A recent NLJ story, “Alaska Rejects Method Calculating Fees,” reports that in an apparent case of first impression, the Alaska Supreme Court has ruled that out-of-state rates may not be used to calculate attorney fee awards except in exceptional circumstances.  Unlike many other states, Alaska has a fee-shifting court rule to award courtroom victors 30 percent of their “reasonable actual fees” in cases that go to trial and do not result in money judgments.

“Since attorney fee awards are a usual part of any judgment in Alaska, the prospect of having to pay [an]…award based on fees well in excess of those that would have been billed by in-state lawyers may deter Alaskans from seeking redress in the country for their bona fide disputes.” Justice Peter Maassen wrote for the court.

Paying out-of-state hourly rates may be justified in the extraordinary situation in which there are not Alaska lawyers with the “necessary expertise or the necessary wiliness to take” a case, but that does not apply in this situation, Maassen said.

The issue arises in a settlement dispute between Exxon Mobile Corp. and Nautilus Marine Enterprise Inc.  The two companies, as well as a third, settled a lawsuit related to the 1989 Exxon Valdez oil spill in 2006, and the accord reserved for the judge the question on how much prejudgment interest should be awarded.

Exxon filed a state court lawsuit seeking to reform the contract so that prejudgment interest would not be compounded or to obtain a declaratory judgment that the contract did not require compounded interest.  A state court judge found that Exxon was the prevailing party and that the parties intended for the federal court judge to calculate the method of compounding the prejudgment interest.

The Alaska Supreme Court remanded the case for a new calculation of attorney fees owed to Exxon.  Maassen, writing for the court, upheld the lower court’s ruling that an additional 5 percent in attorney fees could be awarded to Exxon as a sanction because Nautilus’ president had acted in bad faith.  According to the opinion, he altered his personal telephone logs to add fraudulent references to compound interest.