Sometimes when I am discussing with a client whether we should accept a settlement offer or proceed to trial, my client will protest that the offer doesn’t take into consideration attorney fees. My clients are surprised when I explain that juries are not allowed to include compensation for such fees. I am reminded of how often lawyers take for granted what nonlawyers know about what we do every day.
The default rule in most civil lawsuits is that each side is responsible for paying his or her lawyer. But there are exceptions, where the State Legislature or Congress has decided otherwise. I will discuss some areas where I would like to see legislation requiring the losing party to pay attorney fees.
There are rarely interest groups or citizens other than lawyers who appreciate how such laws may impact their future rights, because they don’t expect to experience the kind of harm or loss that may lead to a lawsuit. I believe that part of a lawyer’s job is to be active in the Legislature, advocating for laws to benefit people who are harmed by wrongful conduct.
Some examples of laws which require the losing party to pay attorneys’ fees are the federal laws prohibiting discrimination, or civil rights violations. Another major area of federal legislation encompasses “whistle blower” statutes, which provide for payment of attorney fees to individuals who report fraud. At the state level, the Consumer Protection Act provides for attorney’s fees to be awarded to NEW BOSTON LEGAL consumers injured by fraudulent business practices. And in workers’ compensation cases, an insurance company which wrongfully denies a claim can be required, after the employee wins an appeal, to pay the employee’s attorneys’ fees and expenses.
The thinking behind many of these laws is that the amount of money involved is small, compared to the difficulty of and time required to prepare and try the case, so the person seeking a remedy would have trouble finding a lawyer without the availability of means to pay the lawyer. But payment for medical care required by a work injury, or discrimination affecting a person’s job or housing, is very important to the person treated wrongfully. We as a society have decided it is important that our Legislature should impose additional costs on the wrongdoer to help incentivize desirable conduct.
A court-created exception to the rule that the winning party pays their lawyer is “where litigation is instituted or unnecessarily prolonged through a party’s oppressive, vexatious, arbitrary, capricious or bad faith conduct.” As an example, fees were ordered under this exception when an employee fired because of her refusal to work on Sundays for religious reasons, who had been told this would not be required when she was hired, was denied unemployment benefits. The Court found that “the institution and handling of this action by the Department of Employment Security was arbitrary and capricious, that the plaintiff should not have been put to the cost and expense of instituting an action against the department to recover what she was entitled to receive in the first place without any suit; and that the treatment of the plaintiff by the Department was unconscionable.”
In creating this exception, the Court was implicitly recognizing the same principles which have supported the Legislature’s recognition of a right to compensation for attorneys’ fees. There is a strong public interest in preventing frivolous litigation. It is interesting that both the case I mentioned and the case in which the Court created this doctrine involved the Department of Employment Security. It will be interesting to see if any of the cases brought during the COVID-19 pandemic will result in an eventual award of attorneys’ fees.
One area where a law requiring an award of attorneys’ fees to a party who wins a case would be helpful is when, after a car crash, the owner of a vehicle and the insurance company disagree about the value of the totaled vehicle. Most of the time, the amount the insurance company is willing to pay is well below the amount necessary to buy a replacement vehicle. Yet, because the car owner needs a new vehicle as soon as possible and cannot afford a lengthy lawsuit, he or she settles for an inadequate amount. Requiring the insurance company to pay the owner’s attorneys’ fee if he or she wins such a lawsuit would provide an incentive to offer a more reasonable amount.
Another area where many states have already recognized the need for awards of attorneys’ fees is when a nursing home resident has been mistreated. A lawyer deciding whether to take such a case recognizes that, like all medical or professional negligence cases, it will be necessary to hire an expert in the area of nursing home care, which is expensive, and will require hours of research and depositions.
The resident who was injured is, by definition, old, or disabled, or both, and thus will not be able to prove large “economic” damages, which is lost earnings or medical costs that would not have been required without the mistreatment. Even if there were additional medical bills, they were likely paid by Medicare or Medicaid, and have to be repaid if there is a settlement or judgment.
Nursing homes or assisted-living facility residents are very vulnerable, and those facilities are often understaffed, resulting in suboptimal care. There is also inadequate oversight by state and federal agencies. One way to incentivize owners to allocate more resources to patient care is to make it more expensive if mistreatment results in settlements that include reimbursement of attorneys’ fees. At this point, New Hampshire does not have such a law. My personal experience with some of these cases has led me to believe that it would result in better care for our elderly or disabled citizens if such a law put in place.
