Attorneys' fleece: some potential dangers of 'loser-pays.'

• Author: Pulliam, Mark S.

If a lawyer hired to handle a $50,000 damage claim won and then submitted a bill to his client for $1 million, the client would be entitled to rip up the bill and report the lawyer to disciplinary authorities. Everyone would agree that such an excessive fee is patently unreasonable, even unconscionable. Unless, of course, the attorneys' fees are not being paid by the client, but are being awarded by the court against the losing party, pursuant to a fee-shifting statute. In that case, the lawyer might get not only the $1 million he asked for, but a bonus of $650,000 and an additional recovery of $200,000 in fees for time spent arguing over fees.

It happened. In a little-noted finale to the widely publicized sexual harassment case Weeks v. Baker & McKenzie, the trial court in San Francisco awarded Rena Weeks $1.8 million in attorneys' fees--1.7 times the actual hours her lawyers spent on the case multiplied by a prevailing hourly rate--even though the jury awarded her only $50,000 in compensatory damages. (The $6.9 million punitive damages verdict, reduced by the judge to $3,725,000, is on appeal.) In sexual harassment cases, as with other types of employment discrimination suits, the prevailing party can recover reasonable attorneys' fees from the losing party.

When Congress and state legislatures began passing civil rights statutes in the 1960s--prohibiting discrimination on the basis of race, sex, and other characteristics--they typically included a provision allowing the court to award reasonable attorneys' fees to the prevailing party. Until recently, many civil rights laws limited the amount of monetary damages recoverable. Therefore, in the past, the prospect of recovering attorneys' fees created an arguably needed incentive for litigants primarily interested in obtaining non-monetary relief, such as reinstatement to their jobs or declaratory or injunctive relief.

The number and scope of civil rights statutes have proliferated greatly since the 1960s, as have the types and amount of damages recoverable in such actions. Not surprisingly, the amount of civil rights litigation has greatly increased as well. You can now win attorneys' fees in many types of lawsuits--employment discrimination, sexual harassment, police brutality, and many types of litigation alleging deprivation of constitutional rights.

Fee-shifting statutes generally draw no distinction between winning plaintiffs and winning defendants. But courts, as a matter of policy...