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Costs - Attorney Fees - Review - Discretion of Court - Reasonableness. Under RCW 4.84.020, the amount of an attorney fee award is reviewed under a standard of reasonableness. An award will not be overturned on appeal unless it constitutes an abuse of the trial court's discretion.
 Courts - Judicial Discretion - Abuse - What Constitutes. A trial court's decision constitutes an abuse of discretion only if no reasonable person would have made the same decision.
 Costs - Attorney Fees - Amount - Factors - In General. When determining the amount of attorney fees to award, a trial court does not abuse its discretion by considering the factors set forth in RPC 1.5(a), the fee agreement between the party and his attorney, and its policy based on the individual circumstances of making the party whole.
 Costs - Attorney Fees - Amount - Factors - Contingent Fee Agreement. A contingent fee agreement is not determinative as to what constitutes a reasonable amount of attorney fees, but a trial court may consider its terms when making an attorney fee award.
 Costs - Attorney Fees - Amount - Reasonableness - Hourly Rate and Contingent Fee. Awarding a party attorney fees charged at an hourly rate in addition to fees incurred under a contingent fee agreement is not necessarily unreasonable.
NAMES OF CONCURRING OR DISSENTING JUDGES: Dore, J., dissents by separate opinion; Utter and Smith, JJ., did not participate in the disposition of this case.
NATURE OF ACTION: In an action seeking damages for breach of a trustee's fiduciary duties, the Supreme Court at 99 Wn.2d 394 reversed a judgment in favor of the trustee and remanded the case for a determination of damages and attorney fees.
Superior Court: The Superior Court for King County, No. 86-2 00058-9, Gary M. Little, J., on June 12, 1987, awarded the plaintiffs damages and attorney fees.
Supreme Court: Holding that the trial court had not abused its discretion in determining the amount of the attorney fee award, the court AFFIRMS the judgment.
COUNSEL: DAVIS, WRIGHT & JONES, by RICHARD A. DERHAM and SLADE GORTON, for appellant.
EDWARDS & BARBIERI, by MALCOLM L. EDWARDS and CHARLES K. WIGGINS; PAUL N. LUVERA, JR.; BOGLE & GATES, by KIMBERLY W. OSENBAUGH, for respondents.
MAJORITY OPINION: First Interstate Bank (Bank) challenges the trial court's award of attorneys' fees to plaintiffs. The Bank contends that the trial court erred by relying on the terms set forth in a contingent fee agreement between plaintiffs and their attorney and erred by awarding fees based on an hourly rate in addition to those based on the contingent fee agreement. We uphold the trial court's award.
In 1979, the plaintiffs brought suit against Pacific National Bank, defendant's predecessor, alleging a breach of the Bank's fiduciary duty in the management of two trusts. Plaintiffs contended that the Bank failed to obtain a reasonable price when it sold property in downtown Seattle owned by one of the trusts. The Bank prevailed at trial, and the plaintiffs appealed. This court reversed, in ALLARD v. PACIFIC NAT'L BANK, 99 Wn.2d 394, 663 P.2d 104 (1983), and remanded the case to the trial court for a determination of damages and attorneys' fees.
On remand, the trial court awarded approximately $2.5 million in damages to the plaintiffs. The court also awarded approximately $1 million in attorneys' fees. These fees included an award of approximately $225,000 to the firm of Oles, Morrison & Rinker, et al, which handled the initial trial and appeal. Additionally, the court awarded approximately $750,000 in attorneys' fees for the second trial. These fees included a contingent fee of $596,646 to the firms of Paul Luvera and Associates and Mullavey, Prout, Grenley, Sonkin & Foe, plus $80,000 in fees payable based on an hourly rate to the firm of Edwards & Barbieri for the services of Charles Wiggins and $65,000 in fees to the guardian ad litem.
1. Whether the trial court may rely on a contingent fee agreement between the prevailing party and its attorney in computing and awarding a reasonable attorney fee?
2. Whether the trial court may award attorney fees charged at an hourly rate in addition to the fees awarded based on a contingent fee agreement?
Both the Bank and the Court of Appeals have framed the issues in terms of the propriety of the trial court's reliance on the contingent fee agreement and the award of hourly fees in addition to those awarded under the agreement. However, the issue should be framed as to whether the trial court's award of attorneys' fees, as a whole, was reasonable.
[1, 2] RCW 4.84.020 provides that, "in all other cases in which attorneys' fees are allowed, the amount thereof shall be fixed by the court at such sum as the court shall deem REASONABLE . . ." (Italics ours.) SEE ALSO SINGLETON v. FROST, 108 Wn.2d 723, 727, 742 P.2d 1224 (1987); KEY v. CASCADE PACKING, INC., 19 Wn. App. 579, 585, 576 P.2d 929 (1978). The reasonableness of an award is subject to appellate review. KEY, at 585. However, the trial court's determination of what constitutes a reasonable award will not be reversed absent an abuse of discretion. BOEING CO. v. SIERRACIN CORP., 108 Wn.2d 38, 64, 738 P.2d 665 (1987); MEYER v. UW, 105 Wn.2d 847, 856, 719 P.2d 98 (1986); ALLARD v. PACIFIC NAT'L BANK, 99 Wn.2d 394, 407, 663 P.2d 104 (1983). "A trial court abuses its discretion when its exercise of discretion is manifestly unreasonable or based upon untenable grounds or reasons." DAVIS v. GLOBE MACH. MFG. CO., 102 Wn.2d 68, 77, 684 P.2d 692 (1984). Also, "[a]n abuse of discretion exists only where no reasonable person would take the position adopted by the trial court." SINGLETON, at 730 (quoting WILKINSON v. SMITH, 31 Wn. App. 1, 14, 639 P.2d 768 (1982)).
a reasonable award for attorney's fees and costs.
of money they owe to Mr. Luvera.
(8) Whether the fee is fixed or contingent. RPC 1.5(a). We have recognized that the factors set forth in CPR DR 2-106(B), the predecessor to RPC 1.5(a), may be used as a guideline for determining reasonable attorneys' fees. SEE SINGLETON, at 731, KIMBALL v. PUD 1, 64 Wn.2d 252, 257, 391 P.2d 205 (1964); see also Informal Op. 88-1, CONTINGENT FEE AGREEMENTS IN CASES WHERE THE COURT SETS A REASONABLE ATTORNEY'S FEE, Wash. State Bar News 23 (Feb. 1988).
DELAWARE II, at 723 (quoting JOHNSON v. GEORGIA HWY. EXPRESS, INC., 488 F.2d 714, 718 (5th Cir. 1974)).
not control the size of the burden placed on a defendant.
enhanced nor diminished by the presence of such an arrangement.
KEY, at 586. The existence of a contingent fee agreement may be considered as one of several factors in making an award of attorneys' fees, but it alone is not determinative.
In this case, the trial court did not apply the contingent fee agreement mechanically to determine the amount of attorneys' fees to be awarded to the plaintiffs. The court also considered the factors set forth in RPC 1.5(a) and its intent to make the plaintiffs whole. Because the court considered several factors in making its award, we cannot say that its award of $596,646 according to the contingent fee agreement constituted an abuse of discretion.
the actual amount of damages.
Furthermore, when we initially concluded that plaintiffs were entitled to recover attorneys' fees, we stated that "plaintiffs should be granted their request to recover ALL attorney fees expended at both the trial and on appeal . . ." (Italics ours.) ALLARD, at 407-08. For these reasons, it was within the trial court's discretion to consider making plaintiffs whole as a factor in reaching its decision.
The trial court did not abuse its discretion by considering the factors set forth in RPC 1.5(a), the contingent fee agreement, and making plaintiffs whole in making its award of attorneys' fees.
The Bank also contends that the trial court abused its discretion by awarding $80,000 in hourly fees for the services of Mr. Wiggins in addition to the $596,646 awarded under the contingent fee agreement. The Bank asserts that had Mr. Luvera chosen to associate someone from the Mullavey firm, the fees awarded to that attorney would have been covered by the contingent fee agreement. Instead, by going outside the firm, the Bank has been required to pay the entire 25 percent contingent fee plus an additional $80,000 to Mr. Wiggins.
it illustrates the thought that Paul had.
The Bank argues that this paragraph refers to hiring outside counsel for a specific, narrowly defined purpose. In this case, Mr. Wiggins handled a large portion of the trial, and therefore, arguably, did not fall within the "Iranian counsel" exception.
 As noted, the primary consideration in determining an appropriate award is reasonableness. Thus, it should not be improper per se to award fees charged at an hourly rate in addition to those incurred under a contingent fee agreement. If such an award is reasonable under the circumstances, it should be upheld. There was evidence that the plaintiffs had originally agreed to pay Mr. Luvera a 33 1/3 percent contingent fee. This fee was reduced to 25 percent in consideration of the fact that outside counsel might have to be appointed. The plaintiffs assert that as a result of this reduction, the Bank saved $120,000 in fees. In addition, there was evidence that Mr. Wiggins' role was limited to research, briefing, and motions practice during much of the litigation, and his role expanded only when the Bank noted last-minute depositions of the plaintiffs' experts and made last-minute disclosures of its own expert witnesses. The plaintiffs should not have to bear the burden of the Bank's late-hour tactics, especially in light of the purpose of making plaintiffs whole. We cannot say that the trial court's award of $80,000 for fees to Edwards & Barbieri constituted an abuse of discretion.
Finally, Mr. Wiggins and the guardian ad litem have requested attorneys' fees for services rendered during this appeal. Mr. Wiggins and the guardian ad litem have complied with the requirements of RAP 18.1 by making a request for attorneys' fees in their brief. In addition, Mr. Wiggins timely filed his affidavit for attorneys' fees and is entitled to recover attorneys' fees in the amount of $23,663.30 for the work he has done on appeal, pursuant to RAP 18.1. We also award the guardian ad litem attorneys' fees of $2,970.
In fashioning the award of attorneys' fees, the trial court considered the factors set forth in RPC 1.5(a), the contingent fee agreement between the plaintiffs and their attorney, and the court's stated intent to make plaintiffs whole. The Bank challenges the award of fees based on the contingent fee agreement and the additional $80,000 awarded to Charles Wiggins. We conclude that this award is not unreasonable and did not constitute an abuse of discretion. We uphold the award of attorneys' fees.
DISSENTING OPINION: In ALLARD v. PACIFIC NAT'L BANK, 99 Wn.2d 394, 407-08, 663 P.2d 104 (1983), we remanded for a determination of damages for the defendant's breach of its fiduciary duties as trustee of plaintiffs' trust with instructions that "plaintiffs should be granted their request to recover all attorney fees expended at both the trial and on appeal . . ." On remand, the trial court based its award of attorney fees on an attorney fee agreement that permits counsel to collect both a contingent fee and an hourly fee for the same result. I believe such a fee agreement is unreasonable and contrary to public policy. Attorney fees based upon such an agreement amount to an unjustifiable penalty. I would disallow Wiggins' fees in the amount of $80,000, and affirm judgment on plaintiffs' contingent fee in the amount of $596,646. I would award appellant its attorney fees on this appeal.
The trial court awarded contingent and hourly fees for the same work. The court's award of attorney fees was based upon untenable reasons and constitutes an abuse of discretion. ALLARD, at 407. BOEING CO. v. SIERRACIN CORP., 108 Wn.2d 38, 64, 738 P.2d 665 (1987).
The Allards negotiated a contingent fee agreement under which Paul Luvera and Associates and the firm of Mullavey, Prout, Grenley, Sonkin & Foe would receive 25 percent of the gross recovery (excluding attorney fees awarded for the first trial). See Clerk's Papers, at 909. Luvera then associated Charles Wiggins and the firm of Edwards & Barbieri to act as cocounsel. Based on the fee agreement, the trial court awarded $596,646 to Luvera and the Mullavey, Prout firm as a contingent fee and awarded $80,000 to Wiggins calculated on an hourly rate.
(Italics mine.) Clerk's Papers, at 910.
Wiggins' services are not covered by the "Iranian attorney" provision. That provision contemplated the hiring of outside counsel for certain specific and narrowly defined purposes. Wiggins' services were extensive. He handled depositions; represented the plaintiffs at pretrial hearings; researched, briefed and argued most of the pretrial motions; and took the leading role in posttrial arguments. At trial, he made opening and closing arguments and handled the examination of two of the plaintiffs' six witnesses. The "Iranian attorney" provision cannot be construed to encompass the hiring of cocounsel, at an hourly rate, to handle a substantial portion of the trial as well as pretrial and posttrial proceedings.
A contingent fee should cover all routine legal work for the preparation and presentation of a case. Because Wiggins performed extensive work that needed to be done to have the matter presented for trial, his hourly fee should have been paid out of the contingent fee. To hold otherwise gives counsel the right to collect a contingent fee and then hire outside counsel, at an hourly rate, to try the case. Such calculation, at the appellant's expense, should not be sanctioned by this court. If Wiggins' services were performed by Luvera or his own personnel, admittedly there would be no additional fee on top of the contingent fee.
The fee agreement, as interpreted by the majority, authorizes a contingent fee and an hourly rate for the same work. Awarding a contingent fee in addition to an hourly fee, under the terms of the subject agreement, is unreasonable. I would hold that the trial court abused its discretion when it failed to deduct Wiggins' hourly fee from the contingent fee award.
There is already a widespread public perception that contingent fee agreements are unfair and ought to be restricted or abolished. The majority's holding today is bound to reinforce this perception.
in the bar and the legal system in general.
of attorney fees and other client costs in tort litigation?
Letter from Chief Justice Pearson to Edward J. Novack (Apr. 22, 1987).
This commission has now filed its report, making various recommendations, the main ones being: to base the fee on net, rather than gross recovery; to provide in advance for the resolution of fee disputes; to include appeals and collection in the services covered by the fee; and to encourage attorneys to review the fee at the termination of the lawyer/client relationship and reduce the fee if appropriate. Such proposed changes, after due deliberation by this court and after circulation in the advance sheets for lawyers' comments, will be rejected, modified or adopted as a part of the Washington Rules of Professional Conduct.
The Novack Commission's recommendations appear to be moving toward more equitable awards for the poor and injured workmen.
I cannot see how we can persuade the public of our good faith in addressing the problem of abuse of contingent fees when we fail to discuss the subject in a case directly before us. I practiced law for 29 years and found the contingent fee the one outstanding custom of our judicial system which makes our system of justice far superior to England's. Without the contingent fee, the poor and working people of America would be deprived in civil cases of the ability to process their claims and great injustices would be effectuated. However, the contingent fee should not be abused by the legal system or the public might overreact and in an attempt to rectify injustices, may in their exuberance abolish or severely limit contingent fees. Such fees should always be based on risks. A greater risk justifies a higher percentage fee. Conversely, the smaller the risk, the smaller the contingent fee should be. In the subject case, the record discloses that the client insisted on a contingent fee. The attorneys in turn responded by charging a moderate contingent fee of 25 percent of the total recovery, apparently based on the fact that liability was nearly certain, the defendant was solvent and only the size of the verdict was uncertain.
agreed to pay Mr. Luvera a 33 1/3 percent contingent fee.
the fact that outside counsel might have to be appointed.
the Bank saved $120,000 in fees.
The record shows that the parties negotiated the amount of the contingent fee from their respective positions and it was agreed to be 25 percent subject to the "Iranian attorney" provision, which I heretofore have analyzed and rejected as to attorney Wiggins.
We cannot ignore the issue of the fairness of contingent fee agreements. I believe the subject agreement combines hourly and contingent fees in a way that undermines the basic justification for contingent fees.
There are at least four general objections to the contingent fee. The first is that it threatens the ethical integrity of the profession by encouraging a speculative attitude toward law practice, too great an emphasis on winning and the solicitation of clients. F. MacKinnon, CONTINGENT FEES FOR LEGAL SERVICES 4-5 (1964).
«1» Another reason the fee is not permitted is that the services of a barrister are considered a "noble" act. Payment to a barrister is therefore considered "an honorarium which he may accept as a gesture of his client's gratitude but for which he has no claim." F. MacKinnon, CONTINGENT FEES FOR LEGAL SERVICES 10 (1964). Contracting for a portion of the recovery is doubly inconsistent with the notion of an honorarium for a "noble act".
Even in this country, where the attitude toward litigation is more positive, contingent fees are often blamed for nuisance lawsuits and the promotion of a litigious atmosphere. F. MacKinnon, at 5.
«2» Except, of course, in the all-or-nothing sense that the lawyer will not be paid unless he wins.
One effect of this is to raise the possibility of disproportionate fees. In PEOPLE v. NUTT, 696 P.2d 242 (Colo. 1984) for example, an attorney was suspended for 6 months because he received a "clearly excessive fee." The services rendered in a suit for oil and gas royalties had a value of $18,272.78. The fee arrangement, however, would have permitted the attorney to receive up to $200,000. SEE ALSO IN RE SWARTZ, 141 Ariz. 266, 686 P.2d 1236 (1984). Even where the fee is not grossly disproportionate, it is arguable that, as a general rule, contingent fees overvalue lawyer services. SEE F. MacKinnon, at 159-94.
The fourth basic objection to contingent fees is related to the third. Severing the logical tie between compensation and services rendered means that the client and the attorney are placed in a conflict of economic interest. The attorney will tend to spend as little time as possible on the case, so that he will maximize his hourly compensation. The client, on the other hand, will want the attorney to spend as much time as possible on the case, so as to avoid paying a disproportionately high cost for legal services. Clermont & Currivan, IMPROVING ON THE CONTINGENT FEE, 63 Cornell L. Rev. 529, 534-66 (1978).
«3» Most western states never prohibited contingent fees. The last state to authorize them was Maine, in the mid-1960's. Comment, CONTINGENT PERCENTAGE FEES: AN ECONOMIC ANALYSIS, 51 J. Air L. & Com. 531, 535 (1986).
The most important justification for the contingent fee is that it opens up the legal system to those who could not otherwise afford it.
society is a risky, complicated, and expensive business.
afford him redress under changed conditions.
the processes of the law.
Hughes, THE CONTINGENT FEE CONTRACT IN MASSACHUSETTS, 43 B.U. L. Rev. 1, 7-8 (1963).
The contingent fee is important to the profession, because it is an essential part of its economic viability.
«4» Beyond these two justifications, it is important to note some responses to the general objections to the contingent fee listed above. First, it is impossible to say how often ethical violations can be directly attributed to the use of contingent fees. Even if they do occur, those violations are and should be addressed directly by the courts and bar associations of the country. Abolishing the fee would be an overbroad solution to ethical problems that are difficult to gauge at all. This also holds true for any harm that results from the conflict of economic interests between lawyer and client.
certainly will not want to pursue patently frivolous claims.
has no other access to the legal system.
hourly basis, this is not necessarily unfair or disproportionate.
fee or a pure percentage fee.
Clermont & Currivan, at 598.
«5» It makes no difference, from the client's point of view, whether the hourly payments go to the first attorney the client hires or a second attorney who associates with the first. An excessive payment to one or two attorneys is still excessive.
This agreement, as the majority interprets it, also intensifies the conflict of economic interests between the attorney and the client. The subject agreement not only encourages the attorney to spend as little time as possible on the case, it makes it legally possible to shift work to a second attorney. Since the first attorney's work load is reduced while his contingent fee compensation is not reduced at all, he will send as much work as possible to the second attorney. The client, meanwhile, not only pays the relatively high contingent fee, he pays an hourly fee for work that should have been covered by the contingent fee and the client necessarily does not receive the services he contracted for, because they are performed by a different attorney.
This is EXACTLY what happened here. The majority, however, fails to recognize this conflict of interest.
Given that this fee agreement was flawed, it cannot constitute a reasonable basis for the award of fees under RCW 4.84.020. The way to cure the defects of the subject agreement would be to offset the hourly fees against the contingent fee. The trial court failed to do so, and therefore abused its discretion.
The plaintiffs' attorneys are men of integrity and ability and have every right to test the validity of their "Iranian attorney" provision of their contingent fee agreement, but members of the Supreme Court also have a responsibility to set forth their views for the benefit of the public. The majority in this opinion by validating a contingent fee plus an additional fee for legal work done by secondary attorneys will create gargantuan attorney fees that clients cannot afford, and which ultimately will injure the legal profession. The subject contingent fee agreement should not be used as the basis for the award under RCW 4.84.020 unless the hourly compensation award was offset against the contingent fee. I would disallow Wiggins' fees in the amount of $80,000 and affirm the contingent fee judgment in the amount of $596,646. As the appellant is the prevailing party, I would remand to the trial court for determination of a reasonable attorney fee for appellant for this appeal.
POST-OPINION INFORMATION: After modification, further reconsideration denied May 26, 1989.

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