Court Opinion

ID: 9788685
Source: CourtListenerOpinion
Date Created: 2023-08-31 01:15:39.395837+00
Date Added: 2024-06-11T07:37:15.986135
License: Public Domain

EASTAUGH, Justice,
dissenting.
Today’s opinion erroneously prevents trial courts evaluating the reasonableness of a prevailing party’s attorney’s fees under Alaska Civil Rule 68 from considering the most relevant evidence. It consequently remands for a determination that cannot rationally be made without considering the now-precluded factors. It does so after confusing the two separate determinations — the prevailing party determination and the reasonableness determination — that Rule 68 requires of trial courts. Because the superior court committed no legal error and did not abuse its discretion in awarding attorney’s fees to the appellant, I would affirm its award. I therefore respectfully dissent.
The first question is whether the superior court committed any legal error in choosing to consider factors listed in Alaska Rule of Professional Conduct 1.5. Conduct Rule 1.5(a) states that a lawyer’s fee “shall be reasonable.” It sets out eight non-exclusive factors to be considered in determining the reasonableness of a fee:
(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 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.
The superior court, in looking to the pertinent factors listed in that rule, did so in reliance on what we said in Gamble v. North-store Partnership,1 and cited Gamble in support. We explained in that case, in holding that full reasonable fees for an earlier appeal should not have exceeded $18,000, that we were considering “the various components determining a reasonable fee ■ expressed in Rule 1.5 of the Rules of Professional Conduct, most importantly the lack of novelty of the issues, the nature of the controversy, the result obtained, and the time and labor that should have been required.”2
The superior court here paraphrased the considerations we said were relevant in Gamble and added these considerations: the modest probable recovery, the minimal verdict, the lack of any serious time limitations, and the contingent nature of the fee. All of these factors originated in Rule 1.5. The superior court therefore followed the methodology that we have approved in a comparable context in which the same issue was before the court: the reasonableness of incurred attorney’s fees.
Today’s opinion, however, contends that awards under Civil Rule 68 raise different questions than awards under Civil Rule 82. It therefore implicitly distinguishes Gamble, which involved a Rule 82 award rather than a Rule 68 award.3 Today’s opinion does so on the theory that the purpose of Rule 68, unlike that of Rule 82, is not merely to “partially compensate” the prevailing party, but to *1239encourage pretrial settlement.4 It reasons that three of the Rule 1.5 factors relied on by the superior court — lack of novel issues of law, modest probable recovery, and minimal verdict — '“cut both ways.”5 It thinks these three factors could suggest not only that the incurred fees might not have been reasonable, but also that the offeree acted unreasonably in “rejecting” an offer of judgment that proved to be successful.6 It therefore seems to conclude that these three factors do not apply under Rule 68; it holds that the superior court reversibly erred by relying on them.7
Before discussing the logical error, I want to discuss its consequences. Most significantly, it forecloses consideration of the three factors when trial courts are determining the reasonableness of the prevailing party’s attorney’s fees. Certainly these three factors are relevant to the reasonableness determination. Even as it holds that relying on them was error, the court’s opinion acknowledges that they are relevant to the issue of reasonableness. Thus, the opinion states that these factors are “still probative as to whether the prevailing party litigated its claim unreasonably.”8 But these three factors are more than merely relevant; they are highly relevant. What could be more germane to the reasonableness of incurred fees than whether the dispute turned on established legal principles, would probably produce only a modest recovery, and indeed produced only a minimal recovery? That these factors are always highly relevant is confirmed by considering what happens as the issues become less obvious, the probable recovery becomes less modest, and the actual recovery increases. At what point on the sliding scale would this court again permit trial courts to consider these three factors? There is no rationally identifiable point, yet it is undeniable that the factors are highly, or even uniquely, relevant.
The court’s rationale for precluding consideration of the three factors is not that they are irrelevant, but that they are too relevant, i.e., that they are relevant not just to the reasonableness of the incurred fees, but also to the unreasonableness of the offeree in failing to accept the successful offer of judgment.9
The court assumes the inferences cancel out. But to the extent these three factors permit inferences on these two different issues, the inferences are much stronger on the topic of fee reasonableness than on the topic of offeree unreasonableness. Therefore, the detriment to the truth-finding process resulting from the inability to consider these factors when determining fee reasonableness far outweighs any possible benefit that might result from preventing unreasonable offerees from inappropriately limiting fee awards.
In my view, the factors listed in Rule 1.5(a) are all potentially relevant, even when Rule 68 is involved. The reasonable-fee determination is inescapably fact specific. The trial court is invariably in the best position to determine globally the maximum fee that would have been reasonable; the factors help the court make that determination. Likewise, the trial court is in the best position to decide the extent to which the offeree’s litigation approach justified greater post-offer efforts by the offeror. And certainly it is capable of determining whether, for example, the lack of novelty of issues demonstrates that the offeror engaged in undue litigation efforts or demonstrates that the offeree was unreasonable. The superior court here had ample opportunity to make that determination and to draw its own assessment about *1240the reasonableness of the fees and effort given the amount at stake.10
Now we return briefly to the public policy underlying the offer of judgment rule. The approach of the opinion today confuses the policy of encouraging settlement (and discouraging unreasonable litigation conduct) with the reasonable-fee determination. The settlement-encouragement policy is fully satisfied by the prevailing party determination. That determination turns only on whether the offeree “beat” the offer, a mathematical comparison that decides whether the offer exceeds the “final verdict.” It does not turn on a subjective assessment of whether the successful offer was “reasonable” and it does not decide that the offeree was unreasonable.
Furthermore, that an offer of judgment is successful can be a matter of happenstance. Similar cases can result in dissimilar verdicts. The success of the offer should not foreclose trial courts from using the appropriate tools to assess the reasonableness of the offeror’s fees. That assessment can best be achieved by looking to the factors the superior court relied on here.
Finally, the court remands, apparently so the superior court can recalculate reasonable attorney’s fees by applying one factor: “the moderate amount of time and labor that the case should have required.”11 But it seems to me that in determining what amount of time and labor the case should have required, the superior court almost certainly should look at the three factors which this court now says cannot be considered. How can a court say what amount of time should have been required without looking at the novelty of the issues, the (modest) probable recovery, and the actual recovery?

. Gamble v. Northstore P’ship, 28 P.3d 286, 293 (Alaska 2001).

. Id.

. Op. at 1237.

. Id.

. Op. at 1237.

. Id.

. Although it does not expressly say so, the court's opinion apparently considers the three factors irrelevant for Rule 68 purposes, and, again without expressly saying so, apparently intends the superior court on remand to conduct its recalculation without regard to these three factors. Op. at 1237.
The opinion also finds the contingent nature of the fee irrelevant. That factor is probably relevant because it implies the client has no practical interest in limiting or monitoring the hours the attorney is spending.

. Op. at 1237.

. Id.

. Although the court reverses on the basis of what it characterizes as a legal error, it is hard to avoid thinking that the court’s real objection is dissatisfaction with the trial court’s finding that the reasonable fee should not have exceeded $20,000. Op. at 1237-38 n. 11. Thus, this court thinks it is "difficult to reconcile” the week-long trial with the trial court’s $20,000 finding. Id. Of course, the trial court may well have concluded that a week-long trial was unjustified, and that Froines was responsible for prolonging it. We owe deference to trial courts making such determinations. Nothing here makes it "difficult to reconcile” the trial length with the $20,000 finding.

. Op. at 1237.