can that be enforced?
Here’s what the MSSC said:
¶28. The forfeiture provision of B.D.’s will stated that if any beneficiary instituted a will contest, that beneficiary “shall pay all attorneys fees and court costs associated with the Will contest or related action.” When the chancery court initially held that the forfeiture provision in B.D.’s will was enforceable, it also concluded that Bronwyn was required to pay attorney fees for initiating the will contest. Upon granting Bronwyn’s motion to reconsider, the chancellor held that B.D.’s will could not obligate her to pay attorney fees. The chancellor reasoned that, although the “paramount duty of the court is to ascertain the intent of the testator,” the court still may not give effect to such intent if it is “contrary to law or public policy.” The chancellor reasoned that, in requiring payment of attorney fees, the testator essentially was attempting to dictate the transfer of property that was not his and was beyond his control. The chancellor analyzed Mississippi Code Section 91-5-1,12 which governs the authority of individuals to create wills, and concluded that it did not give persons power over property which was not theirs to begin with. We agree with this conclusion. Section 91-5-1 permits the testator to dispose of and “devise all the estate, right, title and interest in possession, reversion, or remainder, which he or she hath, or at the time of his or her death shall have. . . .” Miss. Code Ann. § 91-5-1 (Rev. 2013). The testator is not empowered to control assets that do not belong to him or her through a will, but may control only those things “which he or she hath, or at the time of his or her death shall have. . . .” Id. This clearly does not contemplate funds of a third party over which the testator had no control during his or her life or at his or her death. Mississippi does not statutorily authorize the payment of attorney fees by an unsuccessful will contestant. Accordingly, William can prevail in his claim only if there is an alternative avenue through which an award of attorney fees is appropriate.
¶29. We review a chancellor’s determination of whether to award attorney fees under an abuse of discretion standard. Schwander v. Rubel, 221 Miss. 875, 897, 75 So. 2d 45, 54 (1954) (quoting King v. Wade, 175 Miss. 72, 166 So. 327, 330 (1936)) (emphasis added). “[W]hen there is no contractual provision or statutory authority providing for attorney’s fees, they may not be awarded as damages unless punitive damages are proper as well.” Willard v. Paracelsus Health Care Corp., 681 So. 2d 539, 544 (Miss. 1996). There is no statutory authority for a testator to require the payment of attorney fees, and Bronwyn and William were not parties to a contract which included an attorney fees provision. Bronwyn has not been subject to punitive damages, nor is she in contempt of court. The chancellor did not abuse his discretion in denying attorney fees to William. The chancellor correctly noted that Mississippi does not statutorily authorize the payment of attorney fees by an unsuccessful will contestant. All that is permissible is for the will to detail the disbursement of the testator’s property. The Legislature has not seen fit to grant testators the authority to invoke the power of the courts to compel unsuccessful contestants to pay attorney fees incurred in defending a will contest. As concluded by the chancellor, there are no means by which William can obtain attorney fees in these circumstances.
A couple of useful points in this case:
- A testator may only direct the disposition of funds over which he had control during his life. Since an award of attorney’s fees would be a disposition of a third party’s funds, that’s outside the scope of the testator’s power.
- There are only three avenues for a chancellor to award attorney’s fees: (1) where there is a contractual agreement for award of attorney’s fees; or (2) where there is a statute authorizing an award of attorney’s fees; or (3) where there is an award of punitive damages. Of course, attorney’s fees may be awarded on a finding of contempt, but there are statutes authorizing that.
I wonder whether language that authorized the executor to reduce the share of any unsuccessful or bad faith contestant (or contestants pro rata) by the amount of attorney fees and costs incurred by the estate in defending the will, with the amount to be adjudicated by the court, would get by?
Remember that Benoist does not do away with in terrorem clauses in our jurisprudence. It merely opens a line of attack that had heretofore been closed to Mississippi litigants. So can still use your legal creativity to help your clients come up with language that will help blunt or mitigate the attack.
Binding a Minor to a Settlement
August 14, 2014 § 4 Comments
Minors can not act for themselves. That creates some obstacles when a minor is injured in an accident, and the insurance company or some other paying party needs a signature on a release to settle the claim.
In Matter of Wilhite: Woolbright v. Wilhite, handed down September 10, 2013, by the COA, 18-year-old Lacey Wilhite had been severely injured in a catastrophic collision with a drunk driver. Her mother, Celeste Sloan, who had custody, filed a petition to be appointed guardian. Lacey’s father, Rodford, with whom Lacey had been living for several years before the accident, in response filed a petition to be appointed guardian and for custody.
The chancellor appointed Rodford as guardian, and authorized him to accept the insurance company’s tender of policy limits in the amount of $100,000. The judge also approved the contract of the attorney for Rodford for a 25% contingent fee. More about that attorney’s fee in a bit.
On appeal, Sloan’s lawyer argued that, even though her contract with Sloan had not been approved by the court, she had a reasonable expectation of compensation from the child’s estate, based on quantum meruit. The COA disagreed. Beginning at ¶11, Judge Fair explained:
Sloan may have been a “natural guardian” of Lacey under Mississippi Code Annotated section 93-13-1 (Rev. 2004), but the chancery court is the “superior guardian.” See Carpenter v. Berry, 58 So. 3d 1158, 1163 (¶19) (Miss. 2011). As the Mississippi Supreme Court detailed in Mississippi State Bar Association v. Moyo, 525 So. 2d 1289, 1293-96 (Miss. 1988), there are three ways to bind a minor in a settlement: (1) removal of the disability of minority, (2) the formal appointment of a guardian, and (3) the chancery court’s approval, without a guardianship, when the claim is worth $25,000 or less (Mississippi Code Annotated section 93-13-211 (Supp. 2012)). It stands to reason that a parent who has no authority to bind her daughter’s estate in a settlement cannot bind the estate to an attorney’s fee contract, particularly when such a contract would have to be, but was not, approved by the chancery court. See UCCR 6.12. In Carpenter, 58 So. 3d at 1163 (¶19) (citation omitted & emphasis added), the supreme court reiterated its longtime holding that:
Infants and persons of unsound mind are disabled under the law to act for themselves. Long ago it became the established rule for the court of chancery to act as the superior guardian for all persons under such disability. This inherent and traditional power and protective duty is made complete and irrefragable by the provisions of our present state constitution. It is not competent for the Legislature to abate the said powers and duties or for the said court to omit or neglect them. It is the inescapable duty of the said court and[/]or the chancellor to act with constant care and solicitude towards the preservation and protection of the rights of infants and persons non compos mentis. The court will take nothing as confessed against them; will make for them every valuable election; will rescue them from faithless guardians, designing strangers, and even from unnatural parents, and in general will and must take all necessary steps to conserve and protect the best interest of these wards of the court. The court will not and cannot permit the rights of an infant to be prejudiced by a waiver, or omission or neglect or design of a guardian, or of any other person, so far as within the power of the court to prevent or correct. All persons who deal with guardians or with courts in respect to the rights of infants are charged with the knowledge of the above principles, and act to the contrary thereof at their peril.
See also Union Chevrolet Co. v. Arrington, 162 Miss. 816, 826-27, 138 So. 593, 595 (1932) (original source) …
You can take away from that that there are no shortcuts in obtaining a release that is binding on a minor. You can either: (1) get the disabilities of minority removed, which you will likely find to be a hard sell; or (2) have a guardian appointed, who can petition the court to approve an on-the-record minor’s settlement; or (3) present the matter as a minor’s settlement not requiring a guardianship, if the settlement amount is below the statutory amount and the chancellor finds it to be in the child’s best interest. That’s it. The parents can not bind the child acting in their capacities as parents without court approval.
Another feature of this case is that both parents hired their own attorneys to take legal action for the benefit of Lacey before a guardianship was established, and neither had their contract approved in advance by the court. The trial court rejected Ms. Sloan’s attorney’s contract, which called for 33 1/3% of the settlement, and approved that of Mr. Wilhite for 25% The chancellor also reduced Sloan’s attorney’s quantum meruit claim to $2,500, despite that she claimed to have invested 125 hours in the case. The COA affirmed
You can read the COA’s rationale for yourself. What is important here is that you appreciate that when you go out on a limb without court approval in a case such as this, you run the risk of recovering nothing or a greatly reduced fee. UCCR 6.12 clearly lays out what is required. Here it is, broken down point by point for clarity:
- Every petition by a fiduciary or attorney for the allowance of attorney’s fees for services rendered shall set forth the same facts as required in Rule 6.11, touching his compensation, and if so, the nature and effect thereof.
- If the petition be for the allowance of fees for recovering damages for wrongful death or injury, or other claim due the estate, the petition shall show the total amount recovered, the nature and extent of the service rendered and expense incurred by the attorney, and the amount if any, offered in compromise before the attorney was employed in the matter.
- In such cases, the amount allowed as attorney’s fees will be fixed by the Chancellor at such sum as will be reasonable compensation for the service rendered and expense incurred without being bound by any contract made with any unauthorized persons.
- If the parties make an agreement for a contingent fee the contract or agreement of the fiduciary with the attorney must be approved by the Chancellor.
- Fees on structured settlements shall be based on the “present cash value” of the claim. [Emphasis added]
Before you go crashing off into a case involving a minor’s interest, think through what you are being called on to do, and cover your bases. If you don’t, you might find, much to your chagrin, that you have donated a lot of free work to the youngster.
Checklists, Checklists, Checklists
August 12, 2014 § 11 Comments
You can skip over this post if you’ve been paying attention to this blog for any appreciable length of time.
For you newcomers and oblivious long-timers, you need to know and appreciate that proving many kinds of cases in chancery court is a matter of proving certain factors mandated from on high by our appellate courts. I’ve referred to it as “trial by checklist.”
If you don’t put on proof to support findings of fact by the chancellor, your case will fail, and you will have wasted your time, the court’s time, your client’s money. You will have lost your client’s case and embarrassed yourself personally, professionally, and, perhaps, financially.
I suggest you copy these checklists and have them handy at trial. Build your outline of the case around them. In your trial preparation design your discovery to make sure that you will have proof at trial to support findings on the factors applicable in your case. Subpoena the witnesses who will provide the proof you need. Present the evidence at trial that will support the judge’s findings.
If the judge fails to address the applicable factors in his or her findings of fact, file a timely R59 motion asking the judge to do that. But remember — and this is critically important — if you did not put the proof in the record at trial to support those findings, all the R59 motions in the world will not cure that defect.
Here is an updated list of links to the checklists I’ve posted:
Income tax dependency exemption.
Modification of child support.
Periodic and rehabilitative alimony.
And here are two checklists that will help you in probate matters:
What has to be Re-addressed in an Equitable Distribution Remand?
August 11, 2014 § Leave a comment
When equitable distribution is reversed and remanded for a do-over, alimony has to be redone also, because the two are inextricably intertwined; as equitable distribution expands, alimony contracts, and vice versa.
But what about child support?
The COA’s decision in Rodrigue v. Rodrigue, handed down July 29, 2014, reminds us that child support and attorney’s fees have to be revisited, as well:
¶47. Deidi argues that the chancellor committed error in the computation of child support and by not awarding her attorney’s fees. As set forth above, in Lauro [v. Lauro, 847 So.2d 843, 850 (¶17) (Miss. 2003)], the Mississippi Supreme Court determined that since the case was remanded for further consideration of equitable division, the chancellor should be instructed “to revisit the awards of alimony and child support after he has properly classified and divided the marital assets.” Lauro, 847 So.2d at 850 (¶17). Thus, since this case has been remanded for further consideration of equitable division of assets and alimony, on remand, the chancellor will have all the tools of marital dissolution available: equitable division, lump-sum alimony, and periodic alimony. Likewise, the chancellor may revisit the awards of child support and attorney’s fees.
I was aware of the language in Lauro that requires the remand court to look not only at equitable distribution, but also at alimony and any child support. I was unaware that the remand also embraced attorney’s fees. It is logical, though, that the judge on remand, after completing a re-analysis of the division of the marital estate, and after the award of alimony and child support, could arrive at a different conclusion about ability to pay attorney’s fees.
An interesting feature of this case is that the chancellor did not treat a private-school debt, apparently for tuition, as a marital debt. It’s pure speculation on my part, but I will bet that stems from the chancellor’s confusion over how exactly to treat private school expenses. It’s a confused area, with cases going every which way. If we need some bright line guidance in an area, private school expenses is one.
Attorney’s Fees in a Modification Case
March 10, 2014 § Leave a comment
As a general proposition, I think most family lawyers would agree that it’s out of the ordinary for there to be an award of attorney’s fees in a modification case absent a companion claim for contempt.
But it’s not unheard of, and it does happen.
Take, for instance, the recent COA decision in Collins v. Collins, handed down February 25, 2014. In that case, the chancellor had awarded Myra Collins $4,234.74 in attorney’s fees after she prevailed in her quest to obtain an upward modification of separate maintenance. Her ex, Arthur, appealed, arguing that it was erroneous for the chancellor to award attorney’s fees in a modification case when there was no allegation of contempt, and there was no finding of her inability to pay.
Judge Griffis addressed the issue for the court:
¶16. In Labella v. Labella, 722 So. 2d 472, 475 (¶12) (Miss. 1998), the supreme court found that one of the parties “clearly established an inability to pay because she was unemployed at the time of trial and her only income was in the form of unemployment benefits.” The court noted that “[t]he general rule is that if a party is financially able to pay his attorney’[s] fees[,] he should do so, though this is a matter which is entrusted to chancellor’s sound discretion.” Id. at (¶13) (quoting Anderson v. Anderson, 692 So. 2d 65, 74 (Miss. 1997)). Also, in Hammett v. Woods, 602 So. 2d 825, 830 (Miss. 1992), the supreme court ruled that “[w]here the record shows an inability to pay and a disparity in the relative financial positions of the parties, we find no error” in awarding attorney fees. Here, the lower court found that “[Myra] has proven that she has an inability to pay and that [Arthur] has the much, much greater ability to pay attorney’s fees, and therefore an award of fees is appropriate in this modification proceeding.”
Does this open the door to an attorney’s fee award in every modification case? Probably not, for a couple of reasons. First, this is a separate maintenance case, and, if you think about it, separate maintenance is in effect an ongoing temporary divorce order. Since its purpose is to provide the wife with as close as possible to her reasonable standard of living without rendering the husband destitute, it stands to reason that her standard of living should not be further reduced by having to pay attorney’s fees to mantain that standard of living. To deny her attorney’s fees wouold defeat the purpose. Second, it has always been the law that, although an award of attorney’s fees is not favored in a modification case, it is appropriate where it would impose an unfair burden on the prevailing party, as where there is a clear inability to pay, or the lack of an award would impoverish children, etc.
This case is not an outlier. Rather, it demonstrates that the chancellor has considerable discretion both as to whether to award a fee, and as to its amount.
Another Deference Decision with an Appellate Attorney’s Fees Point
February 5, 2014 § 2 Comments
The COA’s decision in Proctor v. Proctor, handed down January 28, 2014, is one of those cases where the appellate court deferred to the chancellor’s discretion, both on application of the Ferguson factors in equitable distribution, and on the Armstrong factors vis a vis alimony.
I talked about deference in a previous post. Proctor is an illustration of how stout the trial judge’s judgment can be when she invokes the applicable factors and her decision is supported by substantial evidence in the record. You might want to pay particular attention to Judge Barnes’ opinion at ¶ 19, where she points out that equitable division need only be equitable, not equal. That seems to be a concept that many lawyers and litigants do not grasp.
Another point that bears mention is at ¶ 36, where Judge Barnes addresses Ms. Proctor’s request for an award of attorney’s fees on appeal:
Donna makes a cursory request that this Court award her attorney’s fees on her appeal, in an amount equal to one-half of the amount that was awarded by the chancery court, according to Grant v. Grant, 765 So. 2d 1263, 1268 (¶19) (Miss. 2000), and Durr v. Durr, 912 So. 2d 1033, 1041 (¶30) (Miss. Ct. App. 2005). The distinguishing feature of these cases, however, is that the appellee was requesting attorney’s fees for defending the case on appeal, not the appellant prosecuting the appeal, unsuccessfully. Therefore, we deny Donna’s request.
Further on the Changing Landscape of Legal Fees
January 10, 2014 § 1 Comment
The subject of limited scope representation has been touched on here. Limited scope affects fees, but even more to the point is that the construction of legal fees is undergoing a metamorphosis in reaction to changing economics.
The following is from a 2013 ABA publication …
The Great Recession has ushered in an era of alternative fee arrangements, according to a recent article in GPSolo magazine. Every year, more clients and lawyers experiment with AFAs, and some skeptics become converts.
A recent report by Altman Weil shows that in 2009 only about 20 percent of the lawyers surveyed thought that nonhourly billing had become a permanent trend within the profession. By 2012 that number had increased to 80 percent.
The report went on to observe that AFAs were being employed by almost all firms responding to the survey. Yet a substantial number of these firms also reported lower profitability when using AFAs. This suggests that law firms and clients have not yet figured out how to turn AFAs into win-win propositions. If they do not, for financial reasons alone, it is likely that firms will embrace AFAs only if required by clients.
In this economy, at least for the short term, it appears that law firms will be forced to agree to alternative fee arrangements if clients demand those arrangements. Indeed, because of client interest, almost half of the firms surveyed by Altman Weil reported a year-to-year increase in the amount of nonhourly billing, as measured as a percentage of revenues.
As a result of the change in dynamics, law firms and clients have created numerous alternatives to the billable hour when pricing legal services. The most common are outlined below:
- Contingent fees. This “old standby” has long been an alternative for hourly billing. A contingent fee is dependent on the results obtained. This obviously requires a clear understanding of what the results are. In personal injury cases, this determination is usually easy. It is a percentage of the amount recovered for the injuries sustained by the client. In other types of cases, however, defining successful results can be problematic.
- Reverse contingent fees. A reverse contingency allows for compensation based on an avoidance of exposure to liability. Although in some cases it may be difficult to determine the amount of exposure escaped, it is not impossible. Most lawyers know how to place a value on their cases, and defense counsel relying on both personal knowledge and public reports of damage awards in their jurisdiction have become adept at assessing the likelihood of both liability and the amount of damages.
- Fixed fees and flat fees. A fixed or flat fee is the price that a firm charges no matter how many hours its lawyers spend on a matter. A fixed fee may be the total fee for the engagement or may apply to discrete components of a matter, such as fixed fees for discovery, pretrial motion and the actual trial.
- Blended rates. Blended hourly rates apply to all hours billed on a matter. The blend includes the lower rates of associates and the higher rates of partners. Unlike capped fees or fixed fees, it does not provide the client with budgeting predictability.
- Percentage fees. A popular alternative fee arrangement is the percentage fee, either constant or graduated, and based on the amount of the transaction. Some courts allow fees to be determined by the value of the estate being probated. The fees for many bond issues are likewise determined by the percentage of the amount of bonds sold.
- Combined approaches. Many alternative fee arrangements combine various approaches. Some firms create fee schedules based on a low blended hourly rate plus a contingency. Other firms base their fees on all the factors set forth in the ABA Model Rule of Professional Conduct 1.5. Alternative fee arrangements may even include an amount retrospectively set, based on the value received by the client.
GP Solo is a publication of the Solo, Small Firm and General Practice Division.
Some of these fee arrangements, such as contingent and percentage fees, have only limited applicability in chancery, due to MRPC 1.5(d)(1).
The article seems to imply that these “alternative” billing arrangements are interim, during the economic downturn, and that the old practices will be restored when prosperity is restored. I’m not so sure. Everyone likes to save money, and legal clients are not exempt from that desire. As new fee arrangements come into play, clients will become accustomed to leaner, more efficient, more economical legal practices and fees. It will be hard to return to the old ways.
Adapt and survive. Lawyers who cling to the old ways will be eclipsed by those who are willing to adopt more efficient ways of doing business. Lawyers who proudly proclaim that they don’t even know how to turn on a computer, and who rely on high-overhead staff to do work they could easily do themselves, will not be competitive in this 21st-century environment. Clients don’t want to pay the higher tariff for 19th-century-style representation when 21st-century technology affords cost-saving possibilities. Thus the pressure for what the article calls “alternate” fee arrangements, but what I would refer to as the new reality.
Thanks to attorney Marcus D. Evans for the raticle.
Proving Attorney’s Fees Requires Some Proof
December 4, 2013 § 3 Comments
Shain (husband) and Dana (wife) Speights submitted an irreconcilable differences divorce by consent. After a hearing, the chancellor awarded Dana custody, ordered Shain to pay child support, and awarded Dana $2,500 in attorney’s fees, among other relief.
Shain appealed, and one of his grounds was the award of attorney’s fees.
Judge James, for the COA majority, in an opinion rendered November 5, 2013, set out the standard:
¶15. Next, Shain argues that the chancellor erred in awarding $2,500 in attorney’s fees to Dana. “The award of attorney[’s] fees in divorce cases is left to the discretion of the chancellor, assuming he follows the appropriate standards.” Creekmore v. Creekmore, 651 So. 2d 513, 520 (Miss. 1995) (citing Adams v. Adams, 591 So. 2d 431, 435 (Miss. 1991)). “Attorney[’s] fees are not generally awarded unless the party requesting such fees has established the inability to pay.” Id. (citing Dunn v. Dunn, 609 So. 2d 1277, 1287 (Miss. 1992)) …
We’ve talked here before about the standard that the trial court is required to apply in order to justify an award of attorney’s fees. We’ve also addressed the steps you need to take to prove attorney’s fees. It’s not complicated. It just requires a little preparation and documentation.
In Speights, though, the record was bereft of even the most elemental proof to support the award. As Judge James put it:
¶16. Although Dana offered testimony regarding her lack of income, she did not offer any evidence of the amount of attorney’s fees she incurred. The record shows that Dana’s attorney briefly mentioned her intention to offer evidence of attorney’s fees at the conclusion of trial, but she never did so. At no time during trial did Dana or her attorney provide the chancellor with evidence of attorney’s fees. Thus, it is unclear to this Court how the chancellor arrived at a figure of $2,500. Further, there is no financial statement from Dana in the record to substantiate her inability to pay.
¶17. “An award of attorney’s fees should be ‘fair and should only compensate for services actually rendered after it has been determined that the legal work charged for was reasonably required and necessary.’” Jordan, 105 So. 3d at 1135 (¶20) (quoting Dunn, 609 So. 2d at 1286)). It has long been the practice of trial courts to apply the factors in McKee v. Mckee, 418 So. 2d 764, 767 (Miss. 1982), in awarding attorney’s fees. Although it is not necessarily reversible error for the chancellor not to make an on-the-record analysis of the McKee factors [footnote omitted], without any evidence of fees in the record, we have absolutely no way of determining whether the chancellor’s award was reasonable.
A point raised in Judge Carlton’s dissent on the attorney’s fee issue is that the trial judge is empowered by MCA 9-1-41 to take judicial notice of a reasonable attorney’s fee, so that the chancellor’s decision should not be reversed. That is a code section that I called to your attention in a prior post.
The majority, however, rejected that approach. The majority opinion said, beginning in ¶18:
… The dissenting opinion also relies on Mississippi Code Annotated section 9-1-41 (Rev. 2002), which states:
In any action in which a court is authorized to award reasonable attorneys’ fees, the court shall not require the parties seeking such fees to put on proof as to the reasonableness of the amount sought, but shall make the award based on the information already before it and the court’s own opinion based on experience and observation; provided however, a party may, in its discretion, place before the court other evidence as to the reasonableness of the amount of the award, and the court may consider such evidence in making the award.
¶19. In the present case, the chancellor made insufficient findings and there is insufficient proof in the record for this court to determine whether the chancellor’s findings were fair and reasonable. Although the statute gives the court broad discretion, the award of attorney’s fees cannot be upheld by this court unless the record supports the award. An award of attorney’s fees may be sufficient in a simple matter before the court, where the award is based on the court’s experience and observation. However, in a case of this nature, where there are many billable hours that the court is unable to observe or lacks knowledge of, it is incumbent upon the party requesting fees to place before the court evidence as to the reasonabless of the amount of the award, so that the record as a whole can support the award of attorney’s fees. Because the chancellor’s award of $2,500 is not supported by the evidence, we reverse and remand this portion of the judgment for a proper assessment of attorney’s fees.
So here are a few points to walk away with:
- Notice that the statute only dispenses with proof of reasonableness, not with all proof whatsoever. In other words, once you have put proof into the record that you have expended 21 hours, and that your rate is $200 an hour, then the court may impose its own opinion as to whether it is reasonable. So proof of what you have done is essential to get you to the reasonableness issue.
- Why not take a few extra minutes and put on proof of the McKee factors? It’s not that hard. You can do it yourself, and you can even carry a script with you to the witness stand if you need it.
- Remember: in a divorce case, you must prove your client’s inability to pay before the chancellor can even get near the issue of reasonableness. That would seem to require, at a scant minimum, a Rule 8.05 financial statement. Your client’s naked assertion that she can’t afford her attorney’s fees is most likely not going to cut it on appeal, and maybe not at trial.
This is yet another case where the chancellor did the best he could with the proof he had. A little more preparation and attention to detail, and this award of attorney’s fees would have been bulletproof on appeal.
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