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Sometimes rules that make sense turn out not to make much sense

twoDollarBill.jpgThere is a federal court rule (and I believe many states have similar rules — at least, I know California does) relating to settlement offers and attorneys’ fees. Let’s say you’re involved in a case where the law says that the prevailing party is entitled to some type of recovery for attorneys’ fees. And let’s say that, before your case goes to trial, the other side offers to settle for $1,000. You say “get bent” and take the case to trial. You win, but you’re only awarded $100. Well this rule says that you are not entitled to attorneys’ fees (or that you may be entitled to lower fees) because the trial verdict was for less than the settlement.

This seems to generally make sense. The idea is that you would’ve been in a better position if you had taken the settlement, and you wouldn’t have used all the judicial resources required for a trial. So this rule is intended to make settlements more attractive to litigants. I’ve got no problem with this.

But there does need to be some serious flexibility with these rules. In Utah, a family recently won a civil rights lawsuit against the state’s Division of Child and Family Services. Seems their kid was wrongfully taken from their home for a week back in 1999, which led to this lawsuit. They ultimately won, getting a ruling that the Fourth Amendment applies to social workers, but the jury only awarded them a nominal $2 in damages. Their fees were over half-a-million dollars, and they of course want the state to pay. But the state is relying on this settlement rule, saying it offered the family much more than $2 before trial, an offer which the family rejected. So, says the state, they shouldn’t get all or most of their fees.

The family’s attorney argues that this was a significant decision and that the lawsuit served a “strong public purpose” which warrants payment of the fees anyway. And the Tribune article says that the suit did result in new policies and changes to state law, which certainly supports the attorney’s argument. And that’s the problem with this settlement rule - it ignores the fact that lawsuits aren’t always about money, and that sometimes there are more important purposes served by a suit.

I don’t know the intricacies of this federal rule or how flexible it is, but I surely hope that it allows the judge to use her discretion in awarding this family their fees despite the low damages they received by the jury. If it doesn’t, the rule needs some updating.