This month, the Supreme Court of Georgia held that a party cannot rely solely on a lawyer’s contingency fee agreement to prove the amount of his attorneys’ fees under Georgia’s “offer of judgment” statute, O.C.G.A. § 9-11-68. Georgia Department of Corrections v. Couch, 2014 WL 2700961 (Ga. June 16, 2014).
Code Section 9-11-68 is a fee-shifting statute. It allows a litigant to extend an “offer of settlement” to his opponent. If the opponent rejects the offer of settlement, goes to trial, and receives a verdict that is substantially worse than the offer, the statute allows the offering party to recover his attorney’s fees “from the date of the rejection of the offer . . . through the entry of judgment.” For attorneys’ who handle cases under contingency fee agreements, and who therefore do not customarily record their billable time, calculating attorney’s fees from the time of rejection through judgment can be problematic—a problem that Couch specifically addressed.
In Couch, an inmate sued the State of Georgia for injuries he sustained while painting the prison warden’s home. Early in the litigation, the inmate extended a $24,000 offer of settlement to the State pursuant to Code Section 9-11-68. The State, however, rejected the inmate’s offer and proceeded to trial. The jury returned a $105,417 verdict in the inmate’s favor and the trial court awarded him $49,542 in attorney’s fees. The trial court based the fee award not on the lawyer’s recorded hours, but on the terms of his contingency fee agreement with the inmate, which entitled the attorney to a percentage of the inmate’s recovery.
The Supreme Court granted certiorari. It found that the lower court erred by basing its fee award solely on the lawyer’s contingency fee agreement. The Court emphasized that Code Section 9-11-68 does not entitle plaintiffs to recover all of their attorney’s fees but, rather, only those fees which accrue between the time an offer is rejected and the entry of judgment. In calculating attorney’s fees under the offer of judgment statute, the Court held, trial courts must account for the reasonable value of the professional services actually provided “from the date of the rejection of the offer of settlement through the entry of judgment” – not just the terms of the contingency fee agreement between lawyer and client.
Couch is probably an unwelcome decision for plaintiff’s lawyers unaccustomed to tracking their time, but it nevertheless makes sense. Going forward, plaintiff’s attorneys who extend offers of judgment under Code Section 9-11-68 would be wise to track their hours at least from the date of an offer’s rejection, if they hope to recover their attorney’s fees under Code Section 9-11-68.
Fried & Bonder is an Atlanta-based litigation boutique that specializes in business, employment and personal injury litigation.