Attorney Fees
| Author | Jeffrey Wilson |
| Pages | 15-21 |
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At the outset, it must be said that in the United States, the long-standing rule (derived from common law) is that each side to a legal controversy must pay for its own attorney. The prevailing litigant is generally not entitled to collect a reasonable attorney's fee from the loser. Alyeska Pipeline Service Co. v. Wilderness Society, 421 U.S. 240, 247 (1975). This is often referred to as the American rule (as distinguished from the English rule, which permits fee-shifting and derives from court-made law).
Of course, there are numerous common law exceptions and nearly two hundred statutory exceptions, some, if not most, having been enacted by Congress to encourage private litigants to implement public policy. For example, an award of attorney's fees is often statutorily designed to address the unequal bargaining and/or litigating power of big corporations or government against individual plaintiffs. Accordingly, provisions awarding attorneys' fees are most often found in consumer or citizen-oriented litigation, such as that found in civil rights, environmental protection, and consumer protection areas of law.
Under these exceptions, federal courts (and some federal agencies) may order the losing party in a lawsuit to pay the winning party's attorney's fees. In 1997, Congress enacted a statute that provided for the award of attorney's fees in some criminal defense cases. Additionally, the Equal Access to Justice Act (EAJA) provides for the United States to pay attorney fees in many court matters and some administrative proceedings in which the United States is a losing party and has failed to prove that its position was substantially justified.
All this having been said, in most matters of private litigation between private parties, the American rule still applies. Despite tort reform efforts by the
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Bush Administration to adopt a "loser pays" rule, as well as the Common Sense Legal Reforms Act, which was part of the "Contract With America" legislation proposed by Republican House Members in 1994, the American rule continues.
The American rule has two major common law exceptions, mostly affecting federal court litigation: the common benefit doctrine and the bad faith doctrine. The common benefit exception generally applies in cases where a particular plaintiff or number of plaintiffs have born the legal expenses for the benefit of a larger group of potential plaintiffs, as in shareholders' derivative suits or class actions. In these matters, district courts may equitably order that attorney fees for the plaintiffs be reimbursed from the total amount of the judgment.
The bad faith exception may be invoked under circumstances in which either an attorney or a party has acted in bad faith when filing or pursuing litigation, often evidenced by the frivolous nature of the particular claim. In this set of exceptions, the underlying rationale behind the award of attorney fees is not that of fee-shifting per se, but rather punitive in nature. [See, for example, Hall v. Cole, 412 U.S. 1,5 (1973)].
Attorneys charge for their services using a variety of fee structures and arrangements. Prospective clients who retain counsel to represent them should know in advance what such services will cost, commit the fee agreement to a writing, and understand their recourse if they believe there has been a deviation from the agreement. This does not imply dishonesty or misrepresentation on the part of counsel, but rather, the possibility of misunderstanding or miscomprehension between counsel and client.
Attorneys consider several factors when setting their fees. These include the area of law invoked, the experience of the lawyer, the simple or complicated nature of the issue, and the amount of time it will take to legally resolve the matter. The more aggressively an attorney wages a legal battle, the more expensive it becomes. Moreover, attorneys may not be able to offer a fair quote for their fee if a prospective client has waited until the last minute to obtain legal counsel, and matters must be acted upon very quickly. In such cases, the fees will typically be higher than otherwise.
Importantly, when dealing with a law firm instead of a sole practitioner, a legal client may be surprised to find that the attorney handling much of the case is not the one who initially met with the client. If a client wishes to retain a particular attorney within the firm to handle the case, this arrangement must be expressly articulated and agreed upon.
Finally, it should be noted that many of the routine legal services provided by law firms are performed by paralegals, and not attorneys. When this is the case, any fee arrangement should reflect a lowered hourly rate for these services, charged separately from attorney's rates.
The most common form of charging legal clients is through an hourly rate. Most attorneys charge a rate between $100 and $300 per hour. Top legal counsel, with a reputation for success in complex or highly visible cases, may charge more. Rates tend to be higher in major urban areas, and in matters requiring special legal expertise (e.g., admiralty, tax, patent law).
The majority of attorneys charge in tenth-of-an-hour increments (every six minutes, expressed as 0.10 hours)for hourly fees. Since one-tenth of an hour (or six minutes) is the least billable amount, attorneys routinely bill for one-tenth of an hour even if only one or two minutes were physically spent on the case, e.g., a quick email or voice mail message; reviewing and signing correspondence, etc. This is neither improper nor illegal. In actuality, an attorney has dropped his or her other work to concentrate on the present case, thinking about what should be done or how it should be done; therefore, the final correspondence or voice mail does not truly reflect the actual amount of minutes spent on the matter.
Hourly charges tend to add up quickly, especially when every tenth of an hour is included. Clients may wish to discuss with their attorneys several moneysaving measures, including discounted rates after a certain number of hours are worked in any month (the discounted rate applying to the excess hours). Clients may also wish to cap the total number of hours or fees charged. By the time most discovery is completed, both sides have a better idea of what the case is worth, and whether it is worth taking to trial. A client may request that the attorney try to settle the lawsuit once legal fees reach a certain amount. Even if the settlement amount is less than desired, it may be the wiser choice if additional legal fees and
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costs of trial would eat up the difference in dollar amount anyway.
Clients can also negotiate prior approval of major legal maneuvers, although deference to counsel's opinion should be exercised. For example, to save money, an attorney may serve written...
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