Fee award against Allstate is sent back to lower court for reduction
Shirley Augustine sued Allstate Insurance Company to recover attendant care benefits and recovered a verdict of $371,700.00 dollars. This occurred after several attendant care disputes between the parties, resulting from Augustine's permanent, catastrophic injuries in a motor vehicle collision. Because Allstate had completely stopped paying benefits and was "unreasonable" in its complete denial of benefits, the Court awarded Augustine attorneys' fees of $312,000.00. Allstate appealed the amount of the fees and the Court of Appeals returned the case to the trial court to compute the fees using the formula recently adopted by the Michigan Supreme Court. On remand, the lower court refused to allow Allstate to subpoena the attorneys' file to justify the fee award and ultimately approved a total fee of $250,000.00. Allstate appealed again.
The lower court approved a $500.00 per hour fee and a total of 600+ hours, although the law firm involved had not maintained a contermporaneous hourly record. The Court of Appeals again reversed the fee award and sent the case back to the lower court. The Court of Appeals judges noted that under its contingent fee arrangement with Augustine, the attorneys would have collected less than the hourly fee it sought and criticized the methods used by the attorneys and the trial court to evaluate the fee claim. The judges emphasized that while Augustine had prevailed, her attorneys apparently achieved a verdict that was substantially smaller than they had originally demanded (the Court did not suggest that Allstate was willing to pay an amount equivalent to the jury award, however, which seems more germane to the issue). The Court also ruled that Allstate may gain access to many elements of the attorneys' file.