Michigan Court of Appeals; Docket No. 103414; Published
Judges Doctoroff, Shepherd, and Lamb; Unanimous; Per Curiam
Official Michigan Reporter Citation: 178 Mich App 426; Link to Opinion 
STATUTORY INDEXING:
Calculating Attorney Fees Based on Contingent Fee [§3148]
Calculating Attorney Fees Not Based on Contingent Fee [§3148]
TOPICAL INDEXING:
Not Applicable
CASE SUMMARY:
In this significant Opinion by Judge Shepherd dealing with the computation of the attorney fee sanction under §3148 of the Act, the court reversed a trial court's award of attorney fees that was based purely upon an hourly rate formula and which did not take into consideration the contingent fee agreement between the plaintiff and his attorney.
The plaintiff was awarded approximately $60,000 in no-fault PIP benefits and interest. After a finding of an unreasonable refusal to pay, the plaintiff moved for an attorney fee award in the amount of $20,000, which was based on a one-third contingent fee. After a hearing, the trial court awarded $5,804 based upon an hourly rate of $100 per hour as applied to an itemized statement listing the time spent and the nature of the services provided. In reversing the trial court, the Court of Appeals ruled that the judge erred in not considering the contingent fee arrangement. In addition, the judge should have considered the significant delay in plaintiffs receipt of no-fault benefits as bearing upon the amount of fee that should be awarded. In expressing its holding, the court stated the following:
"... we conclude that the rigid hourly formula adopted by the trial court to compute the attorney fee that defendant is responsible for was unreasonable under the circumstances of this case. To the extent reasonable, we hold that a contingent fee arrangement is a significant part of the attorney-client relationship which must be considered in arriving at a reasonable attorney fee. Although the controlling criterion remains one of reasonableness, there is no precise formula for computing reasonableness, and we reject the application of any rigid formula, whether based on a contingent fee arrangement or an hourly formula, that fails to take into account the totality of the special circumstances applicable to the case at hand. In the present case, the trial court failed to give any weight to the contingent fee agreement between plaintiff and his attorney. We remand for a determination of an attorney fee that takes into account the nature of plaintiffs relationship with his attorney (i.e., the contingent fee), the fact that plaintiffs recovery was delayed for almost six years due to defendant's unreasonable conduct, and the other guidelines set forth in Wood v DAIIE. We emphasize that we find nothing unreasonable in the hourly formula used by the trial court in this case. We hold only that a proper exercise of discretion requires a trial court to go beyond the use of a rigid formula and to consider other relevant factors in determining how much of the attorney fee shall be paid by the opposite party."
The court also instructed the trial court to determine how the attorney fee sanction award was to be allocated between plaintiff and his attorney. The court is to consider "whether the attorney is to receive the awarded fee in addition to the fee he received from his client, or whether the amount of the awarded fees should be paid to the client if the attorney has already been paid, or whether the awarded fee is to be divided between the attorney and the client and in what proportion."
Judge Lamb filed a separate opinion concurring with the court's decision on the contingent fee issue, but dissenting with regard to that portion of the opinion instructing the trial court to determine how the fees should be allocated between plaintiff and his counsel. Judge Lamb felt that was not an issue in this case.
