This opinion is subject to revision before final publication in the Pacific Reporter

2013 UT 21

IN T HE 

## S UPREME 

## C OURT OF THE 

## S TATE OF 

## U TAH

——————— S USIE S TROHM and D ORSEY & W HITNEY , LLP

,

P laintiffs and Appellees

,

v.

C LEAR O NE C OMMUNICATIONS , I NC ., Defendant and Appellant

.

——————— No. 20110569 Filed April 9, 2013

——————— Third District

, Salt Lake The Honorable Robert K. Hilder No. 080917500

——————— Attorneys: Milo Steven Marsden, Cameron M. Hancock, Salt Lake City, William Michael, Jr.

, Minneapolis, MN, for appellees
James E. Mag le by, Chri stopher M. V on Maack, Jennifer Fr aser Parrish, Salt Lake City

, Brian S. Cousin , Neil A. Capobian c o,

New York, NY, for appellant

——————— J USTICE L EE authored the opinion of the Court in Sections I

– V , in which C HIEF J USTICE D URRANT , A SSOCIATE C HIEF J USTICE N EHRING ,

J USTICE D URHAM , and J USTICE P ARRISH joined.

J USTICE L EE authored the opinion of the Court in Section s V I and

VIII

, in which C HIEF J USTICE D URRANT and
A SSOCIATE C HIEF J USTICE N EHRING joined

. J USTICE L EE filed a dissenting opinion in Section VII as to Section I of J USTICE P ARRISH ‘s opinion, in which
A SSOCIATE C HIEF J USTICE N EHRING joined.

J USTICE P ARRISH authored the opinion of the Court as to Section I of her opinion, in which C HIEF J USTICE D URRANT and

J USTICE D URHAM joined.S TROHM v. C LEAR O NE C OMMUNICATIONS , I NC

. J USTICE L EE , Opinion of the Court

2 J USTICE P ARRISH filed a dissenting opinion in Section II as to Section V I of J USTICE L EE ‘s opinion

, in which J USTICE D URHAM j oined

.
J USTICE L EE , O pinion of the Court as to Sections I

- VI and VIII ; dissenting as to Section VII : ¶1 This case concerns a corporation‘s statutory and contract ual duty to indemnify a corporate offic er‘s criminal defense costs.
Sus ie Strohm , the one

- time CFO of ClearOne Communications, Inc., was charged with eight federal criminal counts relating to an investigation into certain accounting practices at ClearOne. She was later acquitted of all but one count. Strohm and her counsel, Dorsey, asserted that ClearOne is obliga ted by statute and co ntract to indemnify her (and, by extension, Dorsey) for her criminal defense costs and brought suit to collect those costs. The d istrict

c ourt agreed with Strohm and Dorsey and ordered Cl e arOne to indemnify Strohm for her defense costs , subject to certain r estrictions. It also found that a contract between the parties entitled Dorsey to charge ClearOne 18 percent interest on the amounts that were billed to ClearOne but not timely paid and to collect the costs it expended in enforcing Cl earOne‘s contractual obligation to indemnify St ro hm.

¶2 On appeal, ClearOne challenges the district court‘s dec isions and its ultimate fee award . Strohm and Dorsey cross

- appeal the district court‘s decision to place certain limitations on their i ndemnificatio n and collection award

. A unanimous court affirm s the district court‘s indemnification decisions in large part

, its ru ling relating to contract termination rights

, its reasonableness d etermina tion for fees in the criminal case , and its decision to e nforce the 18 percent interest rate provision in the Dorsey letter . A majority of the court, however, joining Section I of Justice Pa rrish‘s separate opinion for the court

, reverse s the district court‘s decision to allow Dorsey to recoup its fees in the collection matter

, a determination from which I dissent. We remand for further pr oceedings.

I . BACKGROUND
¶3 ClearOne is a manufacturer of video

- conferencing equi pment based in Salt Lake City

. Susie Strohm was its CFO until her resignation in December 2003. This case arises out of civil andCite as: 2013 UT 21
J USTICE L EE , Opinion of the Court

3 criminal proceedings challenging accounting practices at ClearOne during Strohm‘s tenure. The Securities and Exchange Commission initiated a civil securities fraud action against ClearOne, Strohm, and Frances M. Flood, Cl earOne‘s then

- CEO, to investigate these practices at ClearOne. In early 2003, wh ile that
action was pending, the U.S. Attorney for the District of Utah i mpaneled a grand jury to begin a criminal investigation that para lleled the SEC action

. The U.S. Attorn ey subsequently informed ClearOne that it ―had begun an i n vestigation stemming from the complain t in the SEC action.‖

¶4 In the wake of these actions , ClearOne and Strohm execu ted a n engagement agreement in the form of a letter from Milo Steven Marsden, who was at that time a partner at Bendinger, Crockett, Peterson & Casey, PC, to Stro h m and ClearOne. In this
letter

— signed by ClearOne‘s CEO Michael Keough

— Marsden and Bendinger agreed ―to represent [ Strohm ‘s] inter e sts in co nnection with the SEC civil complaint . . . and in connection with
further related investigations and litigation.‖ The letter also a llowed Marsden and his law firm to collect 18 percent inter est on ―any amount billed and unpaid‖ for thirty days and t o recover ―all reasonable costs expended in connection with collecting amounts due under this Agreement, including reasonable atto rney s ‘ fees.‖

¶5 ClearOne and Strohm entered into two additional agre ements in the following year. First, counsel for ClearOne, Strohm

, and Flood executed a Joint Defense Privilege and Confidentiality Agreement in February 2003. This agreement allowed the parties to ― shar [e] documents , factual material, mental impressions, memoranda, interview reports, litigation strategies, and othe r i nform ation.‖ Later, Clear One and Strohm also executed an E mployment Termination Agreement to res olve ―disputes regarding Strohm‘s demand for indemnification. ‖ This agreement, like the Joint Defense Agreement, acknowledges that ―the SEC action has spawned, and may continue to spawn, multiple related procee dings, including . . . a grand jury investigation being conducted by the United States Department of Justice.‖

¶6 These agreement s governed the parties‘ relationship until
Mars d en left Bendinger for Dorsey & Whitney, LLP in 2004

. On that occasion, he wrote to Cl earO n e and Strohm to ―up date ― their engagement letter ―to reflect t his move.‖ Like the Bendinger letter,S TROHM v. C LEAR O NE C OMMUNICATIONS , I NC

. J USTICE L EE , Opinion of the Court

4 the Dorsey letter confi rms that ClearOn e and Strohm had engaged Marsden and Dorsey ―to represent [Strohm] in connection with the SEC civil complaint . . . an d in connection with further re l a ted investigations and litigation.‖ But the Dorsey letter differs from the Bendinger letter in several respects . Most importantly for the matter before us , it does not repeat the Bendinger letter provisions allowing 18 percent interest and collection costs and attorney fees. It also lists three by

- then

- instituted civil matters as being ―i nclud[ed] ‖ in ―further related investiga t ions and litigation.‖ But,
like the Bendinger letter, the Dorse y letter makes Strohm and
ClearO ne ―jointly and severally responsible for payment of all amounts billed‖ which are ―due on receipt.‖

¶7 Despite these early internal maneuverings , it wasn‘t u ntil May of 2007 that the U.S. A ttorney i nformed Marsden that Strohm was the target of a grand jury investigation . Strohm was indicted months later with one count of conspiracy , two counts of making materially false and misleading statements to auditors, and two
substantive counts of securities f raud. Two subsequent indic tments added a charge of making material misrepresentations to

a uditors and two perjury counts.
¶8 W ork on Strohm ‘s criminal defense began in earnest in May 2007, with ClearOne appearing to recognize an indemnific ation obligation for her defense costs

. Indeed, ClearOne paid Dorsey‘s bills for the first nine months. By March 2008, however, ClearOne expressly refused to pay any further defense costs and denied that its engagement agreements with Marsden required it to do so.
¶9 In respons e, Dorsey and Strohm initiated the instant colle ction action against ClearOne, seeking

— among other things

— to enforce the engagement agreements and to require ClearOne to indemnify Strohm for her defense costs. Meanwhile, Strohm ‘s
criminal trial commenced i n early 2009, with Dorsey representing Strohm. Of the eight counts for which she was indicted, Strohm was convicted of only one count

— perjury related to testimony given in the SEC action. 1 Following Strohm‘s near complete a c-

1 Strohm appealed her conviction to the Tenth Circui t Court of Appeals, which upheld it in full

. United States v. Strohm

, 671 F.3d 1173, 1188 (1 0th Cir. 2011 ).Cite as: 2013 UT 21
J USTICE L EE , Opinion of the Court

5 quittal, Strohm and Dorsey amended their complaint against ClearOne to remove now

- moot claims and to add a claim for mandatory statutory indemnification under Utah Code section 16

- 10a

- 903 and

- 907.
¶10 Both before and after Strohm‘s criminal trial and limited
conviction , th e parties engaged in contentious litigation over
Strohm ‘s and Dorsey‘s statutory and contract claims. As to the statutory claims, Strohm and Dorsey filed a motion for summary judgment just after Strohm‘s conviction

, bas ing their claim for r elief on the gro unds that Strohm had been acquitted on seven of the eight counts against her. The district court granted the motion

, stating that Utah Code sections 16

- 10a

- 903 and

- 907 required ClearOne to indemnify Strohm for ―the reasonable expenses i ncurred by her in c onnection with the proceeding or claim[s] with respect to which she has been successful.‖ It also ordered ClearOne to pay for Strohm‘s ―reasonable expenses incurred in
order to obtain court

- ordered indemnification pursuant to‖ Utah
Code s ections 16

- 10a

- 903 and

- 907(1).

¶11 Resolution of Strohm ‘s and Dorsey ‘s contract claims was somewhat more complicated. Both parties filed early motions for partial summary judgment relating to Dorsey‘s claim that its e ngagement agreement with ClearOne required ClearOne to rei mburse it for Strohm‘s criminal defense costs. But the district court ultimately determined that ―facial ambiguity concerning the scope and purpose of the agreements‖ prevented it from ruling on the motions. It accordingly ordered discovery regarding the in te ntions of the parties to the eng ag ement letters.
¶12 Discovery ensued over the following months, the most i mportant development being the deposition of ClearOne‘s 30(b)(6) designee, Keough

. 2 In that deposition, Keough testified that when he signed the first engagement letter, he understood t hat a federal criminal investigation was underway that could result in criminal litigation and claims brought against Strohm. He also testified that when he signed the engagement le tters, he unders tood that
Mars d en would represent Strohm in both the SEC action and in

2 U TAH R. C IV

. P. 30(b)(6) (allowing a corporation to ―designate one or more officers, directors, managing agents, or other persons to testify on its behalf‖ in a deposition).S TROHM v. C LEAR O NE C OMMUNICATIONS , I NC

. J USTICE L EE , Opinion of the Court

6 any related federal criminal investigation. Further, he clarified that he and ClearOne understood the engagement agreements to
make ClearOne liable for 18 percent interest and for colle ction costs necessary to enforce the agree ments.
¶13 Strohm and Dorsey thereafter r enewed their motion for summary judgment , and ClearOne filed its own cross

- motion. The district court granted summary judgment in favor of Strohm and Dorsey based largely on Ke ough‘s uncontradicted deposition te stimony concerning the intentions of the parties combined with r ecitals in the Joint Defense Agreement and the Employment Te rmination Agreement. Specifically, the court held that the engag ement agreements ―together form a n enforceable contract, provi ding an alternative basis to require [ClearOne] to pay [ Strohm ‘s] reasonable legal fees incurred in this action or to reimburse her for fees paid to her counsel and co

- plaintiff‖ and that Strohm and Dorsey were ― entitled to jud gment for [ 18 percent] interest and fees incurred in seeking recovery under the letter agreements.‖

¶14 With ClearOne ‘ s o bligations under both statute and co ntract now settled, all parties set about determining the amount of Strohm and Dorsey‘s award, with St rohm and Dorsey first fil ing a petition for an Award of R easonable Attorney Fees and Costs in July 2010 and with ClearOne filing an opposition and cross

motion in response. After hearings on these motions, the district court entered judgments for Dorsey on its contract claim and for Strohm on her statutory indemnification claim

. It also ruled that ClearOne could not unilaterally end its obligation to pay for Dorsey‘s services under the engagement agreements. Based on these judgments, the district court aw arded Strohm and Dorsey (1) all hours and expenses billed an d paid by ClearOne through
M arch 31, 2008, with no adjustment or reimbursement, (2) reaso nable fees and expenses incurred in the criminal case through Fe bruary 27, 2009, (3) prejudgment interest o n criminal case fees and expenses at the rate of 18 percent, and (4) reasonable attorney fees and expenses in the collection case through August 10, 2010.

¶15 ClearOne now appeals, challenging the district court‘s

summary judgment rulings, which we review for correctness. Bahr v. Imus , 2011 UT 19, ¶ 15, 250 P.3d 56

. ClearOne also cha llenges the overall reasonableness of the district court‘s fee award. Due to the district court‘s ― broad discretion in determining what constitutes a reasonable attorney fee [,]

. . . we will not reverseCite as: 2013 UT 21
J USTICE L EE , Opinion of the Court

7 [such a] determination . . . absent an abuse of discretion.‖ Bakowski v. Mountain States Steel, Inc. , 2002 UT 62, ¶ 33, 52 P.3d 1179

. Dorsey cross

- appeal s, challenging the district court‘s rulings limi ting certain of its awards for attorney fees and interest

. ¶16 Under th ese standard s , we first affirm the district court‘s indemnification rulings in full, except for the decision to limit i ndemnification for defense costs to those in curred before Strohm‘s perjury conviction. We likewise af firm the district court‘s dete rmination that the engage ment agreement between the parties does not give ClearOne the right to unilaterally te rminate its payment obligation to Dorsey. And though ClearOne challenges the district court‘s fee award in the crim inal case as unreasonable

, we disagree and affirm. W e next consider and affirm the court‘s ruling that the parties‘ en gage ment agreement conte m plated 18 percent interest on u n paid fees and allowed Dorsey to recover fees and costs incurred in enforcing the engagement agreements

. We also affirm the district court‘s decision to enforce the interest rate provision. Finally, though I would enforce the collection fee provision as well, a majority of the court

, joining Section I of Ju sti ce Parrish‘s separate opinion

, invalidates the collection fee pr ovision on public policy grounds

. These holdings require us to r emand this matter to the district court for a revised fee award in conformity with this opinion.

II . INDEMNIFICATION
¶17 On appeal t o this court, ClearOne challenges both of the district court‘s indemnification rulings. For their part, Strohm and Dorsey ask this court to affirm in l arge part the district court‘s r u lings on indemnification and challenge only certain limitations the dist rict court imposed on indemnification. We agree with Strohm and Dorsey on all counts. We accordingly af firm the district court‘s indemnification rulings in full save for its limitation of fee reimbursement in the criminal case, which we reverse.

A . Statut ory Indemnification

¶18 After Strohm successfully challenged seven of the eight counts for which she was indicted, she amended her complaint against ClearOne to include a claim for mandatory statutory i ndemnification under U tah Code sections 16

- 10 a

- 903 and

- 907. The district court then granted Strohm‘s motion for partial summaryS TROHM v. C LEAR O NE C OMMUNICATIONS , I NC

. J USTICE L EE , Opinion of the Court

8 judgment on that claim, a decision ClearOne now challenges on three grounds

. 1
¶19 ClearOne‘s first statutory argument is based on section 902, which allows a corporation to indemnify its director if ―his co nduct was in good fait h; . . . he reasonably believed that h is conduct was in, or not opposed to, the corporation ‘ s best inter e st s; and

. . . in the case of any criminal proceeding, he had no reasonable cause to believe his conduct was unlawful.‖ U TAH C ODE § 16

- 10a

- 902 (1)

. According to ClearOne

, this statute establishes a ―standard of conduct‖ and limits the indemnification a corporation can provide to its officers

. This argument falters on the grounds that it misco nstrues section 902 and ignores other sections of the code that e xpressly apply to officer indemnification

. ¶20 By its own terms, section 902 applies only to the directors of a corporation. Id. (―[A] corporation may indemnify an indivi dual made a party to a proceeding because he is or was a director

. . . .‖ (emphasis added)). This section‘s title ( ―Authority to i ndemnify directors‖ ) confirms that

. Id. We can find nothing in se ction 902 that suggests that it extends beyond directors to e nco mpass officers

. 3 See Olsen v. Eagle Mountain City , 2011 UT 10, ¶ 9, 248 P.3d 465 (stating that statutory interpretation often require s exa mina tion of a statute‘s structural context ).
¶21 A n exam ination of the rest of title 16 supports this result.
W e interpret individual sections of the code ―in harmony with other provisions in the same statute and with other statutes unde r the same and related chapters. ‖ Sill v. Hart , 2007 UT 45, ¶ 7, 162 P.3d 1099 (internal quotation marks omitted) . W e must look to

t hese other sections to decide if all of the standards for director indemnification apply equally to officer indemnification , as ClearOne seems to suggest . Because the code contains provisions that specifically govern officer indemnification, we cannot pr es ume that all the provisions governing director indemnification

3 The code is riddled with instances where a director is treated differently than an officer. See, e.g., U TAH C ODE § 16

- 10a

- 841 ( a llowing corporations to limit the liability of its directors on a broad scale, but suggesting that officer liability can only be limited when a corporation is a certain type of depository institution).Cite as: 2013 UT 21
J USTICE L EE , Opinion of the Court

9 appl y to officers as well. See U TAH C ODE § 16

- 10a

- 907 (entitled ―Indemnification of officers, employees , fiduciaries, and agents‖). This is particularly true given that the code makes specific dire ctor indemni fication provisions

— and not others

— applicable to o ffice rs. See id. § 16

- 10a

- 907(1) (providing that officers are entitled to mandatory and court

- ordered indemnification to the same ext e nt as a director under Utah Code sections 16

- 10a

- 903 and

- 905 ). B ecause no statute make s officer indemnification subject to

, depen dent on , or coextensive with permissive director indemnification under section 902 , we decline ClearOne‘s request that we apply that section to deny Strohm‘s statutory indemnification claim.

¶22 T he district court ordered ClearOne to indemnify Strohm under sections 16

- 10a

- 903 and

- 907

— not under section 902. Under section 907, an officer is entitled to mandatory indemnification o nly to the extent that a director is entitled to indemnification under
903

. Id

. And section 903 requires a corporation to indemnify a d irector who successfully defended himself in a proceeding where he was a party to the action because he was/is a director of the corporation. See id. § 1 6

- 1 0 a

- 903. Thus, an officer is entitled to mandatory indemnification when he successfully defends himself in a proceeding where he was a party because he was/is an officer of a corporation. See id § 16

- 10 a

- 907 (1)

. ¶23 Yet ClearOne inexplicably presents section 902 to us as co ntrolling in this case. It does so by inserting a bracketed ―or officer‖ immediately after the word ―director‖ in its quote of the language
of the statute. This is not an accurate portrayal of section 902. Clea rOne is free to argue that when the statute says ―director,‖ it means ―director or officer .‖ But that argument must be based on the language of the statute as written, not on a misleading alter ation to its quoted terms . ClearOne‘s bracketed ―or officer‖ co mes perilously close to the lat t er . Counsel do damage to the credibility of their arguments when they are made to rest on confusing di stortions of the controlling legal text. ClearOne‘s position fails on its merits. But it is not at all helped by counsel‘s bracket

- bungled ―quote‖ of the statutory text.

¶24 As neither section 907 nor section 903 make mention of se ction 902‘s standard of conduct, we reject ClearOne‘s argument that only officers complying with that standard are entitled to i ndemnification. We wil l not import into one statutory section la nguage from another when nothing in the statute or statutoryS TROHM v. C LEAR O NE C OMMUNICATIONS , I NC

. J USTICE L EE , Opinion of the Court

10 scheme requires it . Because Strohm su ccessfully defend e d se ven of the eight charges brought against her in her capacity as an o fficer of ClearOne , she is ent itled to indemnification from ClearOne under Utah Code sections 16

- 10a

- 903 and

- 907 for the reasonable expenses she incurred in doing so. We accordingly a ffirm the district court‘s ruling on statutory indemnification

. 2
¶25 ClearOne next argues that it avoided any statutory duty of indemnification by exercising a statutory option to limit its duty to indemnify officers. Specifically, ClearOne suggests that it ―adopt ed bylaws limiting indemnification to officers and directors who have satisfied the requis ite standard of conduct‖

— the same standard of conduct described in Utah Code section 16

- 10a

- 902. This argument likewise fails

. Once again, ClearOne ignores the unambiguous language of the statute and advocates a position that is unsupported by law.
¶26 It is true that Utah Code section 16

- 10a

- 90 7 allow s a corp ora tion to limit its duty to indemnify its officers. But, by the terms of th at statute, a corporation must place such limitation in its art icles of incorporation

. Id. Nowhere does section 907 allow a corp or ation to place limitations on indemnification in its bylaws . Because

― articles of incorporation ‖ is unambiguous and on its face does not encompass by laws, ClearOne‘s attemp t to limit indemnific ation in its bylaws is of no consequence under the controlling sta tute in this case. We refuse to dismiss the statutory terminology as insignificant

. Bylaws are not articles of incorporation, and a sta tute contemplating the latter is not satisfied by the former.
¶27 Once again, t he rest of the code reinforces this conclusion. In many instances, the code illustrates that ―bylaws‖ and ―articles of incorporation‖ are not interchangeable

. As just one example,

t he Utah Revised Business Corporation Act delineates how art icles of incorp oration and bylaws may be amended

. The process
for a mending articles of incorporation is much more restrictive than the process imposed for bylaws. See i d

. §§ 16

- 10 a

- 1001 to

- 08,
10a

- 1020 to

- 23

. T o amend a rti cles of i ncorporation, for instance, the board of directors must propose an amendment, which must then be voted upon by the shareholders

. Id. § 16

- 10 a

- 1003

. Yet , e ither the board of directors or the shareholders can amend a corp oration‘s bylaws at any time. Id. § 16

- 10 a

- 1020

. Thus, articles of i n-Cite as: 2013 UT 21
J USTICE L EE , Opinion of the Court

11 corpor ation and bylaws are hardly interchangeable

. The diffe rences in statutory procedures for their amendment high light the perils of equating them.
¶28 In any event, the bylaws cited by ClearOne do not support the indemnification standard it advances. The only ind emnific ation limit in the bylaws that imposes a standard of conduct

— Section 5.1

— applies only to directors. Though ClearOne cites this section as ―expressly prohibit[ing] indemnification of a director or officer unless‖ the standard of conduct is satisfied

, i t clear ly does no such thing with respect to officers. T hat is not to say that ClearOne‘s bylaws do not limit officer indemnification in any way. They do. Section 5.3 limits officer indemnification , but does

so wit hout imposing the standard of conduct li sted in 5.1. Instead,
it allows ClearOne to indemnify officers ― to any extent consistent with public policy.‖ As discussed below, we can identify no pu blic policy ground that would prevent Strohm from meriting i ndemnification in this instance. Infra ¶ ¶ 29

– 32 . Therefore, nothing in ClearOne‘s bylaws

— or articles of incorporation

— prevents it from indemnifying Strohm.

3
¶29 ClearOne‘s final challenge to the district court‘s statutory indemnification ruling is grounded in public policy. Section 902, it argues, ―esta blishes a Utah public policy prohibiting the use of corporate funds unless the corporate director or officer has sati sfied the requisite standard of conduct.‖ We disagree.

¶30 While declarations of public policy may be found in sta tutes, not all statutory provisions constitute overarching stat ements of public policy

. See Peterson v. Browning , 832 P.2d 1280, 1282 (Utah 1992)

. And n othing in th is statute suggests to us that section 902 is such a statement

. Instead, we read section 902 a s part of a larger inde mnification scheme that is itself a comprehe nsive statement of public policy.

¶31 The code provides for three types of indemnification: pe rmissive, court

- ordered , and mandatory

. See U TAH C ODE §§ 16

- 10a

902,

- 905,

- 907. Permissive indemnification is subject to the stan dard of conduct described in section 902. Mandatory indemn ific ation, on the other hand, does not depend on any stand ard of co nduct. See id. §§ 16

- 10a

- 905,

- 907. Thus, corporations may be r equired to indemnify an officer even when that officer has acted in aS TROHM v. C LEAR O NE C OMMUNICATIONS , I NC

. J USTICE L EE , Opinion of the Court

12 manner that is contrary to sec tion 902‘s standar d of conduct

. Gi ven that indemnification is statutorily required in some circu mstances despite noncompliance with the 902 standard of conduct,
i t cannot be against public policy to allow corporations to inde mnify offic ers that do not meet such a standard of con duct

. Rather, Utah‘s public policy concerning indemnification for corporate o fficers and directors encompasses a range or scale of duties of i ndemnification

— one that, at least sometimes, does not require compliance with a standard of conduct.
¶32 The text of the statutory indemnification scheme is the governing public policy in this area

. See VCS, Inc. v. La Salle Dev.,
LLC , 2012 UT 89 , ¶ 23

, 293 P.3d 290 (―[The purported purpose of a statute] cannot be used to . . . override the meaning of a statute that is otherwise plain.‖)

. By applying the statute as wri tten, we remain faithful to the public policy embraced by the legislature

. And the statute, on its face, requires ClearOne to indemnify Strohm for her successful criminal defense. We accordingly affirm the district court‘s statutory indemnification ruling.

B . Contractual Indemnification
¶33 ClearOne next argues that the district court erred when it ruled that the engagement agreements were an ―alternative basis‖
for criminal defense indemnification

. 4 We conclude that the e ngagement l etters unambiguously required ClearOne to indemnify Strohm for her criminal defense , and affirm the district court‘s r u ling on this alternative ground

. ¶34 Whether the engagement l etters required ClearOne to i ndemnify Strohm for her criminal defense is a matter of contract interpretation. ―When interpreting a contract, a court first looks to the contract‘s four corners to det ermine the parties‘ intentions, which are controlling.‖ Bakowski v. Mountain States Steel, Inc.

, 2002 UT 62, ¶ 16, 52 P.3d 1179. ― [T] he parties‘ intentions are dete r-

4 Though the district court referred to the engagement agre ements as being an ―alternative basis‖ for requiring indemnific ation, the agreements are more aptly described as superior sources of indemnification. As explained below, the engagement agre ements provide a broader indemnification right than does the s ta tute and so cannot be thought of as merely backing up the statut ory indemnification duty.Cite as: 2013 UT 21
J USTICE L EE , Opinion of the Court

13 mined from the plain meaning of the contractual language

. . . . ‖
Glenn v. Reese , 2009 UT 80, ¶ 10, 225 P.3d 185 (internal quotation marks omitted); Pugh v. Stockdale & Co. , 570 P.2d 1027, 1029 (Utah 1977) (―The beginning point of interpretation of a contract is . . . the ordinary and usual meaning of the words.‖). We consider e xtrins ic evidence of party intent only when the contractual la nguage is ambiguous. Gle n n , 2009 UT 80, ¶ 10. ―A contractual term or provision is ambig uous if it is capable of more than one reaso nable interpretation because of uncertain meanings of terms, mis sing terms, or other facial deficiencies.‖ Id. (internal quotation marks omitted). ― Whether a contract i s ambiguous is a question of law, which we

. . . review for correctness. ‖ Bodell Constr. Co. v. Robbins , 2009 UT 52, ¶ 16, 215 P.3d 933.
¶35 Both engagement lett ers contain similar language, and both

encompass indemnification for criminal defense. The Bendinger letter was drafted and executed first and states , in pertinent part : ―This letter will summarize and confirm the agreement for my firm, Bendinger, Crock ett
, Peterson & Casey to represent Susie Strohm‘s interests in connection with the SEC civil complaint, re ferenced above, and in connection with further related investig ations and litigation.‖ The Dorsey letter was executed some fou rteen months later. Its ope rative sec tion states : ―[T]his letter co nfirms your engagement of Do rsey & Whitney, LLP . . . to represent Susie Strohm in connection with the SEC civil complaint, refe renced above, and in connection with further related investigations and litigation includ i ng, among other s, Anderton v. ClearOne
Communications , et al. Civil No. 0300918066; and E

- Bond Epo xies, Inc. Profit Sharing Plan and Trust v. Frances Flood et al. Civil No. 030906061.‖

¶36 Though the word ―criminal‖ is not used in either letter

, their terms clearly encompass criminal litigation. In context

, the ―f urther related investigations and litigation‖ identified in both
letters includes a criminal investigation and resulting trial. Under this clause , ClearOne agreed to indemnify Strohm for invest ig ations and litigation relat ed to the SEC c ivil complaint. T he invest ig ation and litigation most closely related to the SEC civil action
was the federal criminal action. Indeed, t he SEC civil action and the federal criminal action involved the same allega tions and the same conduct. O ne can only be thought of as the natural result of the other. For this reason, we cannot agree with the district courtS TROHM v. C LEAR O NE C OMMUNICATIONS , I NC

. J USTICE L EE , Opinion of the Court

14 that the ―scope and the purpose of the agreements‖ are facially ambiguous.

¶37 We likewise reject ClearOne‘s co nstruction of ―litigation‖ as referring exclusive ly to civil matters. T he ordinary meaning of ―litigation‖ is broad enough to encompass both criminal and civil
actions , even though it may often be used to refer to civil actions. ―L itigation ‖ and ― l itigate ‖ a re defined as ― [ l ] egal action or pr ocess ‖ and ― [ t ] o subject [ something ] to legal proceedings

, ‖
A MERICAN H ERITAGE D ICTIONARY 763 (1981 ) , or as ― the practice of taking legal action‖ and ―to carry on a legal contest by judicial

process ‖ o r to ― prosecute or defend by pleadings, evidence, and debate in a court

, ‖ W EBSTER ‘ S T HIRD N EW I NTERNATIONAL D ICTIONARY 1322 ( 2002 ). A criminal proceeding by the prosecution against a defendant fits easily and naturally w ithin t hese defin itions

. A criminal proceeding is a legal action or proces s. It accor dingly qualifies as ―litigation‖ under the engagement letters

. ¶38 The Dorsey letter ‘s list ing of three civil actions as included in ―further related investigations and litigation‖ is not to the co ntrary

. An otherwise broad, generic contract term may be restricted when modified by a clearly exclusive list. But this list is neither exclusive nor restrictive

. 5 T he Dorsey letter list s three civil cases as examples, but it does not limit indemnifiable ac tions to those sp ecific claims or even claims like them. Instead, t he three civ il a ctions are described as being ―among oth ers. ‖

¶39 The parties ‘ use of the word ―investigation‖ is further ind ication that they contemplated indemnification for criminal d efense. ― Investigation‖

— or ―to investigate‖

— is defined as a ‖d etailed examination‖ or ―searching inquiry ‖ or ― t o observe or study closely ; inquire into systematically

. ‖ W EBSTER ‘ S T HIRD N EW I NTERNATIONAL D ICTIONARY 1189 ( 2002 ) . Though this definition

encompa sses civil, non

- official inquiries

, ―investigation‖ is used most often in a criminal context. In this way, ―investigat ion ‖

— like ―litigation‖

— can refer to undertakings in either a criminal or civil
matter, but here the word more commonly has a criminal flav or.

5 See Rodriquez v. Christus Spohn Health Sys. , No. C

- 09

- 95, 2011 WL 4074475, at *4 (S.D. Tex. Aug. 18, 2011) (stating that use of the word ― ̳including‘ followed by a list indicates that the list is not meant to be exclusive‖).Cite as: 2013 UT 21
J USTICE L EE , Opinion of the Court

15 So, the engagement letters clearly contemplate that ClearOne would indemnify Strohm for the costs associated with investiga ting the criminal charges against her. Given that contemplation, only a tortured reading of the letters would dictate indemnific ation for both criminal and civil investig ation but only for civ il

— not criminal

— litigation

. We accordingly affirm the district court‘s ru ling requiring ClearOne to indemnify Strohm for her criminal d efense costs under the engagement agreements

. ¶40 Dorsey and Strohm ask us to go one step further. In the

cross

- appeal, they argue that once the district court determined that Dorsey was entitled to fees under the engagement letters, it could not change the contract terms to then limit those fees by time or based on the success of that representation. We agree.

¶41 In its ruling and order dated January 24, 2011, the district court held that ―from the date of [the perjury] jury verdict ClearOne shall not be held liable . . . to pay [ Strohm ‘s] fees and expenses in the crim inal case post

- February 27, 2009, all of which must be attributed to the perjury count.‖ Based on this language, it appears that the district court assumed that Strohm could not recover defense fees related to charges for which she was convic ted. This woul d have been true if Strohm ‘s

— and Dorsey‘s

— claims
were limited to statutory indemnification. T he statute under which Strohm qualifies for indemnification states that ―a corpor ation shall indemnify a director [or, by operation of subsection 907, an officer] who was successful, on the merits or otherwise, in the defense of any proceeding, or in the defense of any claim . . . against reasonable

expense s incurred by him in connection with the proceeding or claim with respect to which he has been successful.‖ U TA H C ODE § 16

- 10a

- 903 (emphasis added) . Because Strohm was convicted of one count of perjury, this statute would operate to save ClearOne from indemnifying her for fees related to that charge.
¶42 But the district court did not limit Strohm and Dorsey‘s i ndemni fication right to statutory indemnification. Rather, it held that the engagement letters ―provid[ed] an alternative basis to r equire [ClearOne] to pay [Strohm‘s] reasonable legal fees incurred
in her defense of federal criminal proceedings . . . or to reimburse her for fees paid to her counsel and co

- plaintiff.‖ So, Strohm and Dorsey can require indemnification for the perjury charge if the letter agreements contemplated that ClearOne would indemnifyS TROHM v. C LEAR O NE C OMMUNICATIONS , I NC

. J USTICE L EE , Opinion of the Court

16 Strohm for fees related even to unsucces sfully defended charges.
We read the letters that way and accordingly reverse

. ¶43 Nothing in the engagement letters purports to limit inde mnification to successful challenges to criminal charges. Rather, the letters contemplate that Bendinger and then Dorsey would repr esent Strohm in her criminal defense and that Strohm and
ClearOne would ―be jointly and severally responsible for pa yment of all amounts billed under th[ese] Agreement[s].‖ ―Where the terms and conditions of a contract are not unconscionable, an d no fraud, duress, or misrepresentation is claimed, the courts must
enforce all contracts as the parties have made them and not as the court thinks they should have been made.‖ Johnson v. Geddes , 161 P. 910, 915 (Utah 1916).

¶44 So, while we agree with the d istrict court‘s ultimate ruling on the contractual indemnification issue, we reverse its decision to limit Strohm‘s indemnification for criminal defense costs to those incurred before February 27, 2009 . We accordingly remand to the
district court for a det ermination of reasonable fees from that date to the conclu sion of St r o hm‘s appeal in the criminal case.

III . TERMINATION OF DORSEY ENGAGEMENT

AGREEMENT
¶45 ClearOne next argues that it ended its payment obligation under the Dorsey letter i n November 2009, nine months after Strohm‘s jury verdict and six months before she was sen tenced, and thus cannot be forced to indemnify Strohm for amounts i ncurred after that date. On this point, t he district court determined that ClearOne did not have th e power to ―unilaterally terminate the attorney

- client relationship‖ between Strohm and Dorsey. ClearOne contends that this was error. Specifically, ClearOne a sserts that it never attempted to sever Strohm‘s attorney

- client rel ationship with Dorsey , but so ugh t only to end its o bligation to pay Dorsey‘s fees.

¶46 The Dorsey engagement letter provides that ―[Dorsey] will withdraw from representation upon your request.‖ It also states that the letter confirms ― your engagement of [Dorsey ] to represent [Strohm].‖ ClearOne argues that because it is a party to the e ngagement letter, ―your‖ as used in the letter refers to it and thus gives it the power to terminate its payment obligation. We do not read the letter that way

.Cite as: 2013 UT 21
J USTICE L EE , Opinion of the Court

17 ¶47 Because the letter is addressed to both Str ohm and ClearOne (through Keough, its CEO), ―your‖ is best understood in its plural form, meaning ClearOne and Strohm. Under this reading

, the ―your‖ in Dorsey‘s promise to ―withdraw from re presentation upon your request‖ refers to both Strohm and ClearOne . The Dorsey letter, therefore, does not give ClearOne the option of unilaterally asking Dorsey to withdraw. Rather, the terms of the engagement letter require a joint withdrawal request. And Strohm never asked Dorsey to withdraw. Thus, the district

court was correct when it refused to enforce ClearOne‘s Nove mber 2009 letter attempting to force Dorsey‘s withdrawal. 6
¶48 In briefing, ClearOne suggests that it never attempted to sever Strohm‘s attorney

- client relationship with Dorsey, but only to end its own paym ent obligation to Dorsey. But the letter does not give ClearOne the option of ending its payment obligation. It simply gives the parties the option of asking Dorsey to ―withdraw from representation.‖ And the only representation that Dorsey undertook is rep resentation of Strohm. Asking an attorney to withdraw from a case is vastly different from ending a requir ement to pay for that attorney

. While the letter contemplates the former, it says nothing about the latter.

¶49 We accordingly affirm the district court‘ s ruling on the ground that ClearOne had no right under the letter agreement to

6 Dorsey was representing Strohm and her interests and, by agreement, owed ―all . . . professional responsibilities under a pplicable law . . . solely to‖ her. Allowing what amounts to a third

p arty payor to unilaterally sever an attorney

- client relationship under these circumstances could be problematic. By rule, lawyers may not allow third

- party payors to guide or interfere with pro per representation of a client. See U TAH R. P ROF ‘ L C ONDUCT 5.4( c) (―A lawyer shall not permit a person who recommends, employs or pays the lawyer to render legal services for another to direct or regulate the lawyer‘s professional judgment in rendering such l egal services.‖). In so noting, we do not and need not reach the question whether a third

- party payor‘s unilateral request for withdrawal would put counsel in jeopardy under this rule. Our conclusion, rather, is simply to note the potential for conflict u nder the rule and to observe that our construction of the eng ag ement agreements avoids it.S TROHM v. C LEAR O NE C OMMUNICATIONS , I NC

. J USTICE L EE , Opinion of the Court

18 unilaterally request Dorsey‘s withdrawal or to terminate its pa yment obligation to Dorsey.

I V. REASONABLENESS OF FEE AWARD
¶50 ClearOne next contests the reasonableness of the district court‘s attorney fee determination in the criminal case , arguing that the award was excessive. We disagree.

¶51 Once the district court determined that Strohm and ClearOne were entitled to both statutory and contractual indemn ification for Strohm‘s criminal defense, it acquired ―broad discr etion in determining what constitutes a reasonable attorney fee‖
under both the statute and the contract. See Bakowski v. Mountain States Steel, Inc. , 2002 UT 62 , ¶ 33, 52 P.3d 1179. 7 The evaluation of reasonablen ess is guided by the following considerations:
1. What legal work was actually performed?
2. How much of the work performed was reasonably necessary to adequately prosecute the matter?
3. Is the attorney‘s billing rate consistent with the

rates customar il y charged in the locality for similar
services?
4. Are there circumstances which require consider ation of additional factors, including those listed in
the C ode of P rofessional R esponsibility ? 8

7 See also Foote v. Clark , 962 P.2d 52, 54 (Utah 1998) (―Generally, attorney fees in Utah are awarded only as a matter of right under a contract or statute.‖).

8 Utah Rule of Professional Conduct 1.5(a) list s the following ―factors to be considered in determining the reasonabl en ess of a fee‖ : (1) the time and labor required, the novelty and diff iculty of the questions involved and the skill requisite to perform the legal service properly;
(2) the likelihood

, if apparent to the client, that the acceptance of the particular employment will pr eclude other employment by the lawyer;Cite as: 2013 UT 21
J USTICE L EE , Opinion of the Court

19 Dixie State Bank v. Bracken , 764 P.2d 985, 9 90 (Utah 1988) (fo otnotes omitted)

. 9
¶52 Because the reasonableness of an attorney fee award ―must be decided against a variety of factual backgrounds,‖ the district court ―is in a better position than an appellate court to gauge the quality and efficiency of the representatio n and the complexity of the litigation.‖ Valcarce v. Fitzgerald , 961 P.2d 305, 317 (Utah 1998) (internal quotation marks omitted). Thus, ―we will not reverse a trial court‘s determination of whether a fee is reasonable absent an abuse of discretion.‖ Bakow ski , 2002 UT 62 , ¶ 33

. Under this stan dard, a district court‘s ruling will not be reversed unless it ―was b eyond the limits of reasonability

, ‖ s ee Daines v. Vincent , 2008 UT 51, ¶ 21, 190 P.3d 1269 (internal quotation marks omitted), or not

― based on an ev aluation of the evi dence, ‖ Cottonwood Mall Co. v.
Sine , 830 P.2d 266, 269 (Utah 1992).
¶53 ClearOne contends that the district court‘s fee award e xceeds the limits of reasonableness . Specifically, ClearOne argues
that the fees awarded in the criminal case are unreasonable b e-

(3) the fee customarily charged in the locality for
si m ilar legal services;
(4) the amount involved and the results obtained;
(5) the time limitations imposed by the client or by the circumstances;
(6) the nature and length of the professional relatio nship with the client;
(7) the experience, reputation and ability of the la wyer or lawyers performing the serv ic es; and
(8) whether the fe e is fixed or contingent.

9 See Salmon v. Davis Cnty. , 916 P.2d 890, 89 8 (Utah 1996) ( “ [S]ome of the factors relevant to attorney fee determinations . . . include the difficulty of the litigation, the efficiency of the atto rneys in presenting the case, the reasonableness of the number of hours spent on the case, the fee customarily charged in the locality for similar services, the amount involved in the case and the result attained, and the expertise and experience of the attorneys i nvolved .‖ (int ernal quot ation marks omitted) ).S TROHM v. C LEAR O NE C OMMUNICATIONS , I NC

. J USTICE L EE , Opinion of the Court

20 cause (1) certain lawyers‘ rates were too high, (2) the district court allowed unnecessary travel

- related expenses, and (3) Dorsey‘s a ttorneys charged excessive hours in the criminal case. 10 We dis agree.

1
¶54 ClearOne‘s first challenge to the district court‘s attorney fee award in the criminal case centers on its contention that Dorsey ‘s

out

- of

- town attorney rates were too high for the Salt Lake City market and higher than anticipated in the engagement agre ements, which contemplated that Mar s den would be Strohm‘s primary counsel. The district court set rates for two of Strohm‘s criminal counsel, William Michael and Christopher Shaheen, at $515 and $400 per hour respectively. According to ClearOne, rates for Strohm‘s attor neys should not exceed customary Utah rates and should, in no event, exceed the $360 per hour set for Marsden. In so arguing, ClearOne relies on the district court‘s statement in its March 2, 2010 Ruling and Order that, based on the Bendinger letter, the p arties intended ―that except in unusual circumstances, [Marsden‘s] rate would be the highest rate.‖ In ClearOne‘s view, it
was an abuse of discretion for the court to then conclude that

10 ClearOne also argues that the district court erred when it e mployed the voluntary payment rule to conclude that ClearOne waived its right to contest the amount of attorney fees paid to Dorsey for its criminal defense work prior to commencement of the instant litigation. See S. Title Guar. Co. v. Bethers , 761 P.2d 951, 955 (Utah 1988) (―[A] person cannot recover back money which he has voluntarily paid with full knowledge of all of the facts, wit hout fraud, duress, or extortion in so me form.‖ (internal quotation marks omitted)). But the district court made it clear that it was not relying on this rule when it declined to consider pre

- litigation payments in its reasonableness assessment. According to the di strict court, the rule only b uttressed its determination that Dorsey waived its right to contest the reasonableness of the pre

- litigation charges by paying

— and sometimes negotiating a reduction in

— these charges. We agree with that determination. And though th ese already

- paid fees coul d properly play a role in determining the reasonableness of the unpaid fees, the district court did not abuse its discretion by failing to consider them in that capacity.Cite as: 2013 UT 21
J USTICE L EE , Opinion of the Court

21 Marsden‘s time would be billed at $360 per hour but that other

attorne ys‘ rates would be set even higher. We disagree.

¶55 The district court‘s determination of attorney billing rates,
for both in

- state and out

- of

- state attorneys, was careful and re asonable and certainly within the bounds of its discretion. In insis ting that no attorney should have been billed at higher than $360 per hour, ClearOne asks us to hold the district court to an off

hand statement made in an order that neither in tended nor a ttempted to determine the reasona bl e ness of Dorsey‘s fee request

. We see no bas is for so doing , particularly when the district court itself limited the import of that stateme nt in the same Ruling and Order. After stating that Marsden‘s rate would be the highest , the court explained that it ―cite[d] these provisions for the sole pu rpo se of putting the parties on notice that a reasonable fee dete rmination is within the sound discretion of the trial court, but the Court will be guided as much as possible by contract language.‖

¶56 We see nothing in the district court‘s rate

- setting analysis that exceeds the bounds of the parties‘ intentions as memorialized in the engagement letters. As the district court noted and as the terms of the engagement letters confirmed , ―the ultimate form and complexity [of the criminal case] was not known‖ at the time the letter agreements were executed; ―[i]t was a matter of profe ssional responsibility for Dorsey to staff the case as it evolved, with lawyers best able to represent [Strohm] ; ‖ and her lead criminal counsel, William Michael, ―was an appropriate choic e.‖ In the e ngagement letters , the parties agreed that Marsden‘s law firm would ―be entitled to decide who the appropriate firm employee is for any particular task‖ and that ―hourly rates are subject to a djustment‖ and may ―be affected by factors such as t he amount i nvolved in the representation, unusual time constraints, use of pr ior work product, and overall value of the services.‖ In view of this language, approving out

- of

- state attorneys at higher billing rates
is altogether reasonable. 11

11 C ontrary to ClearOne‘s contention, there is nothing contradi ctory in the district c ourt deciding both (1) that the engagement le tters contemplated indemnification for criminal defense because Marsden wore ―two or more hats‖ as both c ivil and criminal d efense counsel and (2) that the complexity of the criminal case r equired different, hig her priced counsel. That the case bec a me u n-S TROHM v. C LEAR O NE C OMMUNICATIONS , I NC

. J USTICE L EE , Opinion of the Court

22 ¶57 In determining reasonable attorney rates, the district court examined the experience and skill level of Strohm‘s attorneys, identified comparably skilled and experienced attorneys in the Salt Lake City market, and used rates charged by the latter as a reference to set re asonable rates for the former. 12 We find nothing unreasonable about this approach. Indeed, our case law reco mmends just such an inquiry

. See Dixie State Bank , 764 P.2d at 990 (calling for consideration of whether an attorney‘s rate is ―co nsistent with the ra tes customarily charged in the locality for sim ilar services‖) . Its determinations on this score were bolstered by Dorsey‘s expert, who ―validated both the selecti on of a highly skilled specialist and the reasonableness of Dorsey‘s rates in both [the crimi nal and collection] cases.‖ 13

2
¶58 Second, ClearOne challenges the district court‘s approval
of travel

- related expenses

, asserting that they cannot be reason ably charged to ClearOne in light of the parties‘ understanding that legal services would be performed locally. This contention falters on similar grounds. T he district court held, and we agree, that

wieldy and was more appropriately handled by others does not change the fact that Marsden did function as a criminal defense attorney when the parties signed the Bendinger letter.

12 For instance, the district cour t described Strohm ‘s lead defense attorney, Michael, as ―in the upper echelon of criminal lawyers handling complex securities matters‖ and that ―fair comparisons to [Michael], in the Sal t Lake legal community, include James Jardine (Ray, Quinney & N ebeker) and David Jordan (Stoel Rives). Record evidence at comparable times include billing rates for both of $450 in 2008

- 2009.‖ In similar fashion, the court r educed Mr. S haheen‘s typical hour ly rate from $475 to $400 ―to

m ore closely resemble his Salt Lake pee rs.‖

13 ClearOne seems to challenge the district court‘s decision to credit Dorsey‘s expert on this is sue instead of its own. But it is the district court‘s province to determine the weight and credibility of expert testimony. Yelderman v. Yelderman , 669 P .2d 406, 408 (Utah 1983). Cle arOne‘s characterization of Dorsey‘s expert testimony as ―vague and conclusory‖ falls far short of a persuasive challenge to the district court‘s determination on this score

.Cite as: 2013 UT 21
J USTICE L EE , Opinion of the Court

23 ClearOne agreed to ― fund all reasonable and necessary expenses, and did not place any restrictions on the identity or geographic location of counsel.‖ A s discussed above, supra ¶ 56 , ClearOne and Strohm agreed that Marsden‘s firm retained the discretion to
decide how to staff Strohm‘s representation. And the choice to use Michael and others is, from where we sit, beyond reproach. As the district court noted, ―the results speak for themselves.‖

¶59 Though the district court refused to limit or completely avoid billing the lodging and travel costs, it once again softened its ruling by giving ―careful scrutiny‖ to the issue of travel time. Specifically, it noted that ―travel time that does not include any preparation or related work done in behalf of the client is argu ably of less v alue to the client‖ and determined that a 25 percent reduction would be applied to ―travel time billed without any d escription that includes preparation or work on the case.‖ This a pproach fits comfortably in the requirement that a district court consider work ―actually performed‖ as well as other ― circu mstances which require consideration of additional factors.‖ See Dixie State Bank , 764 P.2d at 990. We therefore hold that the court did not abuse its discretion by including travel

- related expenses in
Dorse y‘s attorney fee award or in limiting the fees related to tra vel time where no client work occurred.

3
¶60 In its final challenge to the reasonableness of the fee award in the criminal case, ClearOne asserts that Dorsey charged exce ssive hours, as purportedly evidenced by the disparity between the time charged in Strohm‘s case and in the case against Flood (Strohm‘s co

- indictee) . While Dorsey charged 8,199.25 hours for all of its timekeepers through the verdict

, Flood‘s counsel charged only 4,331.75 for the sam e time period. As a threshold matter, we find this kind of comparison largely unhelpful. The factual dispa rities and nuanced differences in strategy inherent in cases invol ving different defendants, evidence, and defenses typically make

one

- to

- one time com parisons relatively meaningless.
¶61 So while ClearOne also assert s that Dorsey has no justific ation for spending more hours defending Strohm than Floo d‘s counsel spent defending her, the district court clearly found that it did

, and we agree. In response to ClearOne‘s ―simplistic‖ cha llenge

, the district court noted that ―Dorsey & Whitney, with itsS TROHM v. C LEAR O NE C OMMUNICATIONS , I NC

. J USTICE L EE , Opinion of the Court

24 greater resources and experience in the area took the laboring oar in document review and management, preparation of witness kits and trial exhibits, and similar w ork, the fruits of which were shared with [Flood‘s attorneys] under the Joint Defense Agre ement.‖ ClearOne completely ignores this point, but we cannot

. Having agreed to this burden sharing and benefited from it,
ClearOne cannot now hamstring Dorsey with i t.
¶62 ClearOne also ignores another significant justification for the disparity in time charged : Dorsey was overwhelmingly su ccessful in its defense of Strohm, wh ile Flood was convicted on all counts brought against her. We cannot say that this result is due to Dorsey‘s work alone; undoubtedly differences between Strohm‘s and Flood‘s actions and responsibilities played a part in their respective criminal culpability. But our rules provide that the result obtained on behalf of a client can play a part in the r eason ableness of the fee charged

, s ee U TAH R. P ROF ‘ L C ONDUCT 1.5(a)(4)

, and that factor accordingly weighs in favor of the reasonableness of the district court‘s award.

¶63 In sum, we hold that the district court‘s attorney fee award
in the criminal case was reasonable. The parties agreed that Marsden‘s law firm would make all staffing decisions and that rates charged could increase over time to account for special ci rcumstances. By adjusting attorney rates to the Salt Lake City ma rket and by limiting travel e xpenses, the district court properly tempered its ruling to accommodate the reasonableness factors that serve as guides in this inquiry.

V . CONSTRUCTION OF DORSEY ENGAGEMENT

AGREEMENT
¶64 ClearOne next challenges the district court‘s ruling that the parties‘ engagement agreement contained provisions allowing 18 percent interest on unpaid charges and awarding Dorsey fees and

costs incurred in enforcing the engagement agreements

. Under the district court‘s ruling, the Dorsey letter

— whic h contained no provision f or 18 percent interest or for collection fees

— ―implicitly incorporated the terms of the Bendinger [letter], ‖ which contained those terms, ― changing only those elements of the former agre ement that were sp ecifically addressed.‖ Th e district court reached this result by determining that the Dorsey letter was ambiguous but that extrinsic evidence revealed that the parties intended theCite as: 2013 UT 21
J USTICE L EE , Opinion of the Court

25 Dorsey letter to incorporate the terms of the Bendinger letter not specifically addressed therein.
¶65 We find no ambiguity in the Dorsey letter and read it to i ncorporate the Bendinger letter‘s interest rate and collection fee provisions

. ¶66 The original e ngagement agreement (the Bendinger letter)

, provided that
Clearone will pay the full amount of [Bending er‘s] bill within thirty days after receipt. Any amount billed and unpaid after such thirty day period shall bear and accrue interest at the rate of 18% per annum from the date billed until paid.

. . . . We shall be entitled to recover all reasonable cost s e xpended in connection with collecting amounts due under this Agreement, including reasonable atto rneys‘ fees.

¶67 When Marsden joined Dorsey & Whitney in early 2004, he sent ClearOne and Strohm a le tter to memorialize this change. The letter states that ― [a] s you know, I recently left the law firm of Bendinger, Crockett, Peterson & Casey, and joined the law firm of Dorsey & Whitney LLP. Our engagement agreement needs to be updated to reflect t his move. The rest of this letter is in tended to serve as the up date.‖ The letter then goes on to list

, in general
terms, the legal services that will be provi ded, along with the fees, disbursements, and billings. It does not, however, rep eat or co ntradict the B endinger letter‘s interest rate or collection fee prov isio ns

. ¶68 We interpret the Dorsey letter‘s ―update‖ plainly to inco rporate the terms of the Bendinger letter not specifically addressed or changed in the Dorsey letter. To ―update‖ something is not ―to supplant‖ or ―to replace‖ it as ClearOne asserts . Instead, ― u pdate‖
is simply ―to bring up to date.‖ W EBSTER ‘ S T HIRD N EW I NTERNATIONAL D ICTIONARY 2517 (2002)

. And the ordinary mea ning of bringing something up to date is to account for intervening circumstances or to reflect the latest information or changes. See id. at 2519 (defining ― up

- to

- date‖ as ― extending up to the present time‖ or ―including the latest facts ‖). Based on these definitions, itS TROHM v. C LEAR O NE C OMMUNICATIONS , I NC

. J USTICE L EE , Opinion of the Court

26 seems clear that the Dorsey letter was meant to alter the parties‘ engagement agreement only to the extent that its p rovisions co nflict wi th or change provisions of the B en di n g er letter

. 14 Be ca use the Dorsey letter does not address or forbid interest on unpaid billed amounts or an allowance for amounts incurred to enforce the agreements, 15 those terms from the B endinger le tter remain part of th e parties‘ engagement agreement. 16

V I

. REASONABLENESS OF THE INTEREST RATE
¶69 ClearOne, however, challenges the enforceability of the i nterest rate provision, assert ing that 18 percent interest is unre a-

14 Though ClearOne suggests that it is not clear eno ugh, we r efuse to adopt a standard for incorporation that would require pa rties to use magic words to accomplish something that can be done in many ways and using many types of phrases. Indeed, in this and all matters of contract interpretation, we will co ntinue to be guided

— as we always have been

— by the parties‘ intentions, as revealed in the ordinary meaning of the words they used.

15 The Dorsey letter also neglects to mention the $5,000 retainer required by the Bendinger letter. Thus, that term was also i nco rporated into the Dorsey letter, and Dorsey could have rightfully required that ClearOne and Strohm provide a retainer. But Dorsey did not, and the time when Dorsey could have asked for one has passed.

16 In briefing and at oral argument, ClearOne seemed to suggest that our Rules of Professional Conduct somehow require more clarity in contracts between attorneys and their clients than we require in contracts between regular parties. We disagree. While rule 1.5(b) requires attorneys to communicate to the c lient ―[t]he scope of the representation and the basis or rate of the fee and e xpenses for which the client will be responsible‖ and ―[a]ny chan ges in the basis or rate of the fee or expenses,‖ U TAH R. P ROF ‘ L C ONDUCT 1.5(b), nothing in that rule or any oth er rule prescribes a higher standard of clarity for attorney

- client fee agreements than that imposed on regular contracts. That is not to say that counsel could not or should not aspire to greater clarity. Our rules simply set a minimum standard. Bar membe rs can and should seek to e xceed the standard. But as for what is legally required, we read the rules as consistent with the requirements of contract law.Cite as: 2013 UT 21
J USTICE L EE , Opinion of the Court

27 sonable in general because it is unconscionable and in this case because, in a contract between a client and its attorney, such an interest rate is unreasonable, unfair, and a violation of Utah Rule of Professional Conduct 1.5(e). We find no merit to th e s e arg ument s and affirm the district court‘s decision to apply 18 percent interest to charges billed in the criminal case.

¶70 ClearOne must offer mo re than its bare assertion of unre asonableness to convince us to override the already

- determined intentions of th e parties to a contract. At base, ClearOne‘s position is simply that it shouldn‘t have to pay 18 percent interest because that rate is high . But it is not enough to assail a contract term on the grounds that it seems un favorable to you r interests . And if ClearOne thought that 18 percent interest was truly outside the bounds of acceptable rates

— unconscionable as a matter of public policy

— it was obligated to present expert testimony and /or e stablished caselaw to that effect. It offered neither.

¶71 ClearOne‘s on ly arguable foothold seems to be in our Rules
of Professional Conduct and the ―higher ethical standard [] ‖ that applies to attorneys ―when contracting with their clients. ‖ Infra ¶ 101

. We do not disagree that our rules require more from atto rneys in certain contractual relationships than is required of non

attorneys. But nothing in our rules requires or even suggests that we can use that standard as a basis for invalidating otherwise

enforceable contractual provisions. Our Rules of Professional Conduct ―defi ne proper conduct for purposes of professional di scipline ‖ rather than establishing a higher duty as a matter of law.
U TAH R

. P ROF ‘ L C ONDUCT , Preamble (emphasis added)

. They ―simply provide a framework for the ethical practice of law‖ and

― [f] ailure to com ply with ― that obligation ― is a b a sis for in voking the disciplinary process ‖ rather than a basis for contract tinkering. Id.
Violation of a rule should not itself give rise to a cause of action against a law yer nor should it create any presumption in such a case that a legal duty has been breached. . . . The Rules are designed to provide guidance to law yers and to provide a structure for regulating conduct through disciplinary agencies. They are not designed to be a basis for civil liabi lity.

. . . The fac t that a rule is a just basis for a la w yer‘s

se l f

- assessment
, or for sanctioning a lawyer under theS TROHM v. C LEAR O NE C OMMUNICATIONS , I NC

. J USTICE L EE , Opinion of the Court

28 administration of a disciplinary authority, does not
i m ply that an antagonist in a collateral pro ce eding or
transa ction has s tanding to seek e nforce ment of the rule.

Id. ; Archuleta v. Hughes , 969 P.2d 409, 414 (Utah 1998) (― [T] he Utah Rules of Professional Conduct are not designed to create a basis for civil liability

. ‖).

¶72 E ven if our court rules were relevant to this discussio n , ClearOne has not established that any of our rules require us to alter the terms of its contract with Dorsey and Strohm. True, r ule 1.5(a) precludes a lawyer from ―mak[ing] an agreement for, charg[ing] or collect[ing] an unreasonable fee.‖ U TAH R. P ROF ‘ L C ONDUCT 1 .5(a). But we fail to see how a rule that on its face sets standards for fees has any impact on interest that accrues on u npaid fees. Interest charged after a lawyer has assessed a fee does not become part of the fee itself.
¶73 None of our other rules of con duct are to the contrary. ClearOne‘s contract with Dorsey is not a contingent fee agre ement, so rule 1.5(c) is inapplicable. See infra ¶ 101 . It also does not involve a se parate business transaction, so r ule 1.8(a) is no help. See infra ¶ 102 . While rule 1 .5(b) does operate here to require both ―the basis or rate of the fee and expenses‖ and ―[a]ny changes in the basis or rate of the fee‖ to ― be communicated to the client,‖ no one has alleged such communication was absent. Rather, Justice Parrish‘s separate opinion seems to impose an extra ―clarity‖ r equirement that go es beyond mere communication to require ―e xplicit‖ communication. See infra ¶¶ 101

– 05

. This heightened clarity statement, however, has no basis in the rules or in our caselaw.
¶74 In any event, mor eover, r ule 1.5(a) itself lists reasonabl eness factors that appear to accommodate an interest rate of this altitude

— ―the likelihood .

. . that the acceptance of the particular employment will preclude other employment by the lawyer,‖ ―the fee customarily charged in the locality for similar legal services,‖ and ―the time limitations impose d by the client or by the circu mstances‖ incorporate notions of special circumstances, risk, and

custom. See U TAH R. P ROF ‘ L C ONDUCT 1.5(a). Absent evidence on these or oth er factors, we have no way to assess the reasonabl eness of the interest rate here, and thus no basis for striking it down.Cite as: 2013 UT 21
J USTICE L EE , Opinion of the Court/dissenting

29 ¶75 Accordingly, we refuse to invalidate the interest rate prov ision in this case because ClearOne has failed to carry its burden of coming forward with evidence or authority to demonstrate that 18 percent interest is unreasonable.

V I I. ENFORC E ABILITY OF THE COLLECTION FEE PROVISION
¶76 ClearOne likewise challenges the collection fee provision,

argu ing th at the district court ran afoul of state public policy when it allowed Dorsey to collect attorney fees on its own e ngagement agreement . Specifically, ClearOne contends that our d ecision in Jones, Waldo, Holbrook & McDonough v. Dawson , 923 P.2d 1366, 1374 (Utah 1996), articulates a public policy basis for disa llowing pro se lawyer

- litigants from recovering their own attorney fees. Unlike the majority, I disagree and would hold that Jones

, Waldo applies only in situations involving a tr ue pro se lawyer

litigant. Because Dorsey is not such a litigant, Jones

, Waldo is ina pplicable

, as the district court correctly concluded

. ¶77 In Jones

, Waldo

, a law firm sued a former client in an a ttempt to collect attorney fees incurred representing the cl ient in a divorce action. Id. at 1369

– 70. As part of this action, the law firm
asked the court to award it attorney fees incurred in pursuing the collection action against the client

. Id. at 1370. The trial court d enied this request, and we affirmed, concluding that a lawyer

litigant enjoys an advantage of ―competently present[ing] [a] claim without retained counsel‖ and that we were ―loath to e nhance that advantage by giving the lawyer

- litigant recovery . . . as [the successful] party‘s attorney.‖ Id

. at 1374 (internal quotation marks omitted). We also identified ―compelling public policy re asons‖ supporting the result. Id. a t 13 75.
¶78 Specifically, we decided that (1) ―[f]inancing litigation by fee awards provides a new incentive to lawyers to in crease their fees,‖ and ―gives rise to the danger of creati ng a  ̳cottage industry‘
for clai mants . . . as a way to generate fees rather tha n to v indicate personal claims, ‖ and (2 ) creates a ―captive client‖ who ―has no
control over the amount of time the at torney will s p end or how it will be spent.‖ Id

. at 1375 (second alteration in original) ( i nternal quotation marks omitted). In such situations

, we held that t here is no incentive for the lawyer

- litigant to limit the total fee or ―to e xplore less expensive collection alternatives .‖ Id. In addition to th ese public policy concerns, the Jones

, Waldo court ―interpreted  ̳at

-S TROHM v. C LEAR O NE C OMMUNICATIONS , I NC

. J USTICE L EE , dissenting

30 torney fee‘ as denoting a monetary obligation (a fee) paid or owed from one person (a client) to another person who has provided legal representation (an attorney)‖ and determined that ―an atto rney‘s fee presupposes a relationship of attorney and client which
do es not exist in pro se situations. ‖ Id. (internal quotation marks omitted) . Pro se lawyer

- litigants, under this rationale, do not incur fees when they prosecute their own actions and so should not be reimbursed for those fees. Id.
¶79 I find Jones

, Waldo disti nguishable and inapplicable here

. U nlike the law firm in Jones

, Waldo

, Dorsey is not purely a pro se litigant. See id. at 1369; see also Smith v. Batchelor , 832 P.2d 467 , 473

– 74 (Utah 1992) (holding that a pro se attorney

- litigant is not ent itled to recover attorney fees for successful litigation). As a sign atory to the engagement agreements, Strohm is ―jointly and seve rally responsible‖ for fees owed to Dorsey, including those i ncu rred in the collection action. Thus, Dorsey seeks in this case to vindicate not only its rights, but Strohm‘s as well.

¶80 This is an important difference in my view

— one that Ju stice Parrish‘s separate opinion f or the court dismisses too quickly

. Dorsey has a client in this case. And t he presence of a client inte rest la rgely alleviates the public policy and incentive concerns raised in Jones

, Waldo

. With Str o hm on board, Dorsey cannot be

seen to operate without client control because it is bound by rule and by agreement to represent S t rohm professionally and ethica lly. S ee U TAH R. P ROF ‘ L C ONDUCT 1.2 (a) (―[A] lawyer shall abide by a client‘s decisions concerning the objectives of representation and

. . . shall consult with the client as to the means by which they are to be pursued.‖); id. 3.2 (―A lawyer shall make reasonable efforts to expedite litigation consistent with the interests of the client.‖). Perhaps ClearOne had no client control, as the majority suggests. See infra ¶ 96 . But Strohm did. And she has a real stake in the ou tcome o f the collection action against ClearOne. Should Strohm‘s and Dorsey‘s claims against ClearOne prove un successful, Strohm would be liable for Dorsey‘s unpaid fees. And, a s the district court noted, Strohm‘s rights under the engagement agreements ―cannot
be vindicated unless she has competent counsel to assert those rights.‖ Dorsey accordingly cannot be said to be pursing litigation ―as a way to generate fees rather than to vindicate personal
claims .‖ See Jones

, Waldo , 92 3 P.2d at 1375 (internal quotation

ma rks omitted)

.Cite as: 2013 UT 21
J USTICE L EE , dissenting

31 ¶81 These distinctions leave only one element of the ration a le
in Jones

, Waldo

— that pro se lawyer

- litigants do not in cur fees

. Strohm‘s presence in this action, however, renders that element inapplicable . Because Strohm will become liable to pay Dorsey‘s fees should Dorsey be unable to collect them from ClearOne, it can hardly be said that she has not incurred attorney fees in pu rsuing this collection action. She has certainly incurred them and, based on her engagement a greement with Dorsey, she is legally responsible to pay them. Whether she is likely to have the funds to pay those fees is another matter , but that was not at all a factor
that drove our decision in Jones, Waldo. See infra ¶ 97

. And I cannot agree that Str ohm ― had almost nothing to l o s e by supporting Dorsey‘s attempt to prevail against ClearOne.‖ See infra ¶ 96 . She had everything to lose. Perhaps Dorsey could not satisfy its entire debt by pursuing Strohm for her part of its collection fees, but it could r uin her financially and leave her with nothing.
¶82 Even if the rationale was applicable here, I would find it
insufficient and unrealistic

. E very minute a law firm (or lawyer) spends in a pro se collection action is a minute it cannot spend on other matters for paying clients. Thus, in some sense, law firms really do incur costs when they engage in pro se litigation. It is no answer to speculate that ―in many cases firms are no t utilizing their full capacity

, ‖ so ―undertaking extensive pro se litigation o ften does not, as a practical matter, result in lost opportunity costs.‖ See infra ¶ 9 5

. Such speculation may or may not be correct,
but it does accept as true one important fac t: that (at least some) firms incur costs when pursuing their own collection matters. How many that may be is unknowable, despite the majority‘s i nvocation of ―most‖ and ―often.‖ See infra ¶ 9 5

. ¶83 Thus, because this case does not implicate the core of the J ones, Waldo decision

— public policy considerations concerning captive clients and improper incentives

— I would con clude that nothing prevents Dorsey from seeking fees for time spent on co llection efforts under the engagement agreement.

¶84 That does not mean, h ow ever, that my preferred approach would give Dorsey and firms like it an unfettered and ungo verned right to collect these kinds of fees. In circumstances like th ese, this court has always entrust ed the calculation of fees and a ssessment for reasonableness to the discretion of the district court.
S ee Cottonwood Mall Co. v. Sine , 830 P.2d 266, 269 (Utah 1992) (sta t-S TROHM v. C LEAR O NE C OMMUNICATIONS , I NC

. J USTICE L EE , dissenting/Opinion of the Court

32 ing that attorney fees must be reasonable)

. The careful exercise of that discretion is sufficient to alleviate any of the lingering co ncerns expressed in Jones

, Waldo and identified as the driving fa ctors behind the majority‘s extension of Jones, Waldo. Infra ¶¶ 91

– 95

. Lawyer

- litigants who unnecessarily run up legal fees and e mploy tactics that serve only to prolong and complicate litigat ion should expect to face a challenge to the reasonablene ss of their fees under our case law. See Salmon v. Davis Cnty. , 916 P.2d 890, 893 (Utah 1996) (explaining that reasonableness of an attorney fee award is assessed based on factors such as the efficien cy of the a ttorneys, the amount involved, and the result obtained ).

¶85 I accordingly dissent from Section I of Justice Parrish‘s se parate opinion for the court . I would affirm the district court‘s award in Dorsey‘s favor of fees incurred in seeking recovery u nder the letter agreements.

VI II . CONCLUSION
¶86 For the foregoing reasons, we affirm the district court‘s d etermination that Utah Code section s 16

- 10a

- 903 and

- 907 and the parties‘ engagement agreements require ClearOne to indemnify
Strohm

, but reverse the district court‘s decision to limit Strohm‘s criminal defense cost indemnification to the fees and expenses billed before her perjury conviction. We also conclude ClearOne did not have the right to unilaterally end its payment obligation to Dorsey and Strohm and affirm the district court‘s reasonableness
determination for fees in the criminal case. Next, we determine that the Dorsey letter incorporated the 18 percent interest and co llection fee provisions from the Bendinger letter and affirm the di strict court‘s decision to enforce the interest rate provision. Finally

, though a majority of the court invalidates th e collection fee prov ision under Jones, Waldo , I would enforce it

. We remand for further proceedings consistent with this opinion.

—————— J USTICE P ARRISH , Opinion of the Court as to Section I; dissen ting as to Section II :

ANALYSIS
¶87 While I concur in much of the analysis of the lead opinion, I respectfully disagree as to two issues. Specifically, I disagree with the lead opinion‘s conclusion that Dorsey is entitled to r ecover its attorney fees in the collection action because the factualCite as: 2013 UT 21
J USTICE P ARRISH , Opinion of the Court

33 situation presented in this case implicates the public policy co ncerns raised by Jones, Waldo, Holbrook & McDonough v. Dawson , 923 P.2d 1366, 1374

– 75 (Utah 1996). Even though this case does not involve a purely pro se lawyer

- litigant, see supra ¶¶ 79

– 80

, Strohm had no incentive to rei n in Dorsey, who was therefore unco nstrained by costs. Our prohibition on fee collection by lawyer

litigants was designed to protect against this precise type of b ehavior. My view on this issue has garnered a majority and s o re presents the holding of the court with respect to the recoverability of attorney fees in the collection action.

¶88 I also disagree with the lead opinion as to a lawyer‘s eth ical obligations in contracting with his clients. In contracting with client s, lawyers are bound by higher ethical standards than typical parties to a contract. I believe that the Agreements in this case do not meet that heightened standard.

I. ATTORNEY FEES ARE NOT WARRANTED UNDER
A NATURAL EXTENSION OF THE JONES WALDO
RULE PR OHIBITING THE COLLECTION OF
ATTORNEY FEES BY PRO SE LAWYER

- LITIGANTS
¶89 The lead opinion reads Jones Waldo narrowly and applies it only to those situations where the attorney or law firm is solely representing its own legal interests. In this case, howe ver, since the Agreements make Strohm jointly and severally responsible for Dorsey‘s attorney fees, including those incurred in the collection action, the lead opinion reasons that Dorsey is not ―purely a pro se litigant‖ and that Jones Waldo’s reasoning i s inapplicable. See

supra ¶ 79

. ¶90 The lead opinion finds this distinction dispositive because of the view that the presence of a client ―largely alleviates‖ the public policy and perverse incentives for continued litigation that concerned us in Jones Waldo

. Supra ¶ 80 . It reasons that Dorsey ― is bound by rule and by agreement to represent Strohm professio nally and ethically‖ and should ―Dorsey‘s claims against ClearOne prove unsuccessful, Strohm would be liable for Dorsey‘s unpaid fees.‖ Supra ¶ 80

. The lead opinion therefore concludes that Dorsey is not engaging in the kind of fee

- driven litigation that we found unacceptable in Jones Waldo

. ¶91 Though the lead opinion correctly concludes that Dorsey has a client in the formal sense, by distinguishing between theS TROHM v. C LEAR O NE C OMMUNICATIONS , I NC

. J USTICE P ARRISH , Opinion of the Court

34 purely pro se setting of Jones Waldo and the facts here, it evisce rates the underlying principles of Jones Waldo

— protecting captive clie nts and curbing improper incentives. Particularly where, as here, the client has little or no incentive to act as a check on the behavior of her attorneys and there are few, if any, external ince ntives for the attorneys to control costs, the policies dri ving our holding in Jones Waldo are implicated.
¶92 We have long recognized the ―general rule that pro se lit igants should not recover attorney fees

. . . regardless of their pr ofessional status.‖ Smith v. Batchelor , 832 P.2d 467, 473

– 74 (Utah 1992). B ecause the lawyer

- litigant‘s ability to competently present
a claim without the aid of retained counsel is an inherent a dvantage, we are ―loath to enhance that advantage by giving the lawyer

- litigant recovery not only as a successful party, but also as
tha t party‘s attorney.‖ Id. at 474.
¶93 In Jones Waldo , we identified several important public policy concerns motivating the general prohibition against the collection of attorney fees for pro se attorney

- litigants. First, permitting pro se lawyer

- litigan t fee recovery creates an incentive to artificially increase fees. Jones, Waldo, Holbrook & McDonough v.
Dawson , 923 P.2d 1366, 1 375 (Utah 1996). ―In the case of a paying client, the lawyer who wants to retain client satisfaction will have
an incentive t o limit the total fee. That incentive is not present in fee award cases.‖ Id. (internal quotation marks omitted) . ―A captive client

. . . has no control over the amount of time the attorney will spend or how it will be spent. And [lawyer

- litigants] ha[ ve] no motivation to explore less expensive collection alternatives.‖ Id.
¶94 A second, though related risk, is that permitting pro se lawyer

- litigants to recover their fees will result in increased and protracted litigation. Id. Where a lawyer

- litigan t may finance her own litigation through fee awards, there is an incentive to i ncrease fees, which in turn drives the ―adversary‘s predictable r esponse

. . . to litigate the fee claim itself.‖ Id. (internal quotation marks omitted) ; s ee also Connor v. Cal

- Az Props., Inc. , 668 P.2d 896, 898 (Ariz. Ct. App. 1983) (reasoning that ―attorneys representing themselves might be tempted to protract litigation for their own financial betterment‖). This gives rise to the danger of ―creating a  ̳cottage industry‘ f or claimants

. . . as a way to generate fees rath

-Cite as: 2013 UT 21
J USTICE P ARRISH , Opinion of the Court

35 er than to vindicate personal claims.‖ Jones Waldo , 923 P.2d at 1375 (internal quotation marks omitted)

. ¶9 5 Finally, we expressed reservations about characterizing the costs of pro se attorney litigati on as fees that are ―incurred.‖
Id

. ― It is by no means self

- evident that the time a lawyer spends on his own case represents fees  ̳incurred.‘‖ Id. Because attorney fees are ―a monetary obligation (a fee) paid or owed from one pe rson (a client) to anothe r person who has provided legal represe ntation (an attorney)

. . . attorney fee[s] presuppose[] a relationship of attorney and client which does not exist in pro se situations.‖ Swanson & Setzke, Chtd. v. Henning , 774 P.2d 909, 910 (Idaho Ct. App. 1989) ( internal quotation marks omitted) . Further, because in many cases firms are not utilizing their full capacity, underta king extensive pro se litigation often does not, as a practical matter, result in lost opportunity costs. Rather, such a firm is incenti vized to use its extra capacity, in the form of lawyers in search of billable hours or new associates whose time would not otherwise be billed, to pursue pro se litigation with the hope that the firm will reap a significant fee award, with zero downside ri sk. We ther efore reasoned in Jones Waldo that ―a law firm does not  ̳incur‘ fees when it uses its own attorneys in a collection action.‖ 923 P.2d at
1375.
¶96 Though Dorsey technically has a client in Strohm, the

pu b lic policy concerns motivating the gen eral prohibition against the collection of attorney fees for pro se attorney

- litigants are d irectly implicated by the facts here. ClearOne, as the entity u nderwriting the cost of Strohm‘s litigation, is the captive client that ―has no control over the amo unt of time the attorney will spend or how it will be spent.‖ Id. Dorsey had no incentive to limit the hours it expended or the costs it incurred to prosecute its colle ction action against ClearOne. Nor was Strohm motivated to limit Dorsey‘s expenditures in the collection action. Because ClearOne was jointly and severally liable under the Agreements for the u nderlying fees and was statutorily required to indemnify Strohm for her fees in both the underlying crimina l and the subsequent collection action, Strohm had almost nothing to lose by suppor ting Dorsey‘s attempt to prevail against ClearOne.

¶97 As a practical matter, it is far more likely that Dorsey would collect its nearly one million dollar fee from ClearOn e, a large corporation, than from Strohm, a private individual. EvenS TROHM v. C LEAR O NE C OMMUNICATIONS , I NC

. J USTICE P ARRISH , Opinion of the Court

36 lacking an explicit agreement between them that Dorsey would not attempt to collect any residual unpaid fees from Strohm, it is highly unlikely that Dorsey would have expended over eight hundred thousand additional dollars to attempt to collect fees from Strohm in the event that Dorsey was unsuccessful in its co llection action against ClearOne. And the higher the collection fees
became

— pursuant to the 18 percent interest rate specified i n the Agreement

— the less likely Strohm would be able to pay the fees for which she was jointly and severally responsible and the less likely Dorsey would have been to pursue her. And, in any event, Strohm was statutorily entitled to indemnity from Clear O ne. ¶98 These realities negate, as a practical matter, Strohm‘s i ncentive to reign in her attorneys. Indeed, they created a perverse incentive for her to refrain from limiting Dorsey‘s efforts. Further, because Dorsey employed its own attorneys rather t han those of another firm, Dorsey had nothing to lose in protracted litigation. As we explained in Jones Waldo , Dorsey‘s use of in

- house atto rneys means that it does not incur fees. Id. As a result, neither Strohm nor Dorsey had any incentive to limit t he total fee gene rated by the collection action against ClearOne

— a result squarely within the scope of Jones Waldo.

¶99 While Jones Waldo does not govern every collection action, there are instances outside of the purely pro se lawyer

- litigant se tting that, because of their peculiar factual bases, raise concerns r elated to captive clients and unconstrained litigation that Jones Waldo was meant to curb. Though the lead opinion reasons that ―[w]ith Strohm on board, Dorsey cannot be seen to operate wit hou t client control,‖ Strohm was disincentivized to control Dorsey‘s escalating costs. Supra ¶ 80. Rather, Dorsey was ince ntivized to prolong litigation in order to assess and collect its fees from ClearOne. Therefore, even though this case is not directly within the facts presented in Jones Waldo , the policy interests m otivating that case extend naturally to the facts present here, and its prohibition of the award of attorney fees to pro se lawyer

- litigants should also apply. We therefore hold that Dorsey is unable to r ecover its attorney fees in the collection action.Cite as: 2013 UT 21
J USTICE P ARRISH , dissenting

37 II. IN CONTRACTING WITH THEIR CLIENTS,
ATTORNEYS ARE BOUND BY HIGHER ETHICAL
CONSIDERATIONS THAN TYPICAL PARTIES

TO A CONTRACT
¶100 I disagree with the lead opinion‘s analysis regarding the standard to be applied to attorneys entering into fee agreements. Supra ¶ 64

. While I agree that the Dorsey letter incorporates the provisions of the Bendinger letter, the interest rate and collection provisions contained in the letters raise concerns about a lawyer‘s ethical role when drafting such engagement agreements and I b el ieve the issue should not be resolved on summary judgment.

¶101 Despite the lead opinion‘s assertion that ―nothing in [the Rules of Professional Conduct] prescribe s a higher standard of clarity for attorney

- client fee agreements than that imposed on

regu lar contracts,‖ supra ¶ 68 n.14 , the attorney

- client relationship is not analogous to an ordinary contractual relationship. Indeed, the Utah Rules of Professional Conduct (Rules) contemplate hig her ethical standards for attorneys when contracting with the ir cl ients than do typical laws of contract formation. For instance, we require that a contingent fee agreement ―be in a writing signed by the client‖ and that it ―state the method by which the fee is to be determined.‖ U TAH R. P ROF ‘ L C ONDUCT 1.5(c). Su ch formalities are not required in typical contract formation, even when such a contract is based on a contingent return.
¶102 Similarly, subject to certain limited exceptions, ―[a] la wyer shall not enter into a business transaction with a client or know ingly acquire an ownership, possessory, security, or other pecuniary interest adverse to a client

. ‖ Id. 1.8(a). Again, there is no such prohibition on typical contracting parties, nor is there such a prohibition when lawyers are contracting with parties whom they do not represent. Finally, under the Rules, lawyers may not ―solicit any substantial gift from a client,‖ nor may they prepare instruments conveying substantial gifts unless they are related to the client. Id. 1.8(c). Such restrictions are sim ply ina pplicable to non

- lawyers. As stated by the California Court of A ppeal, ―[t]he Rules of Professional Conduct are not only ethical standards to guide the conduct of members of the bar; but they also serve as an expression of public policy to protect the public.‖ Fields v. Ratfield

, No. C09

- 01125

, 2012 WL 5359775, at *9 (Cal. Ct. App. Nov. 1, 2012) (internal quotation marks omitted).S TROHM v. C LEAR O NE C OMMUNICATIONS , I NC

. J USTICE P ARRISH , dissenting

38 ¶103 Such protection of the public extends to the clarity of a lawyer‘s communication with his or her client on the issue of fees. I agree with the lead opinion that lawyers can and should aspire to ―great[] clarity‖ in their dealings with clients, but I believe t hat the ―minimum standard‖ set by the Rules is higher than that which the lead opinion advocates. Supra ¶ 68 n.16 (―[A]s for what is legally required, we read the rules as consistent with the r equirements of contract law.‖). Under the Rules, ―the basis o r rate of the fee and expenses for which the client will be responsible shall be communicated, preferably in writing, before or within a reasonable time after commencing the representation .

. . . Any changes in the basis or rate of the fee or expenses sha ll also be communicated to the client.‖ U TAH R. P ROF ‘ L C ONDUCT 1.5(b). In this case, however, the communication between Dorsey, Strohm, and ClearOne is anything but explicit.
¶104 For example, Dorsey‘s decision to bring in what the di strict court deter mined to be overpriced out

- of

- state counsel was not adequately communicated. See supra ¶ 54 . Because the Dorsey letter did not explicitly contemplate the use of expensive outside counsel, neither Strohm nor ClearOne were on notice that Dorsey would hire such counsel and bill them at rates hundreds of dollars higher than those in the local area. Such exorbitant fees were in contrast to the language of the letter stating that Dorsey‘s ―fees are ordinarily based on our usual and customary hourly rates [of a pproximately $255].‖ And though the Dorsey letter stated that ―[o]ur hourly rates are subject to adjustment from time to time,‖ hiring high

- priced out

- of

- state counsel surely cannot constitute an ―adjustment‖ to Dorsey‘s typical hourly rates.

¶105 The l ack of clarity in agreements such as those at issue here is entirely within the control of the attorneys drafting the agreements. And when lack of clarity leads to issues of notice or misplaced expectations, it is the clients, rather than the drafting

att orneys, who are negatively impacted. I believe that attorneys should be held to a higher standard. They should not just strive for ―great[] clarity‖ in their agreements, but should not be benefi tted when they neglect to draft agreements that lack such cl arity.

CONCLUSION
¶106 The holding of the court is that Dorsey is not entitled to recover its attorney fees in the collection action. Attorney feesCite as: 2013 UT 21
J USTICE P ARRISH , dissenting

39 were not warranted because the facts here present a natural exte nsion of our precedent prohibiting collection of attorney fees by pro se lawyer

- litigants. Although Dorsey technically has a client, the incentives are such that there was essentially no check on its e xpenditures.
¶107 I respectfully dissent from the lead opinion as to the
standards to be applied to lawyers in drafting fee agreements with their clients. Lawyers should be, and often are, held to higher et hical standards than other parties to a contract.