No. 86-324

INTHE SIJPREME COURT OF THE STATF OF MONTANA
1986

JANICE PAULSEN, Claimant and Appellant,

-vsBONANZA STEAK HOUSE, Employer,
and

CRAWFORDAND COMPANY,
Defendantand Respondent.

APPEAL FROM: TheWorkers' Compensation Court, TheHonorable TimothyReardon,Judge presiding.

COUNSELOF RECORD:

ForAppellant:
Kelleher Law Office;Robert L Kelleher,

### Jr,Billings, Montana

For Respondent: Crowley Law Firm;William J Mattix, Billings,Montana

Submitted on Briefs: Oct. 23, 1986 Decided: 

### January 27, 1987

Clerk(1) The amount of an attorney's fee assessed against an employer or insurer under 39-71-611 or 39-71-612 must be based exclusively on the time spent by the attorney in representing the claimant on the issuesbrought before the workers' compensation judge. The judge shall determine a reasonable attorney fee and assess costs. He is not hound by the documentation submitted to him. The hourly fee the judge applies to the time spent must be based on the attorney's customary and current hourly fee for legalwork performed in this state. (2) This section does not restrict a claimant and an attorney from entering into a contingency fee arrangement under which the attorney receives a percentage of the amount of compensation payments received by the claimant because of the efforts of the attorney. However, an amount equal to any fee and costs assessed against an employer or insurer under 39-71-611 or 39-71-612 and this sectionmust be deducted from the fee an attorney isentitled to from the claimant under a contingency fee arrangement. Attorney Norman Grosfield of Helena authored the bill that subsequently became S 39-71-614, MCA. Grosfield primarily practices in the workers' compensation field and was chief legal counsel and then administrator of the Workers' Compensation Division from 1975-79. During his tenure as administrator, Grosfield was directly involved in the assessment of attorney fees against insurance carriers. Assessments at that time were made on an hourly basis and

were in linewithwhat the Division thoughtwas the customary fee charged by the legalprofession in the state ofMontana. Grosfield testified that the hill was aimed at addressing this Court's decision inWight

### v. Hughes Livestock Co., Inc.

(Mont. 1983), 664 P.2d 303, 40 St.Rep. 696. In wight,attorney fees were assessed against an insurance carrier based on the time incurred by the claimant's attorney and a proper hourly amount as determined by the Workers' Compensation Court. We found that the procedure used by the Workers' Compensation Court was improper and held that the court should base the assessment of attorney fees on the contingency fee contract between the claimant and his attorney. Grosfield's intentwas to reinstate the procedure employed prior to Wight in an effort to hold down the costs of workers' compensation and to prevent a severe backlash by the legislature. As to the hourly fee to be applied, subsection (1) of § 39-71-614,MCA, says that "Thehourly fee the judge applies to the time spent must be based on the attorney's customary and current hourly fee for legal work performed in this state." Grosfield testified that the statute granted the workers' compensation judge an opportunity to calculate the appropriate hourly amount based on the judge's knowledge of the charging of legal fees in the state of Montana. Grosfield's remark isnot an accurate reflectionof the final version of the statute. The fee is to be based on what the individual attorney has established as his customary and currenthourly fee,not onwhat is recognized as a reasonable hourly fee by lawyers in the state of Montana. We adopted this view in Gullettv. Stanley Structures (Mont. 1986)) 722 P.2d 619,43 St.Rep. 1335. As expected, Grosfield encountered several questions about the bill's effect. We refer to Grosfield'sdepositi-on testimony. Q. The third question raisedwaswhether the bill would prevent a claimant's attorney fromobtainingawindfall fee in cases involving large amounts of money.What prompted you to raise and address that question?

A. My concern was that Workers' Compensation cases can, anymore, involve substantial amounts of money; and with larger and larger awards, if the Wight decision continued in effect it would amount to larger and larger assessments of attorney fees against insurance carriers, which would have the ultimate effect of substantially increasing the costs to the employer in the State of Montana, which costs are rising, in my opinion, inordinately. That was the primary intent of the bill, to prevent the substantial assessments of attorney fees against insurance carriers in the larger cases. Q. Does the bill prevent a claimant's attorney in such cases from collecting a contingency fee?

A. No. Q. Why is that?

A. Thebill specifically provides that a claimant's attorney may charge a fee based on the contingency contract, but any amount awarded or assessed againstan insurance carrier shall be deducted from the total attorney fee that is received by the attorney. 

### Q. The fourth question that you raised and addressed is whether the bill would assist claimants involving small amounts of disputedmonies. Why, again,did you raise and address that question?

A. There are situations in which there are relatively minor amounts of money involved: and in fact in the articular 

### ---- case befbre the Court, 

### - I wouli consider that articular case involvin a relativLy small amount of money. 

## BUE there are situations wrere insurancecarriers refuse to pay the small amount in medical costs, etc.; and if one were to strictly apply the Wight case, it would have the reverse effect in assisting claimants in receiving proper representation. There are appropriate situations where I can see the award of attorney fees against an insurance company could even be larger than what the actual recovery was, and I've had situations like that. So in granting an attorney fee based on an hourly amount, - it encourages attorneys to take those 

### - 

### -- issuesbefore

## - the Court if theyknowthat 

### ---- they are going to 

### get something other than tx contingency fee amount if they 

## -- are successful. (~rnphzs added.)-

In this case, claimant's attorney, Robert Kelleher, Jr., failed to establish that his customary and current hourly feewas $125. Kelleher testified thathe setthe $125 hourly fee in direct response to the enactment of S 39-71-614, MCA. In the absence of a standard by which to set Kelleher's fee under the statute, the Workers' Compensation Judge concluded that a $70 hourly fee was appropriate: The $70 per hour figure yields an attorney fee in this case of $3,318.50 ($70 times 54.55 hours)

# . This amount is roughly three times greater than what claimant's counsel could have expected to earn under a contingency fee agreement. Under a contingency award, claimant's counsel would have earned $20.78 per hour. Clearly, this amount would not adequately compensate him for the energy expended in pursuing this matter. However,it isan indication that the $70 figure is a reasonable one, and that the $125per hour fee requestedby claimant's counsel would not be justified under the factsof this case.The judge did the best he could with the situation presented to him. In future cases, the hourly fee the Workers' Compensation Judge applies to the time spent should be based on the individual attorney's current and customary hourly feeas establishedby that particular attorney. Affirmed.



### I

We concur: A

JusticesMr. JusticeJohnC. Sheehy,specially concurring:

I concur with themajority and add the following: In this case, the Workers' Compensation Court accepted,

or at least relied heavily on, the testimony of Norman Grosfield, that the usual and customary fees assessed in Montana by Montana lawyers was the yardstick to which the Workers' Compensation Court was bound in fixing the attorney fees inthis case. In leading the Workers' Compensation Court to use the usual and customary fees of other lawyers, Grosfield misinterpreted or misapprehended what the legislature intended in adopting the 1985 revisions to § 39-71-612,MCA. Grosfield testified in deposition before the Workers' CompensationCourt: The intent in drafting the bill and the intent as expressed by myself to the legislature as the primary authorwas exactly the opposite,to correct what Iperceived as aproblem intheWight decision and to reinstate the system that existed previously. That would provide for an assessment of attorneys feesbased on customaryattorneys fees charged inMontanaby Montana lawyers. GrosfieldDeposition, at 21. Whatever Grosfield intended in drafting the bill, his intentionwas not followedby the legislature. Instead,the legislature eliminated from the bill any consideration of hourly fees recognizedby the legal profession. The 1985 amendments to 5 39-71-612,MCA, are contained in Ch. 575, Laws of Montana (1985). The amendments originated in H.B. 778, authored, as we are told, by Grosfield, who was intent that contingent attorney fees contracts should not be thebasis of attorney fees awards in compensation cases,especially largeawards.The central paragraph of Grosfield's bill as first proposed and introduced in the House during the 1985 Legislature Session said:



# . . . (1) The amount ofan attorney's fee assessed against an employeror insurer under 39-71-612must be based exclusively on the time spent by the attorney in representing the claimanton the issues brought before the workers' compensation judge. The attorney must document the time spentand give the documentation to the judge. 

## he judge shall determine a reasonable attorney fee and assess costs. He is not bound by the documentation submittedtohim. Thehourly fee the judge applies to the time spentmust be based on a customary and 

## -- -- current hourly fee recognized by the legal

rofession as a reasonable hourly fee for legal 

### -- Eork perfor@d-in

### -- this state. (Emphasis added.)
IntroducedBill H.B. 778 (1985session). The language underlined above in Grosfield's proposed bill was not accepted by the legislature. It refused the concept of applying the usual and customary fees of other attorneys. Instead,the legislaturerevised the offered bill toread as follows:



# ... (1) The amount ofan attorney's fee assessed against an employer or insurer under 39-71-611 or 39-71-612 must be based exclusively on the time spent by the attorney in representing the claimant on the issues brought before the workers' compensation judge. The attorneymust document the time spent and give the documentationto the judge. The judge shall determin a reasonable attorney fee and assess costs. He is not bound by the documentation submittedtohim. Thehourly fee the judge applies to the time spent 

### -- must be based on the attorney's customaryand currenthourly fee for 

### -- legalwork performed in this state. -- ReferenceH.B. 778. The language underlined above is what the legislature inserted in place of the language that Grosfield had profferred. It is clearthat the legislaturerecognized thatthe matter of attorney fees charged by individual attorneys is largely subjective; that such fees vary from lawyer to lawyer; that factors in determining those fees include age, experience, ability, and the availability of the attorney to perform the kind of legal work involved. In construing statutes, the court must give effect to the legislativewill, ifpossible, and not defeat thatwill. State ex rel. School District No. 8 v. Lensman (1939), 108 Mont. 118, 88 P.2d 63. If no ambiguity exists in the statute, the letter of the lawwill not be disregarded under the pretext of pursuing its spirit. Vaughn & Ragsdale Company v. State Board of Equalization (1939),109Mont. 52, 96 P.2d 420. A court cannot give effect to supposed unexpressed intentions, in a legislativeact,merely to find

abasis fora certainconstructionof an act. Statev. J. C. Maguire Construction Company (1942),113Mont. 324, 125 P.2d 433. The function of the court with respect to statutory construction is to interpret the intention of the legislature, if at all possible, from the plain meaning of the words, and if the meaning of the statute can be determined from the language used, the court is not at liberty to add to or detract from the language of the statute. Montana Deaconess Hospital v. Cascade County

(1974),164Mont. 256, 521 P.2d 203. While it is a general rule that it is the duty of the court to ascertain the intention of the legislature, if possible, and construe the actwith referenceto that intention,it isequally true that the intentionmust be gathered from the language employedby the lawmakers and not from street rumors. State ex rel. Murray v. Walker (1922), 64Mont. 215, 228,210 P. 90. Nonetheless, theWorkers' Compensation Courtwas correct in deciding that Kelleher did not provide the court with adequate evidence on which to base his customary fee forthese cases. The legislaturecreated the dilemmaby adopting Grosfieldls bill, an anomaly and an impossibility for a lawyer whose compensation work is limited to representing claimants based on a contingent fee. As attorney Prindle testified in this case, it is impossible for a court to equate an hourly feebasis with a contingent fee basis. The two are simply not comparable. Itbehooves this Court then, in that situation, to give sustenance to the efforts of the legislature to limit fees by suggesting to the Workers' Compensation Court types of evidence that it should consider. The evidence on fees should be related solely to the attorney or firm handling the worker's claim. Pertinent factorstobe considered should includethe experienceof the attorney in the field,and the complexity of the claim. The attorney should document for the Workers' Compensation Court the claimedhourly feeby supplyingto the court figures that would represent his annual overhead in handling legal business; his justifiably expected annual income from the legal business; and the number of annual billable hours that the attorney normally would apply to the legal business. Using such figures, the Workers' Compensation Court could determine, in its discretion, a proper hourly fee to be awarded. Othermethods or evidencemay suggest themselves to the Workers1 Compensation Court or to attorneys, but in all
cases, the methods or evidence should relate to the "attorney's customary or current hourly fee" for his services. Evidence of what other lawyers charge is irrelevant to the inquiry. Norm's norm is not the norm in this case. 

# ---3

Mr. Justice Frank 

### B. I concur with

### J Mor ustirison, ce SheMr. JusticeWilliam E. Hunt, Sr. concurring:

I concur in the result reached by the majority and by Justice Sheehy in his special concurrence. But I am perplexed by what seems to be objection to considering the testimony ofNormanGrosfield,an experienced practitionerof Workers' Compensation law, who was counsel and later administrator of the Montana Workers' Compensation Division, the state agency that oversees the entire Workers' Compensation program in Montana. In addition to that experience,thewitness testified that since entering private practice, 80% of his work was and is Workers' Compensation lawprimarily representing claimants. Grosfield testified by deposition and was subject to cross-examination. His testimony was considered by the Workers' Compensation judgewho, in his analysis said: Since Mr. Grosfield' s opinion testimony was not. answered by other countervailing deposition testimony, claimant's counsel has failed to carry his burden ofproof and has not prepondered on the reasonableness of the heightened hourly rate originallyrequested. Further, the judge said: While this court is not bound by Mr. Grosfield's opinion as to what would be a reasonable hourly rate forany given attorney in this case,the Court finds the $70 figuretobe avalid one. This conclusion seems to me to be in line with S 39-71-614, MCA, which says, "The judge is not bound by the documentation submitted to him. The hourly fee the judge applies to the time spent must be based on the attorney's customary and current hourly fee for legal work performed in this state."In my opinion the judge was correct in considering t-he opinion of thisexpert.