Friday, December 4, 2020

Attorney Fees to Winner – Not So Fast

LAW MATTERS

Lawsuits are expensive. A big expense in any lawsuit is the attorney’s fees. Some disputes are pursued because the combatants believe the winner will get his or her attorney’s fees in addition to any other relief awarded by the court. But, attorney’s fees are not awarded in every case.

Florida courts follow what is known as the “American rule” concerning attorney’s fee awards. The American rule generally requires the parties pay their own attorney’s fees and costs, unless a statute or contract provides otherwise. If there is no statute providing for an award of attorney’s fees or if the contract between the parties is silent on the issue, the winner is not entitled to attorney’s fees as a matter of right.

In contrast is the English rule. Under the English rule, the loser pays the winner’s attorney’s fees. That rule applies in England and most of the Western world. Allowing the winner to recover fees from the loser might seem “fair,” but early courts in this country did not agree. The colonies separated from England due to perceived abuses by King George III, among which were the King’s refusal to create judicial powers and to allow the colonists to adopt their own laws. After independence, courts wanted a level playing field for disputes and opined that someone should not be penalized because he attempted to assert a right or defend a claim in court. Judges believed the English rule would discourage the poor from pursuing their rights if they had to also risk paying their opponent’s attorney fees.

The lack of automatic attorney’s fees to the winner should make everyone pause before suit. Part of what compels many to courthouse battle is the belief they will win and get attorney’s fees to boot. That means contracts or statutes providing fees to the winner may actually encourage lawsuits. If both parties think they are going to win and get their fees, why try to settle the dispute?

It may seem simple to read a contract and figure out if it includes language that provides for a loser to pay the winner’s fees, but careful reading is required. A good example is the case of Florida Hurricane Protection and Awning, Inc. v. Pastina.

In the Pastina case, a homeowner sued a contractor for breach of a hurricane shutter installation contract. The contractor failed to complete the installation and the homeowner had to hire another contractor. The homeowner sued for the extra expense. The contract provided that attorney’s fees would be awarded in the event of a collection action. The trial court awarded attorney’s fees to the homeowner but the appellate court reversed. The appellate court explained suit for breach of contract was not a collection action so no fees.

Many contracts only provide for an award of attorney’s fees to the party who drafted the contract. Those contracts include language such as “in the event company has to sue to get paid from customer, customer will pay company’s attorney’s fees in addition to any other damages awarded to company.” That language is clearly an effort to provide for attorney’s fees to the company but keep the customer from the same relief. Florida’s legislature decided such one-sided attorney fee provisions are eminently unfair long ago. Section 57.105 (7) of Florida Statutes now provides “if the contract contains a provision allowing attorney’s fees to a party when he or she is required to take any action to enforce the contract, the court may also allow reasonable attorney’s fees to the other party when that party prevails…” In other words, if a contract provides for attorney’s fees to one party, the statute makes the provision bilateral so that the loser pays the winner’s fees, as long as the issue is when for which fees are provided in the contract.

A lot of disputes do not involve contracts or involve contracts which are silent as to attorney’s fees. In those cases, attorney’s fees may be recovered if provided by statute. Florida has many statutes which provide that the winner in a dispute under the statute will get his or her attorney’s fees from the loser.

One of the well known statutes providing for an award of attorney’s fees is Florida’s Residential Landlord and Tenant Act, under which either landlord or tenant may recover fees in connection with litigation to enforce a lease or right under the Residential Landlord and Tenant Act.

The successful party in a construction lien foreclosure may recover attorney’s fees. Success in a suit for unpaid wages or overtime can includes statutory attorney’s fees. The prevailing party in any action between a condominium association and a unit owner for failure to comply with condominium governing documents or the Florida Condominium Act is entitled to attorney’s fees. If the unit owner is successful, the unit owner is also entitled to reimbursement for any portion of assessments levied by the association to fund association expenses of the litigation.

Other statutes provide additional avenues to the attorney fee pot of gold. Section 57.105 Florida Statues directs a court to award a reasonable attorney’s fee, payable in equal amounts by the losing party and the losing party’s attorney, on any claim or defense at any time during a civil proceeding which the court finds the losing party or losing party’s attorney knew or should have known was not supported by the material facts necessary or would not be supported by law. That statute is intended to penalize frivolous lawsuits or raising frivolous claims defenses within a lawsuit.

To encourage settlement, a statute and parallel court rule provide a method for proposing settlement that may result in award of attorney’s fees if the proposal is rejected. If the defendant makes a formal offer and the plaintiff does not accept, the defendant is entitled to attorney’s fees incurred subsequent to the offer, if the subsequent judgment is more than 25% less than the offer. If a plaintiff makes a formal offer that is not accepted by the defendant, the plaintiff likewise gets attorney’s fees if the judgment is at least 25% greater than the offer. In both cases, the recipient of the offer has 30 days to accept or reject the offer.

Even when there is a contract or statute providing for attorney’s fees, the arguments do not end. Deciding who the prevailing party is can be difficult, especially when there are multiple claims. Just because a party gets a judgment does not always mean the party is the prevailing party for purposes of attorney’s fees entitlement. And, once the issue of prevailing party is decided, the parties may continue to argue over the amount of reasonable fees. Factors considered by courts in determining the amount of fees to be awarded include the novelty or difficulty of issues, skill of the attorney, the amount of money at issue in the case, attorney time and labor required, the customary attorney’s fee charged by other attorneys for comparable service and the result obtained.

When representation is provided on a contingency fee basis (the attorney gets a portion of the amount recovered) the fee award can be increased by a multiplier of 1.5 to 2.5. If a multiplier is requested, the court determines whether the relevant market requires a contingency fee multiplier to obtain competent counsel and whether the attorney was able to mitigate the risk of non- payment in any way in addition to the usual factors considered in determining a reasonable fee.

Florida courts generally agree that attorney’s fees incurred in litigating entitlement to fees can be recovered if fees are awarded. But, fees arguing the dollar amount of fees to be awarded are generally not recoverable.

Litigation is expensive. Attorney’s fees are not automatic. Even when attorney’s fees can be included as part of the case, the amount of awarded fees may be significantly less than those actually paid by a litigant. For all of these reasons, parties should make a good faith effort to settle disputes before resorting to court.

William G. Morris is the principal of William G. Morris, P.A. William G. Morris and his firm have represented clients in Collier County for over 30 years. His practice includes litigation and divorce, business law, estate planning, associations and real estate. The information in this column is general in nature and not intended as legal advice.

One response to “Attorney Fees to Winner – Not So Fast”

  1. Micheal Crowe says:

    My Name is Micheal Crowe,I am requesting to know if you can help to enforce a loan agreement. I assisted a business associate/friend Mr.James Smith(who lives in your state and had the agreement in accordance with the laws of the same)a loan and he has defaulted to make payment at the stipulated time.I want to take legal action to see that the money is repaid back to me.Please let me know if you can be of assistance to me or make a referral.

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