Clients often ask if they will be able to collect their attorney fees from the opposing party if they win in court. Payment of attorney fees is a valid concern for both you and your lawyer. For the client, any litigation is a serious financial commitment; for the attorney, litigation is a serious commitment of time and the firm’s resources. It is vital that there be a clear understanding between the attorney and client prior to commencing litigation on how and when the attorney fees will be paid.
There are generally two arrangements made for the payment of attorney fees prior to the commencement of a case. Clients will be billed hourly with a retainer (deposit) due prior to the beginning of the representation, or the attorney will agree to handle the case on a contingency basis–that is the attorney will not bill the case on an hourly basis and will not require a retainer but will be paid out of any judgment entered in the client’s favor. Typically in contingency cases the attorney will be paid approximately 1/3 of any judgment. Contingency pay arrangements are usually seen in the area of personal injury cases while hourly billing is generally done in most other civil cases. Many firms will charge a one-time flat fee for cases such as bankruptcy or in criminal matters.
Generally, courts follow what is called the American Rule. The American Rule provides that unless there is a statute or a contractual agreement requiring the payment of fees, all parties to a lawsuit will pay their own attorney fees–regardless if you win or lose. This being the general rule, all parties should plan on paying their own attorney fees and should not expect the other side to pay any of your fees or court costs.
There are, however, exceptions to the Rule. First, in disputes involving a contract there is often a term in the contract requiring the losing party to pay the prevailing party’s attorney fees and costs. If the contract contains such a term you will be in a good position to collect your attorney fees if you win. Second, under Arizona law, there are several statutory provisions that provide for the payment of attorney’s fees by the losing party if a judgment is entered in the matter. A good and often used example is A.R.S. 12-341.01. This statute provides that the prevailing party in a suit based upon a contract (written or oral) may be entitled to the recovery of their attorney fees. In order for this statute to apply there must be a final judgment or an arbitration award entered. If the case settles prior to trial or arbitration typically no award of attorney fees is provided. It is also important to understand that this statute, like many, is discretionary. A judge can award all fees incurred, a portion of the fees, or none at all. There is no guarantee.
If your case settles prior to trial–and over 90% do–you should not plan on the other side paying your attorney fees. It is rare that either party will agree to pay attorney fees as part of a settlement and insisting that your fees be paid will likely be a hindrance to settlement in your case.
To sum all of this up, before the decision is made to go forward with any lawsuit it is important to have a frank discussion with your attorney about fees. Generally you will be required to pay a retainer and then replenish that retainer once it has been exhausted. Understanding what is expected of you as a client and what your attorney expects from the beginning will head off many problems down the road.
As I have mentioned in previous posts taking your case to trial is not only time consuming, stressful, and expensive, but may not be the best method for resolving your dispute. Increasingly courts are supporting alternative dispute resolution (“ADR”) programs and even introducing court sponsored ADR programs. For instance, in Maricopa County if your case is filed in the Superior Court and the amount in dispute is less than $50,000 you will be required to participate in court-sponsored arbitration. While this arbitration is non-binding in the sense that you can appeal the arbitor’s decision, in many instances arbitration turns out to be a time saving, money saving, way to resolve your dispute.
The Arizona State Bar’s website provides additional information on ADR and how it can help you resolve your dispute. The Arizona State Bar’s website is located at www.azbar.org. Below are a few of the descriptions of various ADR programs found on the state bar’s website:
Negotiation
This is a direct method of communicating and resolving a problem. Parties or their representatives, who may be attorneys, talk directly with each other. The negotiators look for a way to satisfy the needs of the parties experiencing the problem.
Mediation
This problem-solving option uses a neutral person, the mediator, to guide the discussion of ways to solve the problem. The mediator does not make decisions, but helps with developing workable and effective solutions with the parties. People can use mediators on their own or with the advice or assistance of an attorney. Some mediators are attorneys; some have training in other professions. Their skill is in helping people explore the real issues in conflict and what actions would resolve the problem.
Neutral Evaluation
When complex issues are involved, it may be helpful for people (both attorneys and clients) to have a neutral expert listen to the facts. The expert can then provide a realistic appraisal of what the case may be worth (in money and time) and various ways of finding a solution. The evaluator is someone with experience and knowledge of the subject matter of the case.
Mini-Trials and Private Judging
This is a private process in which both sides in a dispute agree on an individual, or panel of experts, who will judge the case. A “verdict” can be binding if the parties agree, or it can simply provide information that helps them with deciding on the best solution for their problem.
Summary Jury Trials
This shorter, less formal type of court trial is usually used in very complicated cases only. The jury renders an opinion that can be binding if the parties agree, or it can simply provide information that helps them settle their case. This process and verdict help the parties and their lawyers by giving them an idea of how a jury might decide the case if it went to trial. This option is only available for cases that are filed with the court.
Shortrials
This is another short, less formal type of court trial that it generally used for fairly uncomplicated cases. A jury of four renders a verdict that is binding with no right of appeal. As with summary jury trials, this option is only available for cases that are filed with the court.
Settlement Conference
This option uses a court official to help the parties settle the case. Any time before a regular jury trial, many judges, lawyers, and parties request a settlement conference to give everyone a chance to avoid going to trial.
Arbitration
This option involves presenting a case to a neutral person who makes a decision. As in a regular public court trial, the control of the case is with somebody else instead of the parties with the legal problem. Arbitration takes many forms, and is usually binding. Court-ordered arbitration however, can be appealed. State law and local court rules provide for mandatory arbitration of small cases.
Making the Results of ADR Binding
Many people worry that if they use an alternative to a court process they can’t force the other side to comply with the solution. This is not true! The parties involved can agree in advance to turn the solution of the problem into a legal contract or court order. The dispute resolution service provider, or a lawyer can help in this process.
Finding a Provider of Dispute Resolution Alternatives
Your attorney can help you determine if alternative dispute resolution is best for your case and can point you in the right direction. You can also look in the Yellow Pages or contact the agencies listed below and ask about Mediation Services.
I haven’t provided any new postings lately largely due to the fact that my law office was undergoing a name change and a corresponding change to the website. The Law Office of John N. Skiba, PLLC is now known as the Skiba Law Group, PLC. This change in name reflects my plans to continue to add excellent attorneys to better serve clients with their various legal needs.
The new logo and website, which is still located at www.skibalaw.com , were custom designed for the firm by Scorpion Design based out of Valencia, California. They did a great job and were great to work with. It is my goal to provide a website that is more interactive and can answer some of the more routine questions you may have prior to even contacting my office. As always I would be happy to meet with you and discuss your case in more detail.
For existing clients you may have noticed a new voice when you call the office. Our new receptionist is Rachell Rowell and we are glad to have her on board. My legal assitant Kelyn Younger is still there to clients with any questions.
A big question on everyone’s mind is how much is this going to cost? This is a fair question and one that your lawyer should address with you at your initial meeting. In litigation and similar type of cases you may find that the lawyer is hesitant to discuss the estimated total cost of the case. This is largely due to the unknown problems that an attorney may encounter in your case that are not foreseeable at the time. Generally you will be required to pay an advance on costs (retainer) anywhere from $2,000-$5,000 or more. The amount of the retainer will be varied depending on the type of case and the anticipated amount of work that will be required. It is also important to realize that the retainer is not an estimate of what the total legal fee will be but is merely a deposit to get work started on the case. There will likely be additional costs.
Once an attorney receives a retainer from you, it will be placed in the attorney’s trust account. All time spent on your case will be billed against this amount and then deducted from the trust account after you have been invoiced for it at the end of the month. While each case is different it is important that it is communicated that going to court is not an inexpensive process. It is also important to know that generally you are going to be responsible for your own attorney’s fees even if you prevail at court. There are exceptions to this general rule, but all parties should plan on paying their own attorney’s fees in the case. An important exception to this rule in Arizona is found at A.R.S. 12-341.01. This statute permits the prevailing party in a lawsuit stemming from a contract, written or implied, to recover the attorney’s fees incurred in the matter. However, for this statute to apply a judgment must be entered in your favor. Specifically, if you settle the case, even if you get what you want, you will not be entitled to an award of attorney’s fees.
I often get the question from people that come in for a consultation whether they actually need a lawyer or if it is something they can handle themselves. This is always a tough question to answer because naturally my occupation makes me biased. If you are in a situation where you feel it is necessary to bring suit against someone or if you have been served with a lawsuit I would always recommend consulting with an attorney. You need to understand that if you decide to proceed and represent yourself that the court will hold you to the same standards as they do attorneys. Specifically it will be assumed that you know the Arizona Rules of Civil Procedure and that you will abide by them. If you fail to abide by these rules you risk having your case delayed or even dismissed. It is also important to note that a business entity cannot represent itself in the Superior Court in Arizona.
An important consideration is how much your case is worth. Most attorneys bill by the hour with hourly rates in Arizona ranging anywhere from $150 per hour up to $360 per hour. Further, most attorneys require an advance on costs (retainer) in the range of $2,500-$5,000. If the most you are seeking in your case is relatively small it may not be cost effective to pursue the matter with an attorney. The same goes if you are being sued for a relatively small amount. If the amount being sought is $2,500 or less the case should more often than not be handled in small claims court where attorneys are not allowed.
In addition to the above, if you are seeking something other than a money judgment (i.e., an injunction, specific performance, etc.) you will need the assitance of counsel. In short there are a lot of pitfalls in the law where you can really mess up your case if you do not know what you are doing. If the case is not cost prohibitive, and if you can afford it, I almost always recommend that you use a lawyer. While many things seem very intuitive, the lawyer has been trained to handle these matters and it will almost always result in a better overall outcome.
In hopes of better serving my current clients and those who would like a reliable source in obtaining legal information I have decided to start this blog focusing on legal matters. As I meet with people to discuss their legal issues I get many of the same questions. While each case is different there are basic questions that I hope to answer with this blog that help people and businesses decide which path is the best to take when deciding whether to pursue a remedy through the court system.
My main areas of practice consist of commercial/civil litigation, bankruptcy law and family law. The posts to this blog will be focused on those areas of law. If you would like additional information about a topic posted on the blog or if you would like a free evaluation of your case, please do not hesitate to contact me at my e-mail address (jskiba@skibalaw.com) or contact my office at (480) 361-5643. Additional information can be obatained at the firm website, www.skibalaw.com.
