Oregon Court Overturns Six-Figure Contingency Fee in Hartford Insurance Case

The Oregon Court of Appeals recently overturned a trial court’s decision to award attorney fees based on a percentage of an insurance settlement, setting a precedent that impacts how such fees are calculated in Oregon. This decision stemmed from a case involving Richard and Rita Griffith, whose home was destroyed by fire. They sued Hartford for breach of contract, among other claims, and reached a settlement. However, a dispute arose over the calculation of attorney fees, with the trial court awarding over $221,000 based on a percentage of the Griffiths’ recovery.

The appellate court’s ruling highlighted the importance of the "lodestar method," which calculates fees based on the attorney’s hourly rate multiplied by the hours worked. This method ensures transparency and fairness, especially in insurance disputes where liability is not contested. The court criticized the trial court’s reliance on a contingency percentage, especially since the plaintiffs’ counsel did not provide detailed time records. This lack of documentation made it impossible to assess the reasonableness of the fee relative to the actual work performed.

For insurance claims professionals, this ruling emphasizes the need for meticulous documentation and clear, transparent fee structures. It underscores the court’s preference for fees that reflect actual legal work rather than arbitrary percentages of settlements. This decision could lead to more rigorous scrutiny of attorney fee awards in insurance cases, ensuring that fees are directly tied to the effort expended.

Moreover, the court’s dismissal of the Griffiths’ appeal regarding prejudgment interest and litigation costs reinforces procedural requirements for appeals. Claims adjusters should note the importance of understanding these procedural nuances, as they can significantly impact the outcome of legal disputes. The ruling also clarifies that obtaining a proper judgment is crucial for triggering appellate review, highlighting the complexities of navigating insurance litigation.