Hiring a qualified law firm to initiate and successfully litigate a lawsuit in Utah is not cheap. Before choosing to litigate a case, it is wise to consider whether your attorney fees can be recovered from the other party. Generally, a party can only recover its attorney fees if two prongs are met: 1) the party is the successful or prevailing party in the litigation and 2) a statute or a contract between the parties allows for recovery of attorney fees. Unless both these prongs are met, Utah courts usually follow the American rule that each party pays its own attorney fees.
A post I wrote earlier explains the second prong—when a statute or contract authorizes attorney fees. This post addresses the first prong—what it means to be the successful or prevailing party in litigation. This post also discusses when a prevailing party’s attorney fees are reimbursed in full or only partially.
Who Is the Winner?
In sports, the team with the highest score is usually the winner. If the Utah Jazz score more points than an opponent on any given night, they leave the arena victorious. In litigation, however, there isn’t an exact score, and determining who won often involves an imprecise judgment call. The judge who oversees the litigation uses a “flexible and reasoned approach” to make this judgment call and decide the overall winner—or that nobody is a winner. In other words, determining the winner (or that these is no winner) is perhaps more like gymnastics than basketball. The judge’s score card—not the scoreboard—is what matters.
Sometimes the analysis is very simple, and the judge’s discretion is very limited. If a party enters litigation in Utah and sues for a specific amount of money damages, and if it ultimately receives a judgment against the other party for this claimed amount, this success is clear evidence of victory. This party won on every possible claim and in every possible way, so the court would be forced to conclude that it was the prevailing party. If, on the other hand, the defendant does not countersue and defeats the other party’s entire claim so that the suing party receives nothing, the defendant is completely successful. He or she entirely avoided an adverse judgment and is therefore the clear winner—or the prevailing party. Under either of these scenarios, the issue of who is the prevailing party is not up for debate.
In less clear-cut cases, the judge must make a judgment call, but this does not mean that he or she can decide who did or did not win based on arbitrary or frivolous factors. A judge must consider certain rules and realities of the case. He or she must, for instance, consider what a party asked for at the outset of the case and compare it with what the party ultimately received. If a business sued another business for breach of contract and demanded $100,000 in damages but only received a judgment of $5,000, the fact that it only received a fraction of what it demanded (i.e. 5% or its initial demand) is strong evidence that it did not really win. In fact, a judge would probably not consider the business a winner if it recovered even half of what it demanded ($50,000). This result would almost certainly be considered a draw. It would probably be hard, however, to say the business did not win if it recovered somewhere near or over the $90,000 range.
Things can get complicated when two parties involved in litigation have competing claims. If a business sues for $100,000 under a breach of contract claim, and the other business countersues for breach of the same contract and claims $100,000 in damages, perhaps either party would be deemed the clear winner if it recovered as little as $30,000. Not only did the other party’s claim for $100,000 fail, but it recovered a good portion of its own claim for $100,000. But again, this is a judgment call for the judge, and he or she may see things differently.
Sometimes the analysis can get even more messy, especially when there are many different kinds of claims. In fact, both parties may be considered the prevailing party in some cases. There may be claims in the litigation for breach of contract where the contract allows for attorney fees, and there may be other claims in the same litigation that are unrelated to the contract but instead relate to statutes that allow for attorney fees. The party who wins on the contract claims may get his or her fees pursuant to the contract, but maybe the other party wins the claims where attorney fees are allowed pursuant to a statute. As a result, each party would be a prevailing party, and any attorney fees incurred on these claims would be awarded to the respective winners. Obviously, much of the litigation on different claims overlaps, so it would be difficult to clearly allocate time to the two kinds of claims. However, this allocation, although imperfect, would have to be made to properly award each prevailing party his or her fees.
Importantly, once a party is deemed to be the prevailing party, the judge almost always has to reimburse at least a portion of this winning party’s attorney fees. The judge probably cannot claim that—even though a party prevailed—the lawsuit was a waste of time, so nobody should get reimbursed for their attorney fees. The only question becomes whether the attorney fees demanded are reasonable.
What Is a Reasonable Fee?
Generally, a judge will only order a losing party to pay the winning party’s “reasonable” attorney fees. Just because a party wins does not mean that he or she can pass on the entire attorney fee bill to the losing party, regardless of what that bill contains. The losing party only has to pay the reasonable and necessary fees, which may be the entire bill or may be just a portion of the bill.
Like the determination of who is the winner, the determination of what fees are reasonable is up to the judge. The judge may consider a variety of factors when making this determination, including the difficulty of the litigation, how efficiently the attorney handled the case, whether the hours the attorney spent on the case were justified, whether the attorney’s fees are in line with general rates in the area for the same kind of work, the attorney’s experience and expertise, the amount of money demanded, and the amount of money obtained. Some of these factors are given less weight than others. For instance, Utah courts explain that although the amount of money demanded is a consideration, the reality is that an attorney usually expends the same amount of time to pursue a case seeking $1,000 as a case seeking $100,000, so an attorney fee for the same amount may be reasonable in both cases.
The judge will also consider other factors that are unique to the circumstances to the case. For example, if one party drags out litigation by unreasonably rejecting settlement discussions and filing frivolous motions, a judge is more likely to conclude that the fees required to deal with this conduct, and the entire litigation, are reasonable.
Help with Litigation
If you are considering filing a lawsuit or if you have been sued, I am happy to discuss the specific facts of your case so that you can better understand the potential risks, challenges, and rewards of engaging in litigation, including the attorney fees to obtain a judgment and the possibility and probability of recovering your own fees following a judgment. I offer free initial consultations. My direct dial is 801-365-1021, and you can e-mail me at [email protected].