Sunday, 3 August 2003

A Hint of Things To Come: The Complexity (and Cost) of Attorneys Fees Litigation

Although it is the amount of the damage award that gets the most attention from the press, and initially even the parties, that is a long way from establishing the true hard dollar cost of employment litigation. Where attorney fee shifting statutes are involved, as with Title VII and many others, a liability finding then becomes an invitation for a second inquiry as to the amount of attorneys fees. How expensive can that be? Take a look at a case that has been working its way through the judicial system since the case was filed in 1994. After two jury trials (a motion for new trial was granted on the first), a jury awarded $60,000 for disability discrimination to the plaintiff. The judgment entered by the court included attorneys fees, interest on the attorneys fees and costs in the amount of $554,672.21. Shott v. Rush-Presbyterian-St. Luke's Medical Center (7th Cir. 8/1/03). This was a one-third reduction from the amount sought by the plaintiff.

The appellate court dealt with a number of unusual issues. Among them: it found the trial court should not have awarded fees for the first trial, since the error which caused the need for the second trial was the plaintiff's faulty trial strategy which prejudiced the defendant. It did find it was proper to allow fees for the preparation for the first trial since it undoubtedly was helpful in the second trial. It found the court correctly did not discount because the plaintiff had rejected a settlement offer near the start of the litigation which defendant argued was little more than what she won. This was true only when one took into account the impact of the Alternative Minimum Tax on the plaintiff. Fortunately for both courts and lawyers, the court held that parties and lawyers are not required to take into account the tax consequences when making decisions on settlements. The court also held that the award of interest on the attorneys fees was an appropriate way to compensate for the delay in payment.

Still nine years after the case was filed, it is sent back to the trial court for one more round of judicial tweaking on the issue of attorneys fees. With what may have been tongue in cheek, the court noted that fee litigation has added a "heavy burden" on the federal courts. Given the likely impact of the recent Desert Palace decision which may well result in more trials and more fee disputes, the burden is likely to get heavier.

So when this one gets written up as "just a $60,000" award, care should be given to remember the ultimate amount of attorneys' fees and interest the defendant gets to pay to the plaintiff's counsel, plus the unknown number it has paid to its counsel over the past nine years.

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Nice comment !