Opinion ID: 1913355
Heading Depth: 1
Heading Rank: 26

Heading: Did the trial court use the correct method in assessing reasonable attorney fees as costs?

Text: As a general rule, attorney fees may only be awarded by contract or when specifically authorized by statute. O'Connor v. King, 479 N.W.2d 162, 166 (S.D.1992) (citing SDCL 15-17-7; Assman v. J.I. Case Credit Corp., 411 N.W.2d 668 (S.D.1987)). SDCL 21-35-23 provides an award of reasonable attorney fees to the defendant in a condemnation suit if the final judgment is twenty percent greater than the plaintiff's final offer. It is undisputed that the final judgment in this case mandates the award of reasonable attorney fees. The formula indicates that the legislature meant to discourage the condemnor from making inequitably low jurisdictional offers. Standard Theatres v. State, Dept. of Transp., 118 Wis.2d 730, 349 N.W.2d 661, 668 (1984). The only language referring to the award of attorney fees explains that they must be reasonable. There is absolutely no restriction in the statute implying that reasonable refers only to fees calculated on an hourly basis. Id. In this case, Kelleys claim that the contingent fee arrangement with their attorney is reasonable simply because the majority of attorneys enter into similar agreements in condemnation actions. `However, while such contingent fee arrangements may be perfectly valid and proper as between an attorney and his client, it does not necessarily follow that such fee is a reasonable fee to be taxed against the party taking private property for a public use, as permitted under [SDCL 21-35-23].' City of Bismarck v. Thom, 261 N.W.2d 640, 643 (N.D.1977) (quoting Municipal Airport Authority of City of Fargo v. Stockman, 198 N.W.2d 212, 217 (N.D.1972)). In deciding what is a reasonable attorney fee, the trial court should consider several parameters which affect the value of legal services, such as: (1) the time and labor required, the novelty and difficulty 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 preclude other employment by the lawyer; (3) the fee customarily charged in the locality for similar 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 relationship with the client; (7) the experience, reputation, and ability of the lawyer or lawyers performing the services; and (8) whether the fee is fixed or contingent. Model Rules of Professional Conduct, Rule 1.5 ... The fee should not be based on any one single factor but all of these matters should be taken into consideration. The only requirement is that the fee which the court fixes in each case must be reasonable for the services rendered ... In the case before us, the court arrived at the amount of the attorney's fee to be awarded solely on the basis of the contingent-fee contract. City of Bismarck, 261 N.W.2d at 642 (quoting Morton County Board of Park Commissioners v. Wetsch, 136 N.W.2d 158 (N.D. 1965)). We should note that under SDCL 21-35-23, where the fee is in addition to the award, no safeguard or incentive exists for the landowner to arrange for reasonable attorney fees as would be the case if the fee were paid by the landowner out of the award or recovery. City of Bismarck, 261 N.W.2d at 643. We are not under the illusion that a `just and adequate' fee can necessarily be ascertained by merely multiplying attorney's hours and typical hourly fees. However, we are convinced that this simple mathematical exercise is the only legitimate starting point for analysis. It is only after such a calculation that other, less objective factors, can be introduced into the calculus. City of Detroit v. Grinnell Corporation, 495 F.2d 448, 471 (1974). We recognize that it is virtually impossible to set out every conceivable item that should be considered. If the trial judge finds justification or reason to include something else of significance, he should state those reasons and justifications for inclusion in his ultimate determination. City of Bismarck, 261 N.W.2d at 646. We conclude that a reasonable fee in certain instances may be in excess of what a one-third contingency fee would produce or it may be less. It is the reasonableness of the fee, and not the arrangements the attorney and his client may have agreed upon, which is controlling. Whenever the fee is to be assessed and included in the judgment, as is provided for in [SDCL 21-35-23]. Id. at 645-46. After reviewing the record, we are convinced that the one-third contingency fee agreement between Kelleys and their attorney does not establish a reasonable fee for this case, since it is only one factor to be considered in determining what a reasonable fee is. It is important to note that this decision on attorney fees would not affect the attorney fee arrangement between Kelleys and their attorney. It may only affect the amount that City, as condemnor, is required to pay the Kelleys for attorney fees. Therefore, we remand for the trial court to award reasonable attorney fees consistent with this opinion.