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When you endeavored to hire an attorney to prosecute your personal injury claim, you probably signed a “contingency fee agreement” or “CFA.” Most personal injury attorneys work on a contingency fee basis because it is very difficult for clients to afford the attorneys hourly billing. Essentially, this means that your attorney (or the law firm he/she represents) has agreed to resolve your claim by charging you nothing upfront and taking a percentage of the settlement successfully obtained for you at the end of the case.
Example: You sign a CFA agreeing to an attorney’s fee of 40%. Your attorney obtains a settlement on your behalf for $100,000.00. This means that your attorney is entitled to be paid 40%, $40,000.00.
Nevada law and the Rules of Professional Conduct permit an attorney to bill on a contingency fee basis.
What does it mean to recover attorney’s fees? The concept of recovering attorney’s fees, in effect, is similar to the age old saying “to the winner goes the spoils.” As a Plaintiff in a personal injury suit, this means that the case is over, you’ve won and now it’s time for the opposing party to pay you accordingly. It is possible that in addition to the amount you have been awarded for your personal injury (medical expenses, pain & suffering, lost wages, etc.), the court may also permit you to recover your attorney’s fees from the other side.
Under certain circumstances, Nevada law permits the court to award a successful Plaintiff the reasonable cost of their attorney’s fees. The applicable statute is NRS 18.010 Award of Attorney’s Fees, which states as follows:
(1) The compensation of an attorney and counselor for his or her services is governed by agreement, express or implied, which is not restrained by law.
(2) In addition to the cases where an allowance is authorized by specific statute, the court may make an allowance of attorney's fees to a prevailing party: (a) When the prevailing party has not recovered more than $20,000; or (b) Without regard to the recovery sought, when the court finds that the claim, counterclaim, cross-claim or third-party complaint or defense of the opposing party was brought or maintained without reasonable ground or to harass the prevailing party…”
The purpose of this statute is to allow parties to contract freely, if they decide that the losing party should award attorney fees to the winning side, then the court can permit such a recovery. Further, section (2) of the statute is designed to keep both parties accountable for their actions, i.e., to act fairly and appropriately toward one another. If you bring a frivolous action against another party, or maintain a defense with no grounds for doing so, you should expect to be sanctioned by the court and/or required to pay the other sides attorney fees.
Nevada Rule of Procedure 68 presents an interesting topic for consideration, recovering attorneys' fees after an offer of judgement. What is an offer of judgement? During litigation, either party may serve an offer of judgement at “any time more than 10 days before trial.” NRCP 68(a). The offer of judgment is an amount that one of the parties has offered in an attempt to settle and resolve the claim without further litigating the case. Making an OOJ is somewhat tactical in nature because it puts the party to whom the offer was made in the hot seat. They now have an important decision to make. If they accept the offer, they might miss out on the opportunity to obtain a more favorable amount from an arbitrator or juror. Conversely, if they choose NOT to accept the offer, they subject themselves to being liable for the other sides attorney’s fees. If they refuse an offer that is ultimately more favorable to them than the final award, they are subject to the rules of NRCP 68, which states as follows:
(f) Penalties for Rejection of Offer. If the offeree rejects an offer and fails to obtain a more favorable judgment,
(1) the offeree cannot recover any costs or attorney’s fees and shall not recover interest for the period after the service of the offer and before the judgment; and
(2) the offeree shall pay the offeror’s post-offer costs, applicable interest on the judgment from the time of the offer to the time of entry of the judgment and reasonable attorney’s fees, if any be allowed, actually incurred by the offeror from the time of the offer. If the offeror’s attorney is collecting a contingent fee, the amount of any attorney’s fees awarded to the party for whom the offer is made must be deducted from that contingent fee.
(g) How Costs Are Considered. To invoke the penalties of this rule, the court must determine if the offeree failed to obtain a more favorable judgment. Where the offer provided that costs would be added by the court, the court must compare the amount of the offer with the principal amount of the judgment, without inclusion of costs. Where a defendant made an offer in a set amount which precluded a separate award of costs, the court must compare the amount of the offer together with the offeree’s pre-offer taxable costs with the principal amount of the judgment.
What does all this mean when we break it down? As a Plaintiff, if you make an OOJ to defense for $40,000 which they refuse, and a jury awards you $70,000, the defendant has refused a more favorable award (40k) and therefore is potentially liable for your associated attorney’s fees.
Awarding attorney’s fees is not always straightforward. Further, the decision to award attorney’s fees is solely in discretion of the district court. O’Connell v. Wynn Las Vegas LLC, 134 Nev. Adv. Op.67, 7. This means that the court will examine all of the evidence in front of them to assess the reasonableness of the attorney’s fees and decide what amount, if any, shall be awarded. As is often the case, the attorney will submit an hourly billing sheet to the court as proof of the leg work that has gone into successfully ligating for her client. The court will consider the hours, motions, depositions, etc., and make its decision accordingly.
What happens when the attorney represented the client on a contingency fee basis? This would seem problematic because there would be no “billing sheet” to verify the amount of time the attorney has put into the case. The applicable Nevada statutes provide little in the way of clarity on this issue, but we do have a few Nevada cases where the court has evaluated and decided on this issue. The Hallmark case is O’Connell v. Wynn Las Vegas, LLC - concluding that the court cannot deny attorneys fees because the lawyer who represented plaintiff in the matter did so on a contingency fee basis, and therefore does not submit hourly billing. (Id at 3)
In coming to this decision, the O’Connell court stated that there are certain criteria, referred to as the Beattie factors, that the District Court must consider when making a determination as to attorney’s fees. Their evaluation is subject to review on appeal when it is arbitrary or capricious. (Id. at 7) The “arbitrary or capricious” standard of review, in layman's terms, means that the court really had no basis for making the decision that it made.
According to the O’Connell court, the trial court must consider the following when making its decision as to attorney’s fees:
(1) Whether the plaintiff's claim was brought in good faith; (2) Whether the defendant's offer of judgment was reasonable and in good faith in both its timing and amount; (3) Whether the plaintiff’s decision to reject the offer and proceed to trial was grossly unreasonable or in bad faith; and (4) Whether the fees sought by the offeror are reasonable and justified in amount. (Id. at 7)(citing Beattie, 99 Nev. at 588-89, 668 P.2d at 274)
O’Connell weighs in on hourly billing statements by explaining that they are helpful in establishing the value of counsel services, but they are not the sole determinative factor… “other factors may be equally significant.” (Id. at 8) (citing 85 Bunzelle, Nev.at 349, 455 P.2d at 33)
“Nevada law does not require billing records with every fees request. The law only requires the trial court to calculate ‘a reasonable fee.’” (Id.at 12)(citing Shuette, 121 Nev. at 864, 124 P.3d at 548, and NRCP 68(f)(2))
O’Connell emphasizes the fact that there isn’t one specific approach to calculating the attorney’s fee, any method will do--the only requirement is that the method used yield a reasonable amount. (Id.) Nevada courts have consistently evaluated an award for attorney’s fees based on the “reasonability” of the fees. O'Connell cites the Nevada Supreme Court case, Cooke v. Gove, where the court upheld an attorney fees award based on “the reasonable value” of the attorneys services, even though the case was taken on a contingency fee basis with no formal agreement.” (Id. at 13)
“Limiting the source for the calculation primarily to billing records is too restrictive, and the trial court can award attorney fees to the prevailing party who was represented under a contingency fee agreement. (Id.at 14)
O’Connell notes that this decision is in line with other jurisdictions and that attorneys take a substantial risk with contingency fee agreements. (Id.at 14-15) The attorney and/or the firm bears the burden of all costs associated with litigation knowing full well they could lose the case and recover nothing for it. Further, there is a substantial public policy aspect to the CFA in that “it allows those who cannot afford an attorney who bills at an hourly rate to secure legal representation.” (Id.)
“Importantly, where, as here, a district court observes an attorney successfully litigating in court, rarely should the court award no attorney fees when evaluation if fees based on a contingency fee agreement are reasonable and justified in amount under the fourth Beattie factor, assuming the factors as a whole weigh in favor of an award.” (Id. 18)
For more information on Fee’s, Liens and Settlements follow this link.