No. 86-049 

IN THE SUPREME COURT OF THE STATE OF MONTANA 

1986 

CLIFFORD GULLETT, 

Claimant/Respondent, 

STANLEY STRUCTURES, 

Employer, 

and 

AETNA COMMERCIAL INSURANCE DIVISION, 

Defendant/Appellant. 

APPEAL FROM: Workers' Compensation Court 

of the State of Montana 

The Honorable Timothy Reardon, Judge presiding. 

COUNSEL OF RECORD: 

For Appellant: 

Poore, Roth and Robinson; C. Richard Anderson, 

Butte, Montana, 

For Respondent: 

Robert L. Kelleher, Billings, Montana 

Submitted on Briefs: March 28, 1986 

Decided: July 25, 1986 

Filed: 

Clerk 
Mr. Justice William E. Hunt, Sr., delivered the Opinion of 

the Court. 

Clifford Gullett's employer, Stanley Structures, and its 

insurer, Aetna, appeal the Order of the Workers' Compensation 

Court awarding attorney's fees to Gullett's counsel in the 

amount of $17,959.00 based upon an hourly fee of $125.00 per 

hour and a paralegal fee of $35.00 per hour. We affirm the 

Workers' Compensation Court's award. 

The single issue presented by this appeal is whether the 

award of attorney's fees was properly calculated under § 

39-71-614, MCA (1985) . 

The award of attorney's fees arose in the context of 

litigation concerning the amount of permanent partial 

disability benefits to which Gullett was entitled. On April 

23, 1985 the Workers' Compensation Court filed its Findings 

of Fact, Conclusions of Law and Judgment awarding Gullett 480 

weeks of permanent partial disability benefits at the rate of 

$93.07 per week. The Court also found that Gullett was 

entitled to an award of reasonable costs and attorney's fees 

pursuant to § 39-71-612, MCA. Consistent with the Order of 

the court, Gullett's counsel submitted a record of the costs 

and of the hours compiled in preparing and trying the case, 

with supporting affidavits. Counsel also submitted the 

contingent fee contract between himself and his client, 

Gullett. Finally, counsel also submitted a Proposed Order 

specifying the amount of attorney's fees claimed and 

including his customary and current hourly fee used to 

determine the amount. The calculation submitted by Gullett's 

counsel included 150.8 hours of attorney work at $125.00 per 
hour ($17,612.50) and 9.90 hours of paralegal time at $35.00 

per hour ($346.50) for a total of $17,959.00. 

Aetna filed a motion opposing the proposed calculation 

of attorney's fees to be awarded to Gullett's counsel. Aetna 

argued that 150.8 hours of attorney time was an unreasonably 

high calculation for the nature of the case. Aetna further 

contended that $125.00 per hour was an unreasonably high 

hourly fee. Aetna urged the Workers' Compensation Court not 

to award attorney's fees based on this calculation which 

Aetna believed to be engineered to garner an award roughly 

equal to what Gullett's counsel would have received if the 

court could have awarded fees based on the contingency 

contract between Gullett and his counsel. 

On April 22, 1985, one day before the Workers' 

Compensation Court issued its Findings of Facts and 

Conclusions of Law, a recent amendment to 5 39-71-614, MCA, 

went into effect. Previous to the amendment, contingency 

contracts could be considered by the court in awarding 

attorney's fees. Wight v. Hughes Livestock Company, Inc. 

(Mont. 1983), 664 P.2d 303, 40 St.Rep. 696. The statute, as 

amended, now states: 

(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 issues brought before the workers' 

compensation judge. The attorney must document the 

time spent and give the documentation to the judge. 

The judge shall determine a reasonable attorney fee 

and assess costs. He 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. 

(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 section must 

be deducted from the fee an attorney is entitled to 

from the claimant under a contingency fee 

arrangement. 

The statute clearly provides that award of attorney's 

fees must be based on the hourly rate of the attorney and the 

hours expended. Gullett's counsel submitted records and 

affidavits supporting the hours claimed and his fee. Aetna 

contends this fee impermissibly contains a factor to 

compensate for the risk involved in contingency situations, 

that is: losing the case and hence not being paid any fee. 

A more reasonable fee, Aetna argues, would be what it 

considers to be the common rate of $85.00 per hour. 

We must note that the statute does not require that fee 

awards be based on an average rate of Montana attorneys, but 

rather awards must be based on the particular attorney's 

customary hourly rate. How the individual attorney 

calculates what would be an adequate hourly rate to cover 

overhead, expenses and compensation is not of concern. There 

is substantial credible evidence in the record to support the 

lower court's finding that: 

As to the reasonableness of the fee, all of the 

time that was spent by claimant's counsel has been 

documented and is on file with this Court. Since 

the claimant prevailed on every issue except the 20 

percent penalty, this Court cannot find that the 

time spent was unreasonable. Claimant's attorney 

should be compensated for 150.8 hours of time. He 

should be paid at the rate he commands in the open 

market, which he reports to be $125/hour for his 

services and $35/hour for his paralegal services. 

Claimant's attorney fee is $17,959. 

The order of the Workers' Compensation Court is 

affirmed. 
We Concur: 

Chief Justice 
Mr. Justice Fred J. Weber dissents as follows: 

I dissent from the majority opinion in its conclusion 

that there is substantial credible evidence to support the 

lower court's determination of attorney's fee. 

Section 39-71-614, MCA, requires that an amount of an 

attorney's fee must be based exclusively on the time spent. 

While the record supports the time determination of the 

Workers' Compensation Court, I do not believe that the record 

meets the requirements of the last sentence of paragraph (1) 

of § 39-71-614, MCA, which states: 

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. 

The affidavit of Robert C. Kelleher, Sr., dated May 2, 1985, 

established that Robert E. Kelleher, Jr., passed the Montana 

and California bar exams in 1984, and detailed various experience which he had. In addition it stated the following: 

. . . that because all of the work of said OFFICE 

is on a contingent fee basis, an hourly rate has to 

be set on the basis of overhead, attorney's skills, 

and the fact that occasionally a case is lost, 

resulting in the OFFICE absorbing not only lost 

attorney and staff salaries but invariably several 

thousand dollars in costs for medical exams, medical consultations, medical expert witness fees, 

vocational rehabilitation expert studies and attorney consultations, vocational rehabilitation expert 

witness fees, deposition charges, air plane fares, 

motel bills, long distance telephone calls, copying, etc.; that the hourly rate of Robert L. 

Kelleher, Jr., has a value of $125. 

The statement that the hourly rate has a value of $125 does 

not meet the statutory requirement that the hourly fee which 

the judge applies must be based upon the attorney's "customary and current hourly fee for legal work performed in this 

state." It may well be that this deficiency resulted in part 

from the recent amendment made to $ 39-71-614, MCA, which 
took effect one day prior to the findings of fact and conclusions of the court. 

In addition, I conclude that the affidavits submitted by 

the attorneys for the insurance company are not satisfactory 

because they set forth the customary and current hourly fee 

for defense legal work which may be significantly different 

than plaintiff's work in this type of case. 

I would therefore reverse the determination by the 

Workers' Compensation Court and remand the case with instructions for a redetermination of the fee in accordance with the 

provisions of the statute. 

Chief Justice J.A. Turnage and Justice L.C. Gulbrandson 

join in the foregoing dissent of Justice Fred J. Weber.