Attorney Fees

2011-06-20 10:23:46 by admin

Attorney Fees are an incidental, generally necessary, but usually expensive cost of litigation, unless attorneys agree to provide representation voluntarily. The cost of representation is usually contractually arranged in advance, based on a cost per hour or a flat rate. Rule 1.5 of the American Bar Association’s Model Rules of Professional Conduct provides guidance on the attorney- client relationship with regard to Attorney Fees. Individual state bar associations adopt local rules fees based upon the Model Rules. Rule 1.5 outlines factors for evaluating reasonableness of Attorney Fees, permits contingent fee arrangements except in divorce and criminal actions, and places limitations on the division of fees when attorneys from different firms represent the same client. This entry discusses the rules regarding who is responsible for paying Attorney Fees and, in particular, instances when litigants may recover fees from opposing parties in a lawsuit.
From a legal-historical perspective, the cost of providing for legal representation is a specific example of failure within the developing U.S. legal system to follow English Common Law. The British rule for Attorney Fees, indeed the rule for much of the world, requires unsuccessful litigants to pay the legal expenses for both sides. Under the “American Rule” for Attorney Fees, litigants pay their own legal expenses, and prevailing parties cannot collect fees from losing parties except in exceptional circumstances. Exceptions to the American Rule, where fee switching is allowed, can come from the Common Law or from statutory provisions awarding Attorney Fees to prevailing parties.

Common Law Exceptions

Common Law in the United States has provided four traditional exceptions to the American Rule: bad faith doctrine, common fund doctrine, the private attorney general exception, and exception by contract agreement. Bad faith doctrine provides for Attorney Fees when a party willfully disobeys a valid court order, or when a party has acted “in bad faith, vexatiously, wantonly, or for oppressive reasons” (F. D. Rich Co. v. Industrial Lumber Co., 1974, p. 129). The common fund doctrine allows a prevailing party to obtain Attorney Fees when the litigation produces or creates a fund of money, or obtains a benefit, for others as well as the prevailing party. The private attorney general exception to the American Rule promotes the common good by allowing private litigants to identify statutory violations (for example, of environmental protection laws) and to force compliance through private litigation. The private attorney general exception was ultimately eliminated by the Supreme Court in Alyeska Pipeline Service Co. v. Wilderness Society (1975), in which the Court ruled that the authority to establish a private attorney exception rested with Congress, not the courts. Finally, the parties may negotiate a settlement for a cause of action and include in that settlement provisions for fee switching as a part of the contractual agreement.
Courts occasionally exercise their powers to provide for attorney fee shifting to resolve cases more equitably. In actions against insurance companies, for example, it is not uncommon for prevailing plaintiffs to ask for, and courts to award, Attorney Fees as an equitable remedy, when the insurer has breached its duty to defend, or when the insurer has breached the insurance contract. Individual jurisdictions will also create local exceptions to the American Rule through the exercise of equitable powers. In an illustrative situation, in New York State, the Shindler Rule provides that “if, through the wrongful act of his present adversary, a person is involved in earlier litigation with a third person in bringing or defending an action to present his interests, he is entitled to recover the reasonable value of attorney’s fees and other expenses thereby suffered or incurred” (Shindler v. Lamb, 1959, p. 765; 1961).

Statutory Exceptions

Perhaps the greatest sources for exceptions to the American Rule are the federal Congress and the individual state legislatures. By the mid-1980s, over 150 federal statutes and 2,000 state laws providing for fee switching had been enacted by legislative bodies.
In the education context, there are two situations in which school boards are most likely to be required to pay for the attorney for plaintiffs against their school boards: claims in special education and claims under Section 1983 of the Civil Rights Act of 1871, which allows plaintiffs to sue the government. In special education, in the Handicapped Children’s Protection Act, now codified as part of the Individuals with Disabilities Education Act (IDEA), Congress essentially overturned Smith v. Robinson (1984), a Supreme Court decision denying Attorney Fees for parents of students with disabilities who prevail in claims against their school boards. Interestingly, Attorney Fees under IDEA are available to both parents and boards, regardless of whether they are plaintiffs or defendants.
Plaintiffs who prevail under Section 1983 of the Civil Rights Act may benefit from a fee-switching provision that was added to civil rights law as the Civil Rights Attorney’s Fees Award Act of 1976; this provision is generally called simply “Section 1988.” Section 1988 authorizes reimbursement of Attorney Fees for plaintiffs who prevail with claims brought under the Constitution as well as under Title VI and Title VII of the Civil Rights Act of 1964, Title IX of the Education Amendments of 1972, the Americans with Disabilities Act, the Religious Freedom Restoration Act of 1993, the Religious Land Use and Institutionalized Persons Act of 2000, and the Violence Against Women Act.
In order to qualify for reimbursement of Attorney Fees under a federal fee-switching statute such as Section 1988, the party seeking the award must be deemed the “prevailing party.” In Hensley v. Eckerhart (1983), the Supreme Court enunciated the Hensley Standard for determining prevailing party status as follows: “A typical formulation is that plaintiffs may be considered ‘prevailing parties’ for attorneys’ fees purposes if they succeed on any significant issue in litigation which achieves some benefit the parties sought in bringing suit” (p. 440). Consequently, a party may be considered to prevail even if it receives only a portion of the requested relief. Interim awards of Attorney Fees are permissible under Section 1988 (Hanrahan v. Hampton, 1980), where plaintiffs receive at least some relief on the merits of their claims (Hewitt v. Helms, 1987), and where awards of nominal damages suffice to accord prevailing party status (Farrar v. Hobby, 1992).
Courts have made a small number of attorney fee awards under what is known as the “catalyst theory.” The catalyst theory allows an award of Attorney Fees, even though there is no judicially sanctioned change in the legal status of the parties. The catalyst theory arises from the argument that the activities of the plaintiff, often before filing a claim, served as a catalyst in forcing the defendant to change its behavior . Even so, the Supreme Court refused to apply the catalyst theory in Buckhannon Board & Home Care v. West Virginia Dept. of Health & Human Services (2001).
In terms of protective proceedings against vexatious plaintiffs, the Christianburg Standard allows a government agency that is the prevailing party to receive a fee award against a plaintiff, or against the plaintiff’s attorney, who files a complaint or subsequent cause of action that is frivolous, unreasonable, or without foundation (Christianburg Garment Co. v. EEOC, 1978, pp. 412, 422).
David L. Dagley

See also Civil Rights Act of 1964; Title VII; Title IX and Athletics
Further Readings
Leubsdorf, J. (1984). Note, Toward a history of the American Rule on attorney fee recovery. Law & Contemporary Problems, 47(1), 9–36.
Legal Citations
  • Alyeska Pipeline Service Co. v. Wilderness Society, 421 U.S. 240 (1975).
  • Americans with Disabilities Act, 42 U.S.C. §§12101 et seq.
  • Buckhannon Board & Home Care v. West Virginia Department of Health & Human Services, 532 U.S. 598 (2001).
  • Christianburg Garment Co. v. EEOC, 434 U.S. 412, 422 (1978).
  • F. D. Rich Co. v. Industrial Lumber Co., 417 U.S. 116 (1974).
  • Farrar v. Hobby, 506 U.S. 103 (1992).
  • Hanrahan v. Hampton, 446 U.S. 754, 758 (1980) (per curiam).
  • Hensley v. Eckerhart, 461 U.S. 424 (1983).
  • Hewitt v. Helms, 482 U.S. 755 (1987).
  • Religious Freedom Restoration Act of 1993, 42 U.S.C. §2000bb.
  • Religious Land Use and Institutionalized Persons Act of 2000, 42 U.S.C. §2000cc.
  • Shindler v. Lamb, 211 N.Y.S.2d 762 (NY. Sup. Ct. 1959), aff’d, 210 N.Y.S.2d 226 (N.Y. 1961).
  • Smith v. Robinson, 468 U.S. 992 (1984).
  • Title VI of the Civil Rights Act of 1964, 42 U.S.C. §2000d.
  • Title VII of the Civil Rights Act of 1964, 42 U.S.C. §2000e-5(k).
  • Title IX of the Education Amendments of 1972, 20 U.S.C. §1681.
  • Violence Against Women Act, 42 U.S.C. §13981.