I. History of the American Rule | |
II. How the American Rule Works | |
1. Whether an attorney's fee award is authorized by a statute. |
However, the young trial attorney should take heart, for today there are several statutory causes of action that, if the attorney is successful at trial, may allow her to recover a "reasonable fee" from the opposing party. Therefore, the only uncertainty remaining is whether the attorney feels she can win the case. If a victory is expected, the young attorney can sleep well, assured that she will get paid.
The above scenario is based on the "American Rule." The American Rule requires that each party to a litigation matter pay his own attorney's fees, unless there is a statutory authorization otherwise.1 This paper discusses the American Rule, describes how and when the rule is applied, and considers the policies surrounding the rule.
A brief history will help the young attorney understand the degree to which the American rule is engrained in society today. The American Rule has essentially been in place for the entire history of the United States.2 This may seem curious, since England's tradition of awarding the prevailing party attorney's fees from the losing party can be traced back to the year 1278.3
In 1853 Congress digressed partially from the American Rule by implementing a fee schedule dictating specific amounts taxable to the various parties involved in litigation.4 This act was primarily intended to provide uniformity in court awarded costs and to limit the amount that the losing party was taxed for the prevailing party's attorney's fees.5 This 1853 statute is no longer in effect today, but its main thrust still exists; absent a legislative directive, the court will not allow the prevailing party to recover its attorney's fees from the losing party.6
Over the years, the Supreme Court has consistently shown a great deal of deference toward legislatures regarding the American Rule. This is revealed by the Supreme Court's statement; "... even if [the American Rule is] not strictly correct in principle, it is entitled to the respect of the court, till it is changed ... by statute."7 The court has also recognized that the American Rule has been subject to a great deal of criticism, but still the court has refused to analyze the rule's positive and negative effects.8 However the strength of this presumption has been substantially weakened in modern society because federal and state legislatures have provided a great deal of statutory authority allowing a prevailing party to recover attorney fees.
1. Whether an attorney's fee award is authorized by a statute.
Before an attorney decides to pursue a client's claim, he should determine whether the applicable statutory cause of action would allow him to recover his fees from the opposing party if he is victorious. This requires the attorney to look to the court's interpretation of the statute. Sometimes the court recognizes that a statute expressly dictates that attorney's fees should be awarded.9 In other cases, the court will use the discretion which the applicable statute grants in deciding whether to award attorney's fees. This discretion is evident in the words "may award attorney's fees."10
Also, the court's authority to award attorney's fees may
be implied from the statutory language.11 However, the court will
not base such an implication on the "mere generalized commands" of a statute.12
There is no "precise rule or formula" the court may use to determine whether
an implied award attorney's fees is proper; the matter is within the court's
equitable discretion.13 In assessing whether to award attorney's
fees, the evidence must be viewed in light of the strong presumption favoring
the American Rule.14 This is true even if an award of fees would
promote an important public policy objective.15 A statutory phrase
granting the court the power to "furnish suitable remedies" will not suffice.16
Nor will authority to award the "costs of the action ... subject to the
principles of equity," grant the court implied authority to award attorney's
fees.17
A rational person might think that a statutory award
of "costs" to a prevailing litigant would include attorney's fees.
However, the court feels that "costs" is not a clear enough mandate, and
believes that legislators know the American Rule and will expressly trump
it by stating "attorney's fees" if they so desire.18
The most notable effect of this interpretation of "costs"
is on Rule 68 of the Federal Rules of Civil Procedure. Rule 68 states
that if a settlement offer is made by an offeror in the course of litigation,
but refused by the offeree, and the offeree later obtains a judgment against
the offeror, but such judgment is less than the amount of the previous
settlement offer, then the offeree must pay the costs incurred after the
offer was made.19 However, since Rule 68 does not expressly include
attorney's fees in the costs it awards, the court held that such fees can
not be awarded, unless the underlying statutory cause of action expressly
provides for attorney's fees.20
This is a very plaintiff-friendly interpretation of Rule
68. Obviously, if "post-offer" attorney's fees are recoverable under
Rule 68, a plaintiff whose expected recovery at trial is not substantially
greater than the settlement offer will have a strong incentive to accept
the settlement offer. Moreover, if the claim is not very large to
begin with, these post-offer attorney fees could eat up most, if not all,
of the plaintiff's eventual recovery, and eliminate any recovery the prevailing
attorney would otherwise receive.
2. Whether a statute authorizes attorney's fees in the
case before the court.
If the court determines that a statute permits attorney's
fees to be awarded, the question remains whether it is appropriate to award
fees in the specific case before the court. This question will be
collateral to the case in chief.21 Several issues are presented here.
First, the court must determine which type of statute
it is dealing with. Some statutes only permit a prevailing plaintiff
to recover attorney's fees, while other statutes allow either a prevailing
plaintiff or a prevailing defendant to recover attorney's fees. The
former is referred to as "one-way fee shifting," while later is "two-way
fee shifting."22
Even though a statute may appear to authorize two-way
fee shifting, some courts will interpret it as only allowing recovery by
the prevailing plaintiff. This has been especially true in Title
VII Civil Rights Actions.23 The Supreme court has noted that there
are two strong policy considerations which mitigate against awarding attorney's
fees to a prevailing Civil Rights Act defendant: A) civil rights plaintiffs
are attempting to vindicate an important wrong, and, B) when fees are awarded
to a successful civil rights plaintiff, they are being awarded against
a violator of federal law.24
Second, assuming a party is eligible to receive attorney's
fees if the party prevails, the court must still determine whether an individual
party has "prevailed" within the meaning of the statute.25 If the
litigant did not prevail, she can not be awarded attorney's fees.26
Generally, a party is considered to have prevailed in a case if she has
succeeded on a "significant" or "central" issue and has achieved relief
which she sought.27 The court also has held that a party may be said
to have prevailed if she has achieved "relief on the merits of the claim
and materially altered the legal relationship between the parties by modifying
the [other party]'s behavior in a way that directly benefits [herself]."28
However, if a prevailing party is only awarded nominal damages, a court
will most likely not authorize the award of attorney's fees which the applicable
statute otherwise would allow.29
Third, the court must determine on exactly which issues
a party has prevailed. This is a crucial step, because attorney's
fees can only be awarded for successful claims.30 If several claims
were advanced, this may be a complex issue. The court addresses this
problem by determining which claims were successful and whether or not
any of the other claims were related to the successful ones.31 A
claim is "unrelated" to a successful claim if it is based on different
facts and legal theories.32 Determining whether a claim is related
to another is very difficult, and if necessary, a court may view the case
as a whole and award fees accordingly.33
3. The court's inherent power to award attorney's fees
absent a statutory authorization.
Notwithstanding the American Rule, there are certain circumstances
under which the court may use its inherent power to award attorney's fees.34
Judges are vested with a range of inherent powers in order to control the
courtroom and ensure the proper disposition of cases.35 These inherent
powers are deeply ingrained in the court, are necessary to preserve judicial
integrity, and will not easily be displaced.36
There are three circumstances that may justify a court's
use of its inherent power to award attorney's fees.37 The first is
the "Common Fund" rule.38 The Common Fund rule allows a petitioner
attorney's fees if the petitioner has sued to recover a fund or property
in which others will share.39 It is irrelevant whether the petitioner
purports to sue only for himself, or, for himself and other parties.40
The primary rationale for this judicial exception is to ensure equity between
the party suing and the parties who directly benefit from the litigation.41
Simply put, equity demands that a party who successfully brought and litigated
a suit, and thereby established a stare decisis effect that other affected
people will be able to use in order to reach the common fund, should be
rewarded with attorney's fees.42 Otherwise, the other beneficiaries
of the common fund would be unjustly enriched because they did not have
to expend any resources in establishing the common fund from which they
will benefit.43
Even though a court may use its inherent authority to
award attorney's fees under the Common Fund rule, the Supreme Court has
refused to create an exception for a similar rule; the "Private Attorney
General" doctrine.44 The Private Attorney General doctrine would
allow attorney's fees to a prevailing litigant if "private enforcement
was necessary to defend important rights benefiting large numbers of people,
and cost barriers might otherwise preclude private suits."45 Most
attempts to have the court recognize this rule have been in civil rights
litigation and environmental litigation. While commending the Private
Attorney General rule, the court feels it is the legislature's prerogative
to implement such a rule where it sees fit.46 Also, the court is
fearful that it would be difficult to consistently determine when it is
proper to implement the Private Attorney General doctrine.47
The second reason a court may use its inherent power
to award attorney's fees is if a litigant willfully disobeys a court order,
(ie. contempt).48 This long-standing rule allows the court to force
the disobedient party to pay the entire cost of the litigation.49
Third, the court's inherent power may be invoked to award
attorney's fees when one of the litigants has acted in bad faith.50
Bad faith includes instances where a party has worked fraud upon the court,
delayed or disrupted litigation, or instituted litigation for improper
reasons.51 The court concedes that this is a punitive power that
is geared more toward allowing the court to "police itself" than to benefit
the other litigants.52 However, an award of attorney's fees due to
of bad faith is not seen as an award of punitive damages.53 Therefore,
an award of attorney's fees may be proper even if punitive damages are
not among the approved remedies for the underlying cause of action.54
This holds true even if a case is in federal court on a diversity basis
and the applicable state law does not authorize punitive damages.55
The position has been advanced that Rule 11 of the Federal
Rules of Civil Procedure overrides the court's inherent power to punish
bad faith actions.56 Section (c)(2) of Rule 11 allows the court to
impose reasonable attorney's fees if the standards of Rule 11 (a) or (b)
are breached, (various types of bad faith actions).57 However, the
Supreme Court has clearly held that Rule 11 does not displace the court's
inherent power to award attorney's fees.58 Rather, Rule 11 only supplements
the court's inherent power.59 If Rule 11 sanctions adequately deal
with the wrongdoer's conduct, they should be used, otherwise the court's
inherent power may be invoked.60
2. Calculation of the attorney's fee to be awarded.
After the court determines that an award of attorney's
fees is proper, the court must then calculate the fees to be awarded.
Unless the applicable statute specifies otherwise, a reasonable attorney's
fee is to be awarded. This reasonable fee is to be determined by
use of the "lodestar method."61 The lodestar method sets the reasonable
fee as the "product of reasonable hours times a reasonable rate."62
No exact definition of "reasonable" exists, however, the court has approved
some general factors which may play a role in the determination.63
Once determined, the lodestar amount carries a strong presumption of reasonableness.64
If a party disputes the lodestar amount, they carry the burden to show
that an adjustment is necessary to reach a reasonable amount.65
In recent years the Supreme Court has placed some restrictions
on how the lodestar method is calculated. First, the lodestar amount
cannot be increased because of the "superior performance" of the prevailing
attorney.66 Second, the lodestar amount may not be increased merely
because the attorney was retained on a contingency fee basis, and therefore,
would have received more compensation for the case than the lodestar amount
awards.67 Third, the award of reasonable attorney's fees can not
include the cost of experts that the attorney retained to assist with the
case.68 Lastly, the court has clearly reaffirmed its narrow interpretation
of attorney's fees by holding that they are just that, and should not be
interpreted as being costs or other similar items.69
Conversely, the court has also expanded the ways in which
attorney's fees may be awarded. Of greatest importance may be City
of Riverside v. Rivera.70 In Rivera, a 5-4 split majority of the
Supreme Court held that a statutory award of attorney's fees, under a civil
rights statute, could exceed the amount of damages awarded to the plaintiff.71
While Rivera dealt only with a civil rights claim, the court seemed to
approve the general proposition that reasonable attorney's fees could exceed
the damage award. The Supreme Court has not addressed this issue
since Rivera. However, the Farrar opinion may show that the court
has moderated since Rivera. Also, the court may be reluctant to approve
such an award in a case not involving an issue as important as civil rights.
The issue Rivera raises is extremely pertinent in today's
legal world. It is not hard to imagine that in a case that goes to
trial, an attorney could easily spend in excess of 100 hours in billable
time. Factor in a medium range hourly rate of $200 - $300, and an
attorney fee in excess of $50,000 is clearly possible. If the attorney's
client prevails, but is only awarded $50,000 in damages, should the attorney
also receive her full statutory award of $50,000 from the losing party
for a total pay out of $100,000 by the losing party? The attorney's
answer is obvious.
The court's opinion in Venegas v. Mitchell is also of
interest.72 In Venegas, also a civil rights case, the court held
that a contingency fee contract executed by the prevailing plaintiff and
his attorney was valid and enforceable between the parties, despite the
fact that the court approved an award of attorney's fees to the plaintiff
under the applicable statute.73 This issue was relevant because the
attorney's fee under the contingency contract was much larger than the
fee awarded by the court under the statute.74 The court made it clear
that a statutory award of attorney's fees is awarded to the plaintiff,
not his lawyer, and therefore any contractual fee arrangements that the
client and lawyer make will govern the compensation of the lawyer.75
The implications of this are twofold. First, a person who can afford
to pay for a high-priced lawyer, or is willing to sacrifice a percentage
of his damage award, may make such an agreement with the lawyer.
This may allow the person to obtain higher quality representation because
the attorney's fee will not be limited to the statutory award. Second,
an indigent person is able to contract with a lawyer to pay the lawyer
the statutory award of attorney's fees, therefore will not have to sacrifice
any damages he or she may receive.
III. Statutes Authorizing Recovery of Attorney's Fees.
Congress has seen fit to authorize attorney's fee awards
for a great many causes of action. This section gives a brief overview
of four main types of the these statutes.
The prototypical statute authorizing attorney's fees
is found in the Civil Rights Act at 42 U.S.C.S. § 1988(b). This
statute states:
In any action or proceeding to enforce a provision of
sections 1977, 1977A, 1978, 1979, 1980, and 1981 of the Revised Statutes
[42 USCS 1981-1983, 1985, 1986], title IX of Public Law 92-318 [ 20 USCS
§§ 1681 et seq.], the Religious Freedom Restoration Act of 1993,
title VI of the Civil Rights Act of 1964 [42 USCS §§ 2000d et
seq.], or section 40302 of the Violence Against Women Act of 1994[,], the
court, in its discretion, may allow the prevailing party, other than the
United States, a reasonable attorney's fee as part of the costs, ... [emphasis
added].
The Supreme Court has stated that the primary purpose
of this statute is to allow, [assumedly indigent], civil rights plaintiffs
to secure "competent counsel."76 However, the Court did hold that
Congress intended § 1988(b) to have a very broad sweep, including
allowing plaintiffs who would be able to pay for their own lawyer to be
awarded fees.77 Two statutes which use the same language as §
1988(b) to authorize an award of attorney's fees are 42 U.S.C.S. §
12205 of the Americans With Disabilities Act, and, 42 U.S.C.S. § 2000e-5(k)
involving sexual harassment. Obviously Congress is attempting to
give a strong incentive to lawyers to engage in litigation of civil rights,
disability, and sexual harassment claims. Note however, that these
statutes do not require a mandatory fee award to either party, but allow
the court to award fees to the prevailing party in its discretion.
A prevailing plaintiff will almost always receive attorney's fees under
these statutes, while such an award is more uncertain for a prevailing
Civil Rights defendant.78
While civil rights causes of action may be very
popular in today's society, other, more economic based claims should not
be overlooked by attorneys. Anti-trust litigation, for example, could
be a very lucrative area of law for attorneys. Section 15 U.S.C.S.
§ 15 (a), has been held to require an award of attorney's fees to
the prevailing litigant for a violation of any of the anti-trust laws,
15 U.S.C.S. § 12. In other words, the court has no discretion
to award attorney's fees, it must do so. This statute was interpreted
and applied quite broadly in United States Football League v. NFL.79
In USFL, the NFL was found to be in violation of the anti-trust laws, but
the jury only awarded the USFL one dollar in nominal damages and three
dollars in treble damages. However, the trial court awarded $5.5
million in attorney's fees to the prevailing attorneys. On appeal,
the Second Circuit held this award to be proper.80 Also, the court
held that an award of attorney's fees may include amounts for paralegals
and for the attorney's out of pocket expenses.81 Obviously this is
a decision that may interest the young anti-trust attorney.
In contrast to anti-trust claims, actions for trademark
infringement under the Lanham Act may not be so lucrative for attorneys.
Section 15 U.S.C.S. § 1117(a) provides that "The court in exceptional
cases may award reasonable attorney fees to the prevailing party" for a
trademark infringement. (emphasis added). The term "exceptional"
is not defined in the statute and the Supreme Court has not defined the
term either. The Ninth Circuit did offer some insight into §
1117(a) in Stephen W. Boney, Inc. v. Boney Servs..82 While no exact
definition was promulgated, the court did demand that a relatively strict
element be satisfied in saying that "Bad faith [is one] of those exceptional
circumstances," and, where "a plaintiff's case is groundless, unreasonable,
vexatious, or pursued in bad faith, it is exceptional, and the district
court may award attorney's fees."83 However, the court did hold that
a showing of bad faith is not required to recover attorney's fees under
§1117(a).84
Possibly the most surprising statutory authorization
of an attorney's fee award is 5 U.S.C.S. § 504. This statute
states that if a United States agency is not victorious in an adversary
proceeding it conducts against a person, and such proceeding was not "substantially
justified," then the prevailing party may be awarded fees and expenses,
including an attorney's fee of up to $125 per hour. The government
agency's position will be substantially justified if it is found to have
a reasonable basis in fact and law.85 While $125 per hour may not
seem very appealing to most attorneys, this statute none the less, offers
some consolation to the young attorney, and may dissuade federal agencies
from harassing people.
IV. Policy Considerations and Implications Surrounding
the American Rule.
After roughly two hundred years of litigation and many
treatises delineating how the American Rule works, the questions still
remain; Is the American Rule the proper route for our courts to follow?
Would the United States be better off using the British Rule? Is
the answer a mixture of both methods? Obviously, these are not questions
that may be answered by empirical data. Consequently, each person's
resolution will turn on how the individual views the legal system's role
in our society. This point can be illustrated by examining the policy
considerations underlying the American Rule.
1. Risk shifting effects of awarding attorney's
fees.
Regardless of how society allocates the burden of attorney's
fees between the litigants of a case, the decision will have a substantial
"risk-shifting" component. In the current "pay your own" system,
a litigant has a great deal of control over the attorney's fees which he
will be required to pay. A plaintiff can hire a cheap lawyer or an
expensive one. The attorney may be paid by a contingency fee or on
an hourly basis, etc... The resulting risk is very small for the
plaintiff. Of course the plaintiff knows that attorney's fees will
be incurred if he pursues the claim. However, such fees can be reasonably
estimated before hand and balanced against the expected recovery at trial.
The result is not the same under a two-way fee shifting
structure. Here, the plaintiff will have a very strong incentive
to pursue only claims that he believes are highly likely to be successful.
This is because if the plaintiff loses the case, he will receive no recovery
and be liable for his own attorney's fees plus those of the defendant,
(a true lose-lose outcome). Clearly such a possibility will dissuade
risk-averse plaintiffs from going to court. Whether an individual
is risk-averse or risk-loving is a function of the individual's personality.
However, it is safe to assume that people with fewer financial resources
are likely to be more risk-averse when it comes to litigation. Conversely,
plaintiffs with greater financial resources will be better able to sustain
the burden of paying both litigants' attorney's fees, and, will therefore
be more apt to take on the risk of litigation.
A simple example illustrates how risk-averse people may
react differently under the "two-way fee shifting" structure versus the
"pay your own attorney's fee" method. Assume that Plaintiff has suffered
100 in damages and that Plaintiff's attorney is hired on a contingency
fee basis with a 30 percent fee. Also, assume that Plaintiff estimates
that Defendant's attorney's fees will be 20. In a pay your own system,
if Plaintiff's claim is unsuccessful, he will receive no recovery and sustain
no out-of-pocket cost, (net cost of pursuing claim is zero). If Plaintiff
is successful, he will have a net recovery of 70. Note that this
amount only partially compensates Plaintiff for his damages of 100.
Despite this partial compensation, a reasonable person will likely pursue
this claim because there is no risk of suffering any out-of-pocket cost,
and, partial compensation for the harm suffered is better than none at
all.
Under a two-way fee shifting system, if Plaintiff is
successful he will recover the full 100 in damages from Defendant (total
compensation for harm done). Additionally, Defendant will be liable
for her own attorney's fees of 20 plus the 30 of Plaintiff, for a total
cost to Defendant of 150 for a wrong of 100. However, if Plaintiff
is unsuccessful, he will recover no damages, (ie. a loss of 100), and be
liable for Defendant's attorney's fee of 20 (net loss of 20 for pursing
claim). The threat of having to pay Defendant's attorney's fees forces
Plaintiff to analyze several factors; the probability of success for the
claim, whether Plaintiff actually has the 20 which he will have to pay
if the claim is unsuccessful, and the individual Plaintiff's attitude toward
risk. It is impossible to say what a rational person will do in this
position. For example, if the likelihood of success is 80 percent,
but Plaintiff is indigent and has no resources with which to pay the 20
if the claim is unsuccessful, what is the proper choice? Keep in
mind that Plaintiff has already suffered damages of 100. It is very
foreseeable that a person in this situation would choose not to pursue
the claim despite the high chance of success.
2. Policy questions presented by risk-shifting
effects.
The above mentioned risk-shifting effects of each system
present three policy questions. First, whether the benefits of a
two-way fee shifting system outweigh its potential drawbacks. One
benefit of the two-way fee system is that the plaintiff is totally compensated
for the wrong he has suffered because no attorney's fees need be taken
from his damage award. A second benefit is that the defendant suffers
an extra punishment for having committed the wrong by having to pay all
of the attorney's fees in the case. The drawback of the two-way system
is that its inherent risk may have the consequence of dissuading risk averse
plaintiffs, and/or plaintiffs with few financial resources, from pursuing
their claims in court.
Second, society must determine whether the two-way fee
shifting system acts properly by dissuading individuals with marginal claims
from coming to court. If the likelihood of success on a claim is
low or marginal, a plaintiff may chose not to pursue the claim even though
she has sufficient resources to pay the defendant's fees if the claim is
unsuccessful. Is this a good thing? Clearly it is a positive
result where the plaintiff's claim is frivolous. However, if the
plaintiff's claim deals with an area of law that is unclear or is in need
of modification, then the plaintiff should pursue the claim. In such
a case, litigation of the claim will clarify the law and offer an opportunity
to change the law so as to stay in step with society's values. Also,
the court system is designed to discover the truth and compensate for wrongs.
If a person fails to bring a claim because the probability of success is
too small, the court system will not get a chance to do its job.
Third, regardless of what the current law dictates, how
the court system will react to a specific claim is inherently unpredictable.
Even if the claim has merit, a judge or jury may rule against it for whatever
reason, (jury nullification, prejudice, misunderstanding of the law or
the facts, etc...). When this unpredictability is coupled with the
risk associated with a two-way fee shifting system, a plaintiff may elect
not to pursue a claim that objectively has a relatively high chance of
success. Is it proper to shift the burden of the court's unpredictability
to the plaintiff?
3. Administrative efficiency.
Under the American Rule, each litigant negotiates with
her own attorney regarding the fee to be paid. The court does not
to concern itself with the amount of each party's attorney's fees or how
the burden of paying the fees is allocated. Conversely, under a two-way
fee shifting system, the court must determine the proper fee to be paid
to the prevailing party's attorney. Requiring the court to make this
determination raises two issues.
A. The method of calculation.
The obvious first choice is to use the lodestar method.
The lodestar method offers an easily understandable, objective calculation,
has been around for some time, and has been clarified by recent litigation.
However, the lodestar calculation may not be as simple as it first appears
to be. This is because the lodestar method hinges on the word reasonable,
(reasonable hours multiplied by reasonable rate). Reasonable will
mean different things to different judges. This has the potential
to create a huge uniformity problem. This lack of uniformity may
cause a great deal of forum shopping on the part of lawyers. Obviously,
an attorney will not want to try a case before a judge who has a reputation
for small attorney's fee awards. Also, a lodestar award may over
or under compensate an attorney by disregarding the actual number of hours
spent on a case in favor of what the judge felt was reasonable. This
creates an incentive for an attorney to curtail his efforts when he feels
that a reasonable number of hours of work have been expended.
Another way in which the court could determine an attorney's
fee is by use of a fee schedule. Such schedule could be devised by
the courts or the legislature and award a set fee for a specific type of
case. There may be some difficulty in determining how detailed the
schedule should be. Should all contract cases pay the same rate,
all tort cases, etc... How often should the tables be revised, should
they be indexed to inflation? Also, some attorneys are better than
others. Imposing a fee schedule on all attorneys may not be fair
to an attorney who could otherwise charge a higher rate because she regularly
produces superior results to that other attorneys subject to the schedule.
Further, by limiting an attorney's income potential, some gifted individuals
may be induced to pursue other careers they otherwise would not, in order
to obtain greater financial rewards.
Lastly, the court could award the victorious attorney
the amount that the attorney says she would have otherwise charged for
the case. This is probably the most troubling method. Even
assuming most people are honest, the natural human tendency would be to
"pad" the amount, thereby increasing the fee award.
No matter how the fee would be calculated, the attorneys
would essentially be at the mercy of the court system. Attorneys
would almost be de facto government contractors or public utilities, taking
what the government decided they should receive, all be it from the losing
party. This would devastate the free market of legal services currently
in place, where an attorney can charge more if he is worth it, and a sub
par attorney will not fare as well.
B. The process of calculation.
Requiring the trial court to determine the victorious
party's attorney fee will require more of the court's time and effort.
The Supreme Court has clearly stated that the attorney's fee determination
is a matter that is collateral to the merits of the case in chief, and,
the fee award is not part of the compensation of the plaintiff.86
Nor does the court's determination of the attorney's fee hamper the finality
of the underlying judgment upon which the fee is based.87
Consequently, the court and the litigants are faced
with a second "mini-trial" at the conclusion of the main trial. Even
if a simple fee schedule is used to calculate the attorney's fee, this
is another hoop to jump through which may slow the court system down.
Also, if the Osterneck precedent were to be followed and the attorney's
fee determination would be a separate court ruling, this determination
almost assuredly would have to be appealable to a higher court. This
would create a situation where the main case was finally determined and
the appellate courts were debating the attorney's fee from the finally
determined case. This may be difficult, especially under the lodestar
method, because the appellate judges did not actually participate in the
trial, and, therefore could have some difficulty in assessing what a reasonable
fee is under the circumstances.
V. Conclusion.
The American Rule is firmly engrained in this country's
legal environment. The young attorney who wishes to engage in litigation
should be aware of this and the implications it will have on her ability
to receive compensation for her efforts. Despite the American Rule,
many statutes do afford the victorious attorney an opportunity to recover
her fees from the losing party. If fee recovery is a concern of the
attorney, she should thoroughly examine the statutory authority for the
proposed cause of action to determine whether a fee award is authorized,
and, assess whether the courts in the jurisdiction regularly award attorney's
fees under such statute.
1 Alyeska Pipeline Co. v. Wilderness Society,
421 U.S. 240, 247 (1975).
2 Id. at 249-250.
3 Id. at 240, n.18.
4 Id. at 251-255 (citing Act of Feb.
26, 1853, 10 Stat. 161-162).
5 Id. at 251-252, n.24.
6 Id. at 255.
7 Id. at 249-250.
8 Id. at 270.
9 Key Tronic Corp. v. United States,
511 U.S. 809, 814-15 (1994).
10 Fogerty v. Fantasy, Inc., 510 U.S.
517, 534 (1994).
11 Id.
12 Id.
13 Fogerty at 534 (citing Hensley v. Eckerhart, 461 U.S.
424, 436-37 (1983)); Alyeska Pipeline at 262.
14 Runyon v. McCrary, 427 U.S. 160, 185 (1976);
Key Tronic at 816.
15 Key Tronic at 816.
16 Runyon at 185.
17 Fleischmann Distilling Corp. v. Maier Brewing Co.,
386 U.S. 714, 720 (1967).
18 Marek v. Chesny, 473 U.S. 1, 8-9 (1985).
19 F.R.C.P § 68 (1997).
20 Marek at 9.
21 Budinich v. Becton Dickinson & Co., 486 U.S. 196,
201 (1988).
22 Geoffrey C. Haxard, Jr., Susan P. Koniak & Roger
C. Crampton, The Law and Ethics of Lawyering, pg. 523 (3d ed. 1999).
See Christianburg Garment Co. v. EEOC, 434 U.S. 412, 415-16 (1978) (citing
several statutes authorizing various types of awards)).
23 See Christianburg Garment (discussing how prevailing
plaintiff under Civil Rights Act should be awarded attorney's fees, while
prevailing defendant may be awarded fees upon court's discretion).
24 Christianburg Garment at 418.
25 Hensley v. Eckerhart, 461 U.S. 424, 433 (1983).
26 Id.
27 Id.
28 See Generally Farrar v. Hobby, 506 U.S. 103, 111-12
(1991) (discussing what is required for a civil rights plaintiff to prevail).
29 Id. at 115.
30 Hensley at 434-35.
31 Id.
32 Id.
33 Id.
34 Chambers v. NASCO, Inc., 501 U.S. 30, 45 (1991);
Roadway Express, Inc. v. Piper, 447 U.S. 752, 765 (1990).
35 Chambers at 43 (citing Link v. Wabash R. Co., 370
U.S. 626, 630-31 (1962)).
36 Id.
37 Id. at 45.
38 Id. (citing Sprague v. Ticonic National Bank, 307
U.S. 161 (1939)).
39 Sprague at 166.
40 Id.
41 Id.
42 Fleischmann Distilling Corp. at 719 (discussing
Sprauge).
43 Id.
44 Alyeska Pipeline at 263-65; West Virginia University
Hospitals v. Casey, 499 U.S. 83, 97 (1991).
45 Casey at 98.
46 Alyeska Pipeline at 264.
47 Id.
48 Chambers at 45 (citing Fleischmann Distilling Corp
at 718).
49 Id. (citing Toledo Scale Co. v. Computing Scale Co.,
261 U.S. 399, 426-28 (1923)).
50 Id. at 45-46.
51 Id.
52 Id. at 46, 53.
53 Id. at 54.
54 Id.
55 Id. at 52.
56 Id.
57 F.R.C.P. § 11 (1997).
58 Chambers at 48-49.
59 Id.
60 Id.
61 City of Burlington v. Dague, 505 U.S. 557, 559 (1992)
(citing Pennsylvania v. Delaware Valley Citizens' Council for Clean Air,
478 U.S. 546, 565 (1986)).
62 Id.
63 Delaware Valley at 562, n.7.; The 12 factors are:
(1) the time and labor required; (2) the novelty and difficulty of the
question; (3) the skill requisite to perform the legal service properly;
(4) the preclusion of other employment by the attorney due to acceptance
of the case; (5) the customary fee; (6) whether the fee is fixed or contingent;
(7) time limitations imposed by the client or the circumstances; (8) the
amount involved and the results obtained; (9) the experience, reputation,
and ability of the attorney; (10) the "undesirability" of the case; (11)
the nature and length of the professional relationship with the client;
and (12) awards in similar cases.
64 Dague at 562.
65 Id.
66 Delaware Valley at 566.
67 Dague at 566.
68 Casey at 97.
69 Id. at 88.
70 City of Riverside v. Rivera, 477 U.S. 561 (1986).
71 Rivera at 580 (approving fee award seven times damage
award).
72 Venegas v. Mitchell, 495 U.S. 82 (1990).
73 Id. at 89-90.
74 Id.
75 Id.
76 Blanchard v. Bergeron, 489 U.S. 87, 93-94 (1989).
77 Id.
78 Christianburg Garment.
79 United States Football League v. NFL, 887 F.2d 408
(2nd Cir. 1989).
80 Id. at 415.
81 Id. at 415-17.
82 Stephen W. Boney, Inc. v. Boney Servs., 127 F.3d 821
(9th Cir. 1997).
83 Id. at 827.
84 Id.
85 Pierce v. Underwood, 487 U.S. 552, 565 (1988).
86 Osterneck v. Ernst & Whinney, 489 U.S. 169, 175
(1989).
87 Id. at 174.