### No. 84-287 IN THE SUPREME COURT OF THE STATE OF MONTANA 1985



### E. L. McDANOLD, Claimant and Appellant,

-vs

### B.

### N

# .TRANSPORT, INC.

## , Employer- Defendantand Respondent.

APPEAL FROM: Workers' Compensation Court, The Honorable Timothy Reardon, Judgepresiding.

COUNSEL OF RECORD:

ForAppellant: William T. Kelly, P.C.; Halverson, Sheehy & 

### Prindle, Billings, Montana GeneA. Picotte, Clancy,Montana For Respondent: 

### Utick, Grosfield & 

### Uda, Helena,Montana Thomas Spence,Billings,Montana

Filed: 

### Submitted on Briefs: Feb. 28, 1985 Decided: June 27, 1985 

## JUN2 '.

## 1985

- ,.- 

### ClerkMr. JusticeFred J. Weber delivered the Opinion of the Court. This 

### is an appeal from the decision of the Workers' Compensation Court limiting claimant's fee tothe contingent fee agreement without regard to the 

### time records of his counsel. We

### reverse and remand. The underlying Workers' Compensation proceeding was commenced before the Workersf Compensation Court in 1979. Two appeals tothisCourt followed. McDanold 

### v. B. N. Transport, Inc. (Mont. 1981), 634 P.2d 175, 38 St.Rep. 1466; McDanold v. B.N. Transport, Inc. (Mont. 1984), 679 P.2d 1188, 41St.Rep. 472. Following appeal of the lower court determination in the second case that the total amount of weekly benefits was $15,452.70, thematterwas remanded fordetermination of attorneys fees and costs. The issuespresented on appeal are: 1. Was 

### it reversible error for the Workers' Compensation Court to enter 

### its order determining attorneys fees without allowing claimant atleast five days 

### timetorespond tothedefendant's memorandum? 2. Was 

### it reversibleerrortofixthe attorneys fees at the amount of the contingent fee contract without regard to attorneys

## ' affidavits? By order dated May 4, 1984, the Workers' Compensation Court determined claimant's entitlement to temporary total disability and permanent partial disability at a total of $15,452.70. The order further stated: "Further, claimant's counsel shall, within 10 days of receipt of this Order, provide the Court with a Request forReasonable Costs and Attorney Fees, and Proposed Order. Said requests shall include a statement of itemized costs, calculations concerningthe determination of a reasonable attorney fee, and a copy of the claimantf

### s attorney fee agreement. Counsel sha1

### 1 simultaneously provide defendant's counsel with copies of these documents."Pursuant tothe order, claimant's attorney filed a copy of the attorney-client agreement under which claimant agreed topay his attorney a contingent fee, based upon the followingprovision: "In theevent the case should be appealedby either the defendant insurance company of the Workmen's Compensation Division, orthe CLIENT, asthe situation may occur, to the district court or the Supreme Court of the State of Montana, then and in such event, said ATTORNEY shall receive ashis fee a sum equal to one-third (1/3) of all sums recovered. l1 In addition, sworn affidavits 

### were filed, the first of which established that one firm of attorneys worked on the

case for

### a total of 239.06 hours, resulting in claimed attorneys fees of $18,684.15. The other affidavit established a total of 119.75 hours worked by another attorney and claimed

a fee of $10,777.50. The affidavits contained detailed statements of the 

### time records converted tomoney based upon the routine hourly rate of the attorney involved. The affidavits contained no further factual explanation with regard tothe nature of the 

### services performed. The affidavits did not address the reason why fees should be determined on an hourly basis instead of under the contingent fee agreement. The defendant filed

### itsobjection toany award of attorneys fees in 

### excess of the contingent fee agreement. By order dated June 19, 1984, the court made the following findingsand conclusions: "The claimant's attorneys have submitted a copy of their contingent fee agreement, which provides for one-third (1/3) of all sums recovered upon a successful appeal to the Montana Supreme Court, plus reasonable costs incurred. They have also submitted a statement of the hours compiled in pursuing thismatter and thecosts incurred. "There exists a rebuttable presumption that the attorney fee due claimant's attorney under the continqent fee aqreement 

### is a reasonable fee. Wight

# ;. Hughes ~ivestock, Inc., Mont. I 664 p.Td 303, (1983)

# ."Neither party has filed a Motion for Evidentiary Hearing Regarding Reasonableness of Attorney fees based on the contingent fee agreement and an award of 

### costs based on claimant's attorney's statement of costs. "Itappears from therecord that thedefendant paid $8,890.00 in temporary total disability benefits and $2,083.68 in permanent partial disability benefitsbefore a controversy arose. Following the claimant's attorneys

## ' efforts, and a successful appeal to the Montana Supreme Court, that Court determined that temporary total and permanent partial entitlement totaled $15,452.70. 

# .. [TIhe claimant's attorneys are entitled to an award of attorney fees based on the $4,479.02 difference. 

# . .

"The instant case 

### is one inwhich the attorney fee award appears inadequatewhen compared tothe total number of hours reported by claimant's attorneys. However, no Request for Evidentiary Hearing wa

### s received, and no evidence was presented (besides the lone statement of hours) suggesting a departure from the presumed reasonableness of the contingent fee agreement. Therefore, an attorney fee award under the contingent fee contract, and pursuant to Wight, supra., shallgovern. "Based solely on the difference between the total amount the Supreme Court awarded and the amount the defendant previously paid the claimant, the claimant's attorneys are entitled to an award of $1,492.01 under the 

### terms of the contingent fee agreement. (33 1/3percent 

### times $4,479.02, equalling $1,493.01)

# ." Claimant's attorneys appeal fromthe foregoingorder.

Was it reversible error for the Workers' Compensation Court to enter 

### its order determining attorneys fees without allowing claimant at least five days 

### time torespond tothe defendant's memorandum? Claimant's attorneys point out that the administrative rules of the Workers' Compensation Court do not provide for post-trial motions, so there is no specific provision which would have allowed them torespond tothe objection to fees filed by the defendant. Claimant argues that under Rule 2.52.316, A.R.M., pertainingtopre-trial motions, a fivedayperiod should have been allowed comparable tothe five days allowed fora replybrief on pre-trial motions. The defendant repliesthatthere 

### isno requirement under the order togrant any additional 

### time for such a reply and contends that this 

### ismerely a "red herring." The defendant points out that, under Sorenson 

### v. Drilcon, Inc. (Mont

# . 1983), 664 P.2d 320, 40 St.Rep. 829, even after the entry of the order setting attorneys fees, claimant's attorneys 

### were free 

### to request an evidentiary hearing. They have failed to do soeven up tothepresent 

### time. In Sorenson, following theentryby theWorkers' Compensation Court of an order fixing attorneys fees, claimant's attorney requested a hearing and an opportunity to present evidence tojustify her fee. This Court reversed the lower court's denial of the motion for a hearing and remanded the matter to the lower court with instructions to hold an evidentiary hearing regarding the attorney's fee. We held that 

### it was an abuse of discretion not 

### to allow the hearing. In the instant case, the claimant failed 

### to request an evidentiaryhearing. In the absence of any rule requirement,



### we conclude that the lower court did not 

### err in denying claimant the opportunity to file a response 

### to the defendant's memorandum.

Was it reversible errortofixthe attorneys fees atthe amount of the contingent fee contract without regard to the attorneys' affidavits? Both counsel relyon Wight v. Hughes Livestock Co., bnc. (Mont. 1983), 664 P.2d 303, 40 St.Rep. 696, which discusses the elements tobe considered in determining the reasonableness of contingent fee contracts and the amount of attorneys fees to be awarded. Citing an Idaho Supreme Court decision,this Court adopted several factors to be considered by the judge ortheDivision: 

### "[I]n determining a reasonable attorneys fee

# . .. [the judge or the Division] must engage in a balancing process and consider on contingent basis the following factors: '(1)The anticipated time and labor required to perform the legal serviceproperly. 

## '(2) The novelty and difficulty of legal issues involved inthematter. 

## '(3) The feescustomarily charged for similar legal services. 

## '(4) The possible total recovery if successfu1. 

## '(5) The 

### time limitations imposed by the client or circumstances of the case. 

## '(6) The nature and length of the attorney-client relationship. (7) The experience, skill 

### and reputation of the attorney. '(8) The abilityof theclienttopay forthe legal 

### services rendered. 

## '(9) The risk of no recovery.' 629 P.2d at 661. "Not mentioned by the Idaho court in Clark v. Sage, supra, but surely a factor tobe considered: 

### isthe market value of the 

### Iawyerl

### s services atthe 

### time and place involved. Indeed 

### it may be said that in every retainer contract, be 

### it personal orpublic, hourly, fixed fee or contingent fee, each such contract 

### isinrealitybased on themarket value of the lawyer's services. With the added factor of the market value of the lawyer's services at the 

### time and place involved, we adopt the factors 

### set out by the Idaho Supreme Court tobe considered by Montana

## 's Workers

## ' Compensation judge orthe Division in determining the reasonableness of contingent fee contracts and the amount of attorneys fees tobe awarded tosuccessful claimants." Wight, 664 P.2d at311-12, 40 St.Rep. at706. Under Wight, the lower court was required to consider the foregoing in 

### its determination of the reasonableness of the contingent fee contract and the amount of attorneys fees to be awarded. In discussingWight, defendant emphasizes theholding by the court with regard tothe strongpresumption in favor of the contingent fee contract: "In considering Wight's contingent fee contract with his attorney, the Workers' Compensation judge should accept the approved contract as having a strongpresumption in

### its favor. If thejudge does not seta fee i.n accordancewith the contingent fee contract, he shall state with particu3arity his reasons in writing, based upon strongcountervailing evidence, why the contingent fee contract 

### isnot followed by him, and precisely what w~ight he accorded tothe contingent feecontract." Wight, 664 P.2d at312, 40 St.Rep. at707 (emphasis added). Defendant's counsel contends that in failing 

### to request

a hearing and failing to 

### set forth strong countervailing evidence, claimant's attorneys have failed to discharge the burden which 

### is placed upon them. As a result, they argue thatthe lower court ordermust be affirmed. Claimant's attorney argues that under Wight, claimant

was not required torequest an evidentiaryhearing. Claimant attempts 

### to place the duty upon the court to extend the opportunity for hearing once the controversy arises. Claimant further argues that under Sorenson, which granted a claimant a right to an evidentiary hearing, such a hearing must be held. Respondent has attached to 

### its brief a copy of the present administrative rules in effect for the Workers' Compensation Court. These rules provide the basis for a hearing upon the request of a party 

### to determine the reasonableness of attorneys 

### fees. Those rules of coursp are not applicable in the present case. However, they do indicate a reasonable procedure forthe determination of attorneys fees. Based upon Sorenson, claimant properly could have 

### requested a hearinq before the court following 

### its adverse order of June 19, 1984. The record does not disclose the

reason for claimant's failure tomake that type of a motion. Claimant's evidence contained significant contradictions. On the one hand, the contingent fee agreement justified an award 

### of $1,493.01 in attorneys fees. On the other hand, the 

### time records, if accepted on their face, would justify an award inexcess of $28,000. The evidence further demonstrates that the attorneys 

### were successful in securingapproximately $5,000 for the claimant. Before 

### it could adequately compare the evidence submitted, the Workers1 Compensation Court required substantial additional evidence

on the various Wight factors, such as the anticipated time and labor required, the novelty and difficulty of the legal issues, and the fees customarily charged for similar 

### services. In addition, 

### it would have been appropriate for both sides tohave submitted evidence of the market value of the lawyers1 servicesunder theseunusual circumstances. While 

### it might have been appropriate toaffirm the lower court inthe absence of 

### more adequate evidence, undek allthe circumstances

### we have concluded 

### it isjust toallowa hearing before theWorkers' Compensation Court. While both sidesmay present additional evidence atthat hearing, the claimant1 

### s counsel have the primary obligation 

### to present appropriate evidence from which the court may determine a reasonable attorneys fee. We reverse the decision of the Workers1 Compensation Court. This cause 

### is remanded for such further hearing and consideration as the court may deem advisable in accordance with thisopinion.

We concur: