BURDICK, Justice
The Idaho Department of Health and Welfare (IDHW) appeals the Ada County district court’s award of attorney fees under Idaho Code section 12-120(3). IDHW contends the district court abused its discretion by basing the award on the amount billed by the Attorney General. We agree.
I. FACTUAL AND PROCEDURAL BACKGROUND
Inclusion, Inc., Inclusion North, Inc., and Inclusion South, Inc., (collectively Inclusion) provide residential rehabilitation support services to Idahoans eligible for Medicaid. In September 2012, Inclusion filed a complaint against IDHW, alleging IDHW breached binding Medicaid Provider Agreements by failing to adequately reimburse Inclusion for its services. In June 2013, Inclusion amended [240]*240its complaint with unjust enrichment and quasi-estoppel claims,
In April 2014, the district court granted summary judgment for IDHW, concluding no triable issue of fact supported Inclusion’s claims. IDHW then moved for attorney fees under Idaho Code section 12-120(3) and requested $74,925.00 in fees. IDHWs requested award reflects 599,4 hours of work billed at a rate $125.00 per hour. Though $125.00 per hour is not the actual hourly rate billed during litigation, IDHW contended its requested award was reasonable based on prevailing hourly rates for comparable legal services in the local market (Boise).
The district court found that IDHWs requested award was based on a reasonable amount of hours and a reasonable hourly rate, as determined by the Boise market. As the district court acknowledged, “the hourly rate requested is reasonable and certainly well within the rate in the marketplace in the Fourth District in Ada County, in particular.” Even so, the district court took issue with how IDHWs requested award was not based on the actual hourly rate billed during litigation. As the district court explained, “[ejxcept where the award of attorney fees is paid to the lawyer, fees awarded to a party should not exceed the amount the client actually paid for the lawyer.” To that end, the district court multiplied 599.4 hours of work by $54.00 per hour1 to award a total of $30,857.11. IDHW moved to reconsider, but the district court upheld the award for $30,857.11. IDHW timely appealed.
II.ISSUES ON APPEAL
1. Did the district court abuse its discretion when fashioning the award of reasonable attorney fees under Idaho Code section 12-120(3)?
2. Is the prevailing party entitled to attorney fees on appeal?
III.STANDARD OF REVIEW
“An award of attorney fees and costs is within the discretion of the trial court and subject to an abuse of discretion standard of review.” Smith v. Mitton, 140 Idaho 893, 901, 104 P.3d 367, 375 (2004). To determine whether the district court abused its discretion, this Court evaluates whether the district court: (1) correctly perceived the issue as one of discretion; (2) acted within the outer boundaries of its discretion and consistently with relevant legal standards; and (3) reached its decision by an exercise of reason. Swallow v. Emergency Med. of Idaho, P.A., 138 Idaho 589, 592, 67 P.3d 68, 71 (2003).
IV.ANALYSIS
A. The district court abused its discretion by basing the award of attorney fees under Idaho Code section 12-120(3) on the amount incurred in litigation.
Idaho Code section 12-120(3) entitles the prevailing party to an award of “reasonable” attorney fees and specifically provides as follows:
In any civil action to recover on an open account, account stated, note, bill, negotiable instrument, guaranty, or contract relating to the purchase or sale of goods, wares, merchandise, or services and in any commercial transaction unless otherwise provided by law, the prevailing party shall be allowed a reasonable attorney’s fee to be set by the court, to be taxed and collected as costs.
IDHW maintains the district court abused its discretion by rejecting its requested award, which the district court conceded was based on a reasonable amount of hours and a reasonable hourly rate. We agree.
[241]*241The district court analysis rests on two primary bases. First, the district court reasoned that IDHWs requested award would result in unethical fee-splitting with a non-lawyer. That conclusion was in error. Idaho Rule of Professional Conduct 5.4(a) governs unethical fee-splitting, providing that a “lawyer or law firm shall not share legal fees with a nonlawyer ....” Rule 5.4(a) serves to protect the lawyer’s professional independence of judgment. I.R.P.C. 5.4 cmt. [1]. IDHWs requested award would not result in unethical fee splitting because, as IDHW explains, Idaho Code section 12-120(3) entitles the prevailing party to the award, not the prevailing party’s lawyer. Because the award is not the property of IDHWs lawyers, they would never be in a position to share the award with any nonlawyers. Indeed, the parties do not dispute that IDHW is entitled to all attorney fees awarded, which will be deposited in the Idaho State General Fund. Thus, IDHWs requested award would not result in unethical fee-splitting.
Second, the district court reasoned that IDHWs requested award would result in an improper profit because it would exceed the amount incurred in litigation. As the district court explained:
Except where the award of attorney fees is paid to the lawyer, fees awarded to a party should not exceed the amount the client actually paid for the lawyer. This is so whether the prevailing party is a government entity or a private party. To do so otherwise is an impermissible penalty and does not serve the purpose of making the receiving party whole.
These concerns are not grounded in Idaho law. Indeed, nothing under Idaho law equates reasonable” attorney fees to “actual” attorney fees. Idaho Code section 12-120(3) entitles the prevailing party to a “reasonable” attorney fee. Idaho Rule of Civil Procedure 54(e)(3) enumerates several factors to guide the reasonableness inquiry, all of which must be considered but none of which emphasize the actual amount incurred.2 See Mihalka v. Shepherd, 145 Idaho 547, 553, 181 P.3d 473, 479 (2008). The district court, after stating that it had considered all Rule 54(e)(3) factors, reasoned that IDHWs requested award was based on a reasonable amount of hours and a reasonable hourly rate. Yet, despite that finding, the district court rejected IDHW’s requested award because it did not reflect the actual amount incurred in litigation. Based on the above, neither section 12-120(3) nor Rule 54(e)(3) supports that conclusion.
Moreover, the district court’s analysis overlooks our jurisprudence. We have held that a prevailing party may recover a reasonable attorney fee award even if that party never actually incurred any attorney fees. Kidwell v. U.S. Mktg., Inc., 102 Idaho 451, 459, 631 P.2d 622, 630 (1981) (rejecting argument that the state could not recover attorney fees merely because “the state accrued no fees, inasmuch as it was represented by staff attorneys”);
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BURDICK, Justice
The Idaho Department of Health and Welfare (IDHW) appeals the Ada County district court’s award of attorney fees under Idaho Code section 12-120(3). IDHW contends the district court abused its discretion by basing the award on the amount billed by the Attorney General. We agree.
I. FACTUAL AND PROCEDURAL BACKGROUND
Inclusion, Inc., Inclusion North, Inc., and Inclusion South, Inc., (collectively Inclusion) provide residential rehabilitation support services to Idahoans eligible for Medicaid. In September 2012, Inclusion filed a complaint against IDHW, alleging IDHW breached binding Medicaid Provider Agreements by failing to adequately reimburse Inclusion for its services. In June 2013, Inclusion amended [240]*240its complaint with unjust enrichment and quasi-estoppel claims,
In April 2014, the district court granted summary judgment for IDHW, concluding no triable issue of fact supported Inclusion’s claims. IDHW then moved for attorney fees under Idaho Code section 12-120(3) and requested $74,925.00 in fees. IDHWs requested award reflects 599,4 hours of work billed at a rate $125.00 per hour. Though $125.00 per hour is not the actual hourly rate billed during litigation, IDHW contended its requested award was reasonable based on prevailing hourly rates for comparable legal services in the local market (Boise).
The district court found that IDHWs requested award was based on a reasonable amount of hours and a reasonable hourly rate, as determined by the Boise market. As the district court acknowledged, “the hourly rate requested is reasonable and certainly well within the rate in the marketplace in the Fourth District in Ada County, in particular.” Even so, the district court took issue with how IDHWs requested award was not based on the actual hourly rate billed during litigation. As the district court explained, “[ejxcept where the award of attorney fees is paid to the lawyer, fees awarded to a party should not exceed the amount the client actually paid for the lawyer.” To that end, the district court multiplied 599.4 hours of work by $54.00 per hour1 to award a total of $30,857.11. IDHW moved to reconsider, but the district court upheld the award for $30,857.11. IDHW timely appealed.
II.ISSUES ON APPEAL
1. Did the district court abuse its discretion when fashioning the award of reasonable attorney fees under Idaho Code section 12-120(3)?
2. Is the prevailing party entitled to attorney fees on appeal?
III.STANDARD OF REVIEW
“An award of attorney fees and costs is within the discretion of the trial court and subject to an abuse of discretion standard of review.” Smith v. Mitton, 140 Idaho 893, 901, 104 P.3d 367, 375 (2004). To determine whether the district court abused its discretion, this Court evaluates whether the district court: (1) correctly perceived the issue as one of discretion; (2) acted within the outer boundaries of its discretion and consistently with relevant legal standards; and (3) reached its decision by an exercise of reason. Swallow v. Emergency Med. of Idaho, P.A., 138 Idaho 589, 592, 67 P.3d 68, 71 (2003).
IV.ANALYSIS
A. The district court abused its discretion by basing the award of attorney fees under Idaho Code section 12-120(3) on the amount incurred in litigation.
Idaho Code section 12-120(3) entitles the prevailing party to an award of “reasonable” attorney fees and specifically provides as follows:
In any civil action to recover on an open account, account stated, note, bill, negotiable instrument, guaranty, or contract relating to the purchase or sale of goods, wares, merchandise, or services and in any commercial transaction unless otherwise provided by law, the prevailing party shall be allowed a reasonable attorney’s fee to be set by the court, to be taxed and collected as costs.
IDHW maintains the district court abused its discretion by rejecting its requested award, which the district court conceded was based on a reasonable amount of hours and a reasonable hourly rate. We agree.
[241]*241The district court analysis rests on two primary bases. First, the district court reasoned that IDHWs requested award would result in unethical fee-splitting with a non-lawyer. That conclusion was in error. Idaho Rule of Professional Conduct 5.4(a) governs unethical fee-splitting, providing that a “lawyer or law firm shall not share legal fees with a nonlawyer ....” Rule 5.4(a) serves to protect the lawyer’s professional independence of judgment. I.R.P.C. 5.4 cmt. [1]. IDHWs requested award would not result in unethical fee splitting because, as IDHW explains, Idaho Code section 12-120(3) entitles the prevailing party to the award, not the prevailing party’s lawyer. Because the award is not the property of IDHWs lawyers, they would never be in a position to share the award with any nonlawyers. Indeed, the parties do not dispute that IDHW is entitled to all attorney fees awarded, which will be deposited in the Idaho State General Fund. Thus, IDHWs requested award would not result in unethical fee-splitting.
Second, the district court reasoned that IDHWs requested award would result in an improper profit because it would exceed the amount incurred in litigation. As the district court explained:
Except where the award of attorney fees is paid to the lawyer, fees awarded to a party should not exceed the amount the client actually paid for the lawyer. This is so whether the prevailing party is a government entity or a private party. To do so otherwise is an impermissible penalty and does not serve the purpose of making the receiving party whole.
These concerns are not grounded in Idaho law. Indeed, nothing under Idaho law equates reasonable” attorney fees to “actual” attorney fees. Idaho Code section 12-120(3) entitles the prevailing party to a “reasonable” attorney fee. Idaho Rule of Civil Procedure 54(e)(3) enumerates several factors to guide the reasonableness inquiry, all of which must be considered but none of which emphasize the actual amount incurred.2 See Mihalka v. Shepherd, 145 Idaho 547, 553, 181 P.3d 473, 479 (2008). The district court, after stating that it had considered all Rule 54(e)(3) factors, reasoned that IDHWs requested award was based on a reasonable amount of hours and a reasonable hourly rate. Yet, despite that finding, the district court rejected IDHW’s requested award because it did not reflect the actual amount incurred in litigation. Based on the above, neither section 12-120(3) nor Rule 54(e)(3) supports that conclusion.
Moreover, the district court’s analysis overlooks our jurisprudence. We have held that a prevailing party may recover a reasonable attorney fee award even if that party never actually incurred any attorney fees. Kidwell v. U.S. Mktg., Inc., 102 Idaho 451, 459, 631 P.2d 622, 630 (1981) (rejecting argument that the state could not recover attorney fees merely because “the state accrued no fees, inasmuch as it was represented by staff attorneys”); In re Dunmire, 100 Idaho 697, 700, 604 P.2d 711, 714 (1979) (permitting salaried staff lawyers with legal aid organization to recover attorney fees as if they were private lawyers). Thus, Idaho law simply does not equate reasonable attorney fees to actual attorney fees.
We briefly note that the district court’s analysis—which uses the actual amount incurred in litigation as the yardstick of reasonableness—risks undermining judicial effi[242]*242ciency. In many cases, basing attorney fee awards on the actual amount incurred in litigation would require discovery into confidential business practices, trade secrets, and financial records. That invasive inquiry will invariably require motion practice and a hearing. We are not alone in this conclusion. See, e.g., Copeland v. Marshall, 641 F.2d 880, 898 (D.C. Cir. 1980); Carter v. State of R.I., Dep’t of Corrs., 25 F.Supp.2d 24, 26 (D.R.I. 1998); Coleman v. McLaren, 635 F.Supp. 266, 268 (N.D. Ill. 1986); PLCM Grp. v. Drexler, 22 Cal.4th 1084, 95 Cal.Rptr.2d 198, 997 P.2d 511, 520 (2000); Corbin v. Tocco, 173 Ariz. 587, 845 P.2d 513, 518 (App. 1992).
In sum, the district court abused its discretion by basing the attorney fee award on the amount billed by the Attorney General. The district court’s findings were clear in that IDHWs requested award was based on a reasonable amount of hours and a reasonable hourly rate. Therefore, we adopt those findings and grant IDHW its requested award ($74,925.00) in full.
B. IDHW is entitled to attorney fees on appeal.
Both parties request attorney fees on appeal under Idaho Code section 12-120(3). That statute entitles the prevailing party to an award of reasonable attorney fees on appeal. I.C. § 12-120(3); see also Kugler v. Nelson, 160 Idaho 408, 374 P.3d 571, 580 (2016). Since IDHW is the prevailing party on appeal, we award attorney fees on appeal to IDHW.
Y. CONCLUSION
We vacate the district court’s award of attorney fees and grant IDHW its requested award ($74,925.00) in full. Additionally, we award attorney fees and costs on appeal to IDHW.
Justices EISMANN and W. JONES concur.