Case Law Update: Georgia Supreme Court Confirms Plaintiff’s Attorney’s Contingency Fee Agreement Cannot be the Sole Basis for a Fee Award

The Georgia Supreme Court just issued a new ruling this week in which it held that when a Plaintiff becomes entitled to an award of attorney’s fees pursuant to Georgia’s offer of judgment statute, O.C.G.A. § 9-11-68, the court must take into account more than the contingency fee agreement plaintiff has with their attorney. Georgia Department of Corrections v. Couch, S13G1555 (GA Sup. Ct. June 16, 2014). This isn’t entirely new case law, but does clarify that a contingency fee agreement cannot be the sole consideration for an award of attorney’s fees under O.C.G.A. § 9-11-68. That statute provides for either party to recover attorney’s fees if they make a formal settlement offer which is rejected and then receive a verdict at trial which is at least 25% better, in their favor.

In Couch, the Georgia Supreme Court also made it clear that in considering fees to be awarded that the trial court was, pursuant to the statute required to separate out fees and expenses after the offer was made and rejected. The Court also emphasized prior case law which makes it clear that: “an award of attorney fees is to be determined upon evidence of the reasonable value of the professional services which underlie the claim for attorney fees.” (Quotation omitted). Id. at *31. The Court also noted that a contingency fee agreement alone is not sufficient to support an award of attorney’s fees. Id. at *27 citing to Brandenburg v. All-Fleet Refinishing, Inc., 252 Ga. App. 40, 43, 555 S.E.2d 508 (2001).

This is still a developing area of law as there are still no specific guidelines for courts, or juries for that matter, to use in determining the amount of attorney’s fees to be awarded.   The Couch case does emphasize that the fees must be reasonable and that evidence of the attorney’s hourly rate and time actually spent be presented and at least considered in some way, although again it’s not clear how that evidence is to be weighted if at all. In addition an attorney fee award pursuant to O.C.G.A. § 9-11-68 must also take into account time spent after the offer was made and rejected and not for the entirety of the case. There is another case, Landstar Ranger v. Foster, A14A0063 currently pending before the Georgia Court of Appeals on this same issue as well.

Other issues in this area involve attorney’s fees claimed pursuant to O.C.G.A. § 13-6-11 for bad faith, stubborn litigiousness or unnecessary trouble and expense. As of now the same considerations discussed by the Couch court similarly apply to fee awards under that statute, but again the specific guidelines for consideration are not clear.

This line of cases is important when looking to avoid or at least mitigate large fee awards to plaintiff’s attorneys who have contingency fee agreements, particularly where that fee percentage is 40% of any recovery as that can add a substantial amount to a verdict or judgment.

Lara Percifield