In this first-party, no-fault-insurance action, defendant, Allstate Insurance Company, appeals as of right the trial court’s order awarding plaintiff, Shirley Augustine, $327,090.60 for attorney fees and interest. The sole issue on appeal is attorney fees. Defendant maintains that, on remand, the trial court abused its discretion by awarding attorney fees to plaintiff. Because, on remand, the trial court failed to follow the directive of this Court, did not comply with the law-of-the-case rule, and did not properly apply Smith v Khouri,
I. FACTS AND PROCEDURAL HISTORY
This is the second time this matter is before this Court. See Augustine v Allstate Ins Co, unpublished opinion per curiam of the Court of Appeals, issued August 21, 2008 (Docket No. 276537) {Augustine I). In the first appeal, defendant challenged the trial court’s award of attorney fees in the final judgment. Id. at 1. This Court vacated thе award and remanded the case for further proceedings in light of Smith, which was decided after defendant filed its appeal. Augustine I, unpub op at 1, 3. The Augustine I Court set out the substantive facts of the case as follows:
Plaintiff was seriously injured in an auto accident and sought first-party, no-fault benefits from her insurer, defendant, to pay for the permanent attendant care that she now requires. Defendant paid the benefits for two years but ceased payments over a dispute regarding plaintiffs refusal to provide more detailed documentation of the nature of her care. Plaintiff brought the instant suit and was victorious, recovering $371,700 of the $929,000 that she sought, plus interest in the amount of $42,524. Plaintiff subsequently sought attorney fees pursuant to MCL 500.3148(1) due to defendant’s “unreasonable delay” in making benefit payments. The trial court awarded attorney fees in the amount of $312,625 based upon a finding that plaintiffs attorneys had done 543.75 hours of work at $500 per hour and 51.25 hours at $300 per hour.[1 ] [Id. at 1.1
Defendant appealed the final judgment, challenging the reasonableness of the award of attorney fees. After the briefs were filed, our Supreme Court decided Smith,
In ruling in the first appeal, this Court provided specific instructions to be followed on remand, explicitly outlining the procedural steps set out in Smith for determining a reasonable attorney-fee award. Augustine I, unpub op at 2-3. This Court explained that “in determining the hourly rate, the focus is on initially finding a reasonable fee, i.e., the ‘fee customarily charged in the
A. ON REMAND
On remand, the trial court granted defendant’s request for an evidentiary hearing regarding attorney fees. Defendant requested that its expert be given the opportunity to review the entire litigation file that plaintiffs attorneys relied on in support of their itemization of fees. Defendant argued that it needed to see if all the work that was attributed to the attorneys was reflected in the file in order to test the accuracy of the billings against the alleged work product. Plaintiff maintained that the request for the file went far bеyond what was argued during the first appeal and that she feared that defendant would publish the contents of the file. Though defendant was willing to accept the file with redactions under a protective order, plaintiff argued that it was improper to allow defendant access to the attorneys’ work product and privileged communications. Plaintiff contended that the entire file was privileged and that without the privileged information there would be nothing left for defendant’s expert to review other than the billing summary. The trial court ruled that defendant could not see the litigation file unless it was used at the evidentiary hearing to refresh the recollection of an attorney witness, in which case the file would then be made available.
B. EVIDENTIARY HEARING
On October 9, 2009, the trial court conducted an evidentiary hearing on fees. It was established that the law firm of Liss, Seder & Andrews gave plaintiff the option of paying аn hourly fee of $500 or entering into a contingency-fee arrangement for representation. The $500 hourly fee was based on factors such as the law firm’s experience, track record, commitments made to other clients, and limited resources, and the difficulty of handling catastrophic no-fault-insurance cases. Plaintiff chose to enter into a contingency-fee arrangement.
Plaintiffs trial attorney, Nicholas Andrews, prepared the billing summary as part of his trial preparation and completed the summary after the trial. Liss, Seder & Andrews did not have an “office procedure or methodology” for keeping track of the time expended on cases on a daily basis. Senior partner Arthur Liss testified that he never made his time entries contemporaneously with his work. Andrews testified that he may have used an Excel spreadsheet or office notes to assist in the preparation of a billing summary. The minimum time increment for billing was 0.25 hours. Plaintiff s attorneys indicated that a significant amount of the time that the firm actually expended on the case was not billed and emphasized that these types of cases required extensive discussion between the attorneys in the office to strategize. The trial court admitted into evidence in support of the firm’s claim for 625.25 hours the firm’s billing summary, a listing of the dates of service, the identification of each of the four lawyers
Defense counsel James Borin testified for the defense. The trial court admitted Borin’s law firm’s billing statement that reflected hourly charges totaling 252.8 hours. The trial court also admitted a survey of the hourly rates of approximately 208 attorneys authorized to conduct mediation in Oakland County during the relevant time. The trial court also admitted the State Bar of Michigan’s 2007 Economics of Law Practice survey on hourly billing rates. Defendant also produced Thomas H. Blaske, who testified as an expert regarding attorney fees. Blaske provided testimony regarding plaintiffs counsel’s practice, hourly rates, and allegedly excessive charges based on plaintiffs counsel’s billing summary alone. He also statеd that he was unable to provide a complete analysis of the reasonableness of plaintiffs attorneys’ services because he did not have plaintiffs litigation file to cross-check the services enumerated.
C. OPINION OF THE TRIAL COURT
On December 30, 2009, the trial court issued an opinion and order that was later reduced to a judgment. The trial court acknowledged the remand order from this Court and then proceeded to perform an analysis of the evidence submitted. The trial court addressed the reasonableness of the hourly fee and, in making that determination, relied on the factors set forth in Wood,
II. DISCOVERY
First, defendant argues that the trial court committed error requiring reversal by denying defendant’s discovery request for plaintiffs entire litigаtion file. Generally, we review the grant or denial of a discovery motion for an abuse of discretion. Linebaugh v Sheraton Mich Corp,
Whether the attorney-client or work-product privilege may be asserted is a question reviewed de novo by this Court. Leibel v Gen Motors Corp,
“It is well settled that Michigan follows an open, broad discovery policy that permits liberal discovery of any matter, not privileged, that is relevant to the subject matter involved in the pending case.” Id. at 616, citing MCR 2.302(B)(1). This is true “whether it relatеs to the claim or defense of the party seeking discovery or to the claim or defense of another party.” Cabrera v Ekema,
MCR 2.302(B)(1) limits discovery to matters that are not privileged. “The attorney-client privilege attaches to direct communication between a client and his attorney as well as communications made through their respective agents.” Reed Dairy Farm,
This Court has also recognized the common-law privilege protecting the disclosure of attorney work product. Messenger v Ingham Co Prosecutor,
Subject to the provisions of subrule (B)(4), a party may obtain discovery of documents and tangible things otherwise discoverable under subrule (B)(1) and prepared in anticipation of litigation or for trial by or for another party or another party’s representative (including an attorney, consultant, surety, indemnitor, insurer, or agent) only on a showing that the party seeking discovery has substantial need of the materials in preparation of the case and is unable without undue hardship to obtain the substantial equivalent of the materials by other means. In ordering discovery of such materials when the required showing has been made, the court shall protect against disclosure of the mental impressions, conclusions, opinions, or legal theories of an attorney or other representative of a party concerning the litigation.
The trial court did not directly address the issue of privilege in its ruling and defendant acknowledges that it was not seeking information protected by the attorney-client privilege. The trial court simply held that the file was not available to defendant unless a question was asked of an attorney witness at the evidentiary hearing and the file was necessary to refresh the attorney witness’s recollection.
The nature of a request for discovery in a claim such as that presented here for attorney fees allowable pursuant to MCL 500.3148(1) must be carefully scrutinized. A request for discovery that constitutes an attempt to invade the attorney-client relationship or to discover the mental impressions and strategies generally employed by opposing counsel must be rejected. But the reasonableness of an attorney-fee claim cannot be assessed in a vacuum. At the time of the discovery request, defendant had been provided a simple, albeit lengthy, billing statement without any corroboration of the time reflected. Defendant knew that plaintiffs attorneys’ law firm did not maintain a time-billing procedure and that lawyers of the firm did not make contemporaneous time entries. Further, defendant knew that the summary billing stаtement presented in support of an attorney-fee award was a retrospective exercise based on memory and possibly some office notes or Excel spreadsheets. Defendant could only compare dates from its own counsel’s billing statement with plaintiffs summary to determine if there was a comparable match. If there were logs, reports, summaries, or spreadsheets that would tend to corroborate the billing statement, they could be provided with the redaction of any impressions or thoughts on future work or strategies. In other words, counsel for plaintiff could provide a copy of the litigation file with all items that include the mental impressions, thoughts, or strategies of counsel broadly and completely redacted. The “sanitized” file would clearly be useful in corroborating and validating time claims to determine a reasonable attorney fee. Cаrefully redacting the litigation file would assuage the trial court’s concern that there was nothing to stop defendant’s attorney from obtaining strategy information from the litigation file that could be used in subsequent cases against plaintiffs attorneys. The trial court’s failure to even entertain such a procedure seems highly unreasonable and therefore an abuse of discretion.
A review of the evidentiary hearing causes concern regarding the likelihood that an honest and fair determination of fees could be awarded on this record. Blaske testified as an expert but he could not offer a complete analysis of the reasonableness of plaintiffs conduct, charges, or time on the billing summary without some materials from which to extrapolate. Starkly, the litigation file was noticeably absent. Notwithstanding defendant’s attempt to serve a subpoena for the file by certified mail before the evidentiary hearing, plaintiff refused the mail. During the evidentiary hearing, neither Liss nor Andrews referred to the litigation file, and both denied having reviewed any of it in preparation for the hearing. As a result, the testimony was replete with speculation, conjecture, and a denial of knowledge. Liss testified at the evidentiary hearing that the billing statement did not refresh
The burden of proving the reasonableness оf a request for attorney fees rests with the party requesting it. Smith,
III. DETERMINATION OF ATTORNEY FEES
Interpreting the meaning of a court order involves questions of law that are reviewed de novo. Silberstein v Pro-Golf of America, Inc,
This Court generally reviews for an abuse of discretion a trial court’s decision to award attorney fees and the determination of the reasonableness of the fees. In re Temple Marital Trust,
“[T]he decision whether to admit or exclude evidence is reviewed for an abuse of discretion.” Elezovic v Ford Motor Co,
This Court “review[s] the trial court’s factual findings for clear error.” Brandt v Brandt,
A. LAW-OF-THE-CASE DOCTRINE
Defendant argues that the trial court abused its discretion by awarding attorney fees on remand because it failed to comply with this Court’s remand directive. Under the law-of-the-case doctrine, this Court’s determination of an issue in a case binds both the trial court on remand and this Court in subsequent appeals. Grievance Administrator v Lopatin,
In remanding the case in the first appeal, this Court explicitly directed “the trial court to make specific findings, consistent with Smith, on each attorney whose fees plaintiff sought to recover----” Augustine I, unpub op at 3. This Court clearly ordered the trial court to complete a Smith analysis to determine the award of attorney fees. In Smith,
Given the remand directive, the trial court’s award of attorney fees was an abuse of discretion under the law-of-the-case doctrine because the trial court failed to make specific findings consistent with Smith. It did not comply with the first step in the Smith analysis, which is to determine the fee customarily charged in the locality for similar legal services. Though the trial court discussed the evidence presented regarding the fee customarily charged in the locality for similar legal services, it did not conclude that $500 an hour was the fee customarily charged. As stated in Smith,
The reasonable hourly rate represents the fee customarily charged in the locality for similar legal services, which is reflected by the market rate for the attorney’s work. The market rate is the rate that lawyers of similar ability and experience in the community normally charge their paying clients for the type of work in question. We emphasize that the burden is on the fee applicant to produce satisfactory evidence-in additionto the attorney’s own affidavits-that the requested rates are in line with those prevailing in the community for similar services by lawyers of reasonably comparable skill, experience and reputation. The fees customarily charged in the locality for similar legal services can be established by testimony or empirical data found in surveys and other reliable reports. But we caution that the fee applicant must present something more than anecdotal statements to establish the customary fee for the locality. Both the parties and the trial courts of this state should avail themselves of the most relevant available data. For example, as noted earlier, in this case defendant submitted an article from the Michigan Bar Journal regarding the economic status of attorneys in Michigan. [Quotation marks, citations, and footnote omitted.]
In the instant case, the trial court apparently failed to credit the Michigan Bar Journal article in its calculus of the appropriate hourly rate. The Michigan Bar Journal article not only ranks fees by percentile, it differentiates fee rates on the basis of locality, years of practice, and fields of practice. Further, the record was silent in drawing any comparisons between no-fault-insurance litigation and other complex areas of litigation. The trial court simply accepted the testimony that the area of the law was complex. This is undoubtedly so, however, the trial court excluded from its analysis evidence of other complex areas of litigation that may rival no-fault-insurance litigation in complexity and for which a published fee is established. Also, amazingly absent from the testimony, evidence of anecdotal experiences, and other statements was any substantive evidence that real, actual clients have paid $500 an hour in similar circumstances. Ultimately, the language of the trial court’s opinion and order indicates that it simply found that $500 an hour was a reasonable fee in a first-party, no-fault-insurance case on the basis of its reviеw of the criteria set forth in Crawley,
Not only did the trial court fail to make specific findings consistent with Smith generally, but it also failed to make findings regarding each attorney whose fees plaintiff sought to recover. The trial court’s opinion and order indicated, “[o]ther attorneys in the office were involved at various time [sic] and they will be discussed later,” but the trial court never addressed them later in the opinion. The only attorneys that the trial court highlighted were Andrews and Liss. In the first award of attorney fees, the trial court discussed the rate of $300 an hour for attorneys Karen Seder and Jay Schrier. Augustine I, unpub op at 1. Presumably these were the “other attorneys.” But, on remand, the trial court failed to refer to Seder and Schrier, and the trial court curiously did not include the rate of $300 an hour in its attorney-fee calculation.
The law-of-the-case doctrine “applies without regard to the correctness of the prior determination,” and this Court is bound by the decision on a question of law made by a panel of this court in the first appeal. Driver,
B. ATTORNEY LETTERS IN SUPPORT OF FEE CALCULATION
Defendant also contends that the trial court erred by admitting, over defendant’s relevance and hearsay objections, four letters written by attorneys who had litigated catastrophic no-fault-insurance cases in which letters they discussed their hourly fees. “ ‘Hearsay’ is a statement, other than the one made by the declarant while testifying at the trial or hearing, offered in evidence to prove the truth of the matter asserted.” MRE 801(c). In Int’l Union, United Auto, Aerospace & Agricultural Implement Workers of America v Dorsey (On Remand),
[I]n order to be admissible under the exception found in MRE 803(24), “a hearsay statement must: (1) demonstrate circumstantial guarantees of trustworthiness equivalent to the categorical exceptions, (2) be relevant to a material fact, (3) be the most probative evidenсe of that fact reasonably available, and (4) serve the interests of justiceby its admission.” There is no complete list of factors to consider when determining whether a statement has “ ‘ “particularized guarantees of trustworthiness.” ’ ” [Citation omitted.]
Because there is no complete list of factors to consider when determining whether a statement has particularized guarantees of trustworthiness, the trial court should consider the totality of the circumstances. Dorsey,
At the hearing, plaintiff argued that the four letters from the attorneys should be admitted under the “catch-all” exception because they were inherently reliable. Instead of articulating the reason that the letters were inherently reliable, plaintiff simply argued:
[Y]our Honor, you’re the gatekeeper of evidence. We do not have a juror [sic]. As the gatekeeper of all evidence in any case, you can make the determination both of reliability and what weight to give any particular document. As you said earlier, this is essentially a bench trial, and I think that you can use the catch-all to make that determination.
The trial court responded, “[a]nd that’s exactly what I’m going to do. I will accept these in evidence based upon that, the same way I will not entertain any objection to [defendant’s Oakland County courthouse compilation of fees for mediators] . . . because I think they fall in the same class . ...”
The trial court abused its discretion by admitting the letters into evidence because they were not admissible under MRE 803(6) or (24). The letters were hearsay because they contained statements that were not made by any declarant testifying at the trial or hearing and were offered in evidence to prove the truth of the matter asserted. MRE 801(c). The letters were not admissible under MRE 803(6) because they were not business records. Rather, the letters were nothing more than responses to solicitations by plaintiffs counsel in form and content for use in supporting the demand for an attorney fee of $500 an hour. The attorneys solicited had all referred similar cases to plaintiffs attorneys’ law firm. Similarly, the letters were not admissible under MRE 803(24) because they did not satisfy the elements of this exception. At the evidentiary hearing, there was no evidence offered to demonstrate that there existed circumstantial guarantees of trustworthiness equivalent to the categorical exceptions in MRE 803(1) to (23). Considering the totality of the circumstances, the letters were not sufficiently trustworthy because they were prepared exclusively for litigation, they were all favorable to plaintiff, the attorneys who wrote the letters had reason to exaggerate because it might benefit their attorney-fee awards in the future, and there was no independent evidence presented to support the attorneys’ claims that their rates were $500 an hour. Despite the fact that the letters tended to establish a material fact, they were not the most probative evidence regarding that fact that the plaintiff could have produced through reasonable efforts.
C. HOURS AND FUNCTION
Defendant also argues that the trial court abused its discretion by assessing the number of hours allowed for the attorney-fee calculation. “The fee applicant bears the burden of supporting its claimed hours with evidentiary support.” Smith,
Because of the meager state of the record, the trial cоurt’s finding that plaintiff’s attorneys expended 537.5 hours instead of the 595 hours claimed is not subject to meaningful review. The evidentiary hearing established only that plaintiff claimed the amount of hours listed. While the billing summary supported the hours plaintiff’s attorneys claimed they expended, the testimony provided in its support was so overwhelmingly lacking in substance and description that any statement of hours spent on a particular task is suspect for accuracy. Notably, plaintiff had the burden of supporting the claim for fees. But plaintiff did not demonstrate by a document, an example, or with specific testimony that a billable item was performed in the amount of time listed or, for that matter, even completed. The billing summary alone did not explain the work that was actually performed by plaintiff’s attorneys, as shown by the fact that the billing summary did not refresh Liss’s memory regarding what work he did on a particular entry. While defеndant was able to cross-examine plaintiff’s attorneys with regard to the time they spent on the case and presented an expert who rendered an opinion on some of the hours expended as they appeared on the face of the document, defendant’s cross-examination was substantially limited by the absence of litigation materials.
Our review of the record reveals that plaintiff requested attorney fees in her complaint. Considering the fact that plaintiff’s counsel requested attorney fees from the very outset of the underlying claim, we are befuddled by the fact that plaintiff’s attorneys claim they had no billing protocol to account for those fees and did not set one up. In today’s technological world, it would be but a minute task to set up a spreadsheet detailing the date of the service, the service provided, the time expended on the task, and the amount charged for the specific service that could be updated and summed at any time. Indeed, it would seem a handwritten ledger might even do. Plaintiff’s attorneys allege that they are top-tier attorneys with exceptional experience in their field. We do not challenge this point. But we do find it inconceivable that attorneys of this caliber and experience would be unaware of the requirements of Smith and would not keep adequate records in support of their claims for attorney fees, especially considering the amount of time and talent expended on this case. As a result of these deficiencies, plaintiff did not and could not point to any documentary support for the work performed and the amount of time spent on any task in the absence of counsel’s file. Consequently, counsel for defendant was effectively handcuffed by the refusal of discovery and plaintiffs strategy of not bringing her counsel’s file to the evidentiary hearing.
On the basis of the evidence presented, the trial court made the finding that the billings were unreasonable in certain areas. Indeed, we afford great deference to the special opportunity of the trial court to judge the credibility of the witnesses at the evidentiary hearing. Lumley,
D. SMITH, WOOD, AND MRPC 1.5(a) FACTORS
The Wood factors and the MRPC 1.5(a) factors used for determining attorney-fee awards overlap and are both set forth in Smith,
“(1) the professional standing and experience of the attorney; (2) the skill, time and labor involved; (3) the amount in question and the results achieved; (4) the difficulty of the case; (5) the expenses incurred; and (6) the nature and length of the professional relationship with the client.” [Smith,481 Mich at 529 (opinion hy TAYLOR, C.J.), quoting Wood,413 Mich at 588 (citations omitted).]
The Smith Court also set out the eight factors listed in Rule 1.5(a) of the Michigan Rules of Professional Conduct to be considered in determining a reasonable attorney fee, as follows:
“(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.” [Smith,481 Mich at 530 (opinion by TAYLOR, C.J.), quoting MRPC 1.5(a).]
In Smith, the Supreme Court endeavored to “fine-tune” the multifaceted and intersecting approach for determining fee awards set out in both Wood and MRPC 1.5(a). Smith,
A meaningful application of the factors is more than a recitation of those factors prefaced by a statement such as “after careful review of the criteria the ultimate finding is as follows . . . .” Similarly, an analysis is not sufficient if it consists merely of the recitation of the factors followed by a conclusory statement that “the trial court has considered the factors and holds as follows ...” without clearly setting
Here, the trial court acknowledged the fee-consideration factors, but provided little analysis or insight into the application of those factors to the client or the case. By way of example, the trial court noted that the fee agreement was contingent. MRPC 1.5(a)(8). Aside from that observation, the trial court presented no other information and did not explain the import of the fact that the fee agreement was contingent in the context of its determination of fees. It might be an insightful exercise for a trial court to look at what the fee would have been on such a basis and compare that to the fee actually being sought.
The trial court also commented that the attorney aсhieved “good” results from this litigation as well as from a prior dispute involving the same insurance carrier. In its discussion of Wood factor 3 (“the amount in question and the results achieved”), in assessing attorney fees, this Court has stated that a reasonable fee is proportionate to the results achieved. The trial court may in its discretion adjust fees upward or downward. Schellenberg v Rochester, Mich, Elks Lodge No 2225,
The trial court also commented that counsel had a long relationship with the client, having represented her in a previous attendant-care dispute with the same carrier. The nature and length of the professional relationship with the client is considered in both MRPC 1.5(a)(6) and Wood factor 6. Smith,
When a trial court entertains a discussion of attorney-fee factors and analyzes those factors by way of a searching inquiry into the record evidence, the parties benefit by receiving a true and fair attorney-fee award. Additionally, in the event of a
IV CONCLUSION
We conclude that the trial court abused its discretion by failing to provide defendant limited discovery in order to allow a meaningful examination of the issue of an award of attorney fees pursuant to MCL 500.3148(1). The trial court also abused its discretion because it misapprehended the law to be applied and the award of attorney fees was inconsistent with our remand directive. The trial court abused its discretion by admitting the four letters by the attorneys into evidence because they were neither admissible under MRE 803(6) nor admissible under 803(24). And, the trial court clearly erred in its award of attorney fees because the assessment of the work performed and the number of hours expendеd both fail for want of evidentiary support.
We vacate the trial court’s award of attorney fees and remand this case to the trial court for rehearing and redetermination in accordance with this opinion. We direct the trial court to make specific findings, consistent with Smith, for each attorney whose fees plaintiff sought to recover. We refer this matter, on remand, to the Honorable Nanci J. Grant, the trial judge assigned in this matter, rather than a visiting judge.
Defendant may tax costs as the prevailing party pursuant to MCR 7.219. We do not retain jurisdiction.
Notes
Notwithstanding a contingency-fee agreement, plaintiff sought attorney fees on an hourly basis. Of the $312,625 the trial court awarded, $287,250 represented the actual attorney fees ordered. Augustine I, unpub op at 2 (“ ‘[T]he Court will allow 543.75 hours at $500.00 per hour and 51.25 hours at $300.00 per hour for a total of $287,250.00.’ ”).
We are not unmindful of this Court’s opinion in Univ Rehab Alliance, Inc v Farm Bureau Gen Ins Co of Mich,