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It Pays to Check Your Math

Posted on Tuesday, May 8, 2018

Charging Lien: Discharged attorneys may obtain a charging lien, which “is an equitable right to have the fees and costs due for services secured out of the judgment or recovery in a particular suit.” George v Sandor M Gelman, PC, 201 Mich App 474 (1993).

The Michigan Court of Appeals (MCOA) affirmed the lower court’s decision reducing the amount of an attorney’s charging lien in RivertownDevelopment Group v West Congress Street Partners, No. 330728.

Facts: Petitioner Lawrence Walker was retained in May 2014 as counsel for West Congress Street Partners in a litigious landlord-tenant dispute. The relationship broke down, a new lawyer was hired and Walker was allowed to resign as counsel by court order dated March 11, 2015. A two-day hearing was held to determine the accuracy of Walker’s $35,094 charging lien on the settlement in April 2015. Following the hearing, the court determined the amount owed to be $18,889.62 calculated as follows:

            167 hours @ $300 = $50,100.00

            Expenses                         2,833.62

            Payments                     (34,044.00)

            Balance due                  $18,889.62

Walker, on his appeal, claimed the court abused its discretion by (1) making a math error when it found that West Congress made prior payments of $34,044 when the actual amount was $30,155, 2) reducing the billable hours from 217 to 167.

Analysis: The MCOA affirmed the lower court on both counts.

Math error: While it may be true that the math was in error and the correct amount of payments was $30,155, the error was not raised during the two-day hearing and the parties accepted the $34,000 figures as accurate. “It is not the trial court’s burden to check petitioner’s math when the petitioner’s own documentation clearly stated that payments on the account totaled $34,044.14.”

Hour Reduction: Courts calculate attorney fees by first determining the reasonable hourly rate customarily charged in the locality for similar services, then multiply by the reasonable number of hours expended. The MCOA supported the reduction in hours stating: “…the trial court explicitly stated that its decision was based on the parties’ testimony, petitioner’s billing statement, and the court’s knowledge of billing in general.” After the 2-day hearing, MCOA stated that “the trial court was in the best position to determine the reasonable hours expended by petitioner, which it did.”

The court “did not abuse its discretion by not crediting petitioner with all of the hours listed in the billing statement” and the Michigan Supreme Court said that in determining the number of reasonable hours, trial courts should “exclude excessive, redundant or otherwise unnecessary hours regardless of the attorneys’ skill, reputation or experience.”

Thus, the MCOA concluded that the trial court’s determination Walker reasonably expended 167 hours rather than the 217 billed on defendant’s case fell within “the range of principled outcomes.”

Lessons to be learned: Check your math more than once and be prepared to defend your hours when requesting enforcement of a charging lien or payment of your bill in court. 

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