Georgia Supreme Court Ruling Makes It Tougher For Plaintiffs to Recover Attorney Fee Awards – by J. Robb Cruser

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In a ruling favorable for the defense bar, the Georgia Supreme Court ruled that a contingency fee contract alone is insufficient to support an award of attorney fees under OCGA § 9-11-68. Georgia Dept of Corrections v Couch, 295 Ga. 469, 759 S.E.2d 804 (2014).

The Georgia Supreme Court explained:

A contingency fee agreement is a contract between the lawyer and the client regarding what the client agrees to pay, and what the lawyer agrees to be paid, for the work that the lawyer will do in the matter. Entering such a contract is a gamble for both the lawyer and the client, because the value of the professional services actually rendered by the lawyer may be considerably higher or lower than the agreed-upon amount, depending on how the litigation proceeds. While certainly a guidepost to the reasonable value of the services the lawyer performed, the contingency fee agreement is not conclusive, and it cannot bind the court in determining that reasonable value, nor should it bind the opposing party required to pay the attorney fees, who had no role in negotiating the agreement.  Id.

The Numbers

In Couch, the final judgment was $123,855.65 and there was a 40% contingency contract. The trial Court therefore awarded $49,542.00 in attorney fees – 40% of the final judgment. In reviewing the award against the evidentiary record, the Georgia Supreme Court concluded:

“. . . while the trial Court was entitled to consider Couch’s contingency fee agreement with his attorneys, and the amount it would have generated as evidence of their usual and customary fees, the Court erred in calculating what amount of attorneys’ fees was reasonable based solely, as far as the record reflects, on the agreement rather than evidence of hours, rates, or other indications regarding the value of attorneys’ professional services actually rendered.”  Id.

The Georgia Supreme Court then reversed “. . . the portion of the Court of Appeals’ judgment affirming the trial Court’s calculation of the attorney fee award to Couch” and remanded with direction the case to the trial Court for recalculation pursuant to the Georgia Supreme Court’s guidance.

The Upshot

The Georgia Supreme Court has confirmed that an attorney fee award based solely on a contingency fee agreement is not good enough; rather, there must be evidence of “hours, rates, or other indications regarding the value of the attorneys’ professional services actually rendered.” This case is helpful to the defense in rebutting attorney fee claims because a high percentage contingency agreement (on a high dollar case) will likely yield a much higher attorney fee than from an hourly arrangement and call into question whether the “value of the attorney’s professional services actually rendered” is “reasonable” and if it should be reduced. This case confirms an evidentiary burden on plaintiffs that must be met before a trial court can award attorney fees. This case should be in the toolbox of all defense lawyers to rebut and reduce claimed attorney fee awards based on contingency agreements where the plaintiff has not otherwise met his evidentiary burden.