Any lawyer who tries cases will lose cases. When a client loses an employment case, the plaintiff is entitled to an award of attorney fees. But here is something less well known that is creating a circuit split: In deciding the amount of fees, may a trial court consider a settlement offer made to the plaintiff?
After all, when a court determines the fee amount, case law requires the judge to compare the amount sought to the amount awarded. So, considering the settlement offer makes sense to me, but on Oct. 12 the 1st U.S. Circuit Court of Appeals rejected this argument in Diaz v. Jiten Hotel Management Inc.
The 1st Circuit sketched out the numbers: The plaintiff brought an age discrimination claim, rejected an offer of $75,000 before trial and received a paltry $7,650 from the jury. The trial judge rejected the plaintiff's fee request of $139,622, lowered it (for a variety of factors) to $44,766 and then decreased it again to $25,000 because of the rejected offer. The court rejected the defendant's argument that holding otherwise would create "a perverse incentive for attorneys to encourage clients to reject reasonable settlement offers and proceed to trial to earn more in fees."
The 3rd U.S. Circuit Court of Appeals took a more enlightened view in a 2009 case, Lohman v. Duryea Borough, et al., affirming the trial court's decision to slash fees from a requested $112,883.73 to $30,000 where the plaintiff was offered and rejected $75,000 but ended up with a measly $12,205 from the jury. The appeals court ruled that the trial court, as one factor in determining the amount of the fee award, could consider the rejected offer and what was obtained. Here is the bonus room in this opinion: Federal Rule of Evidence 408 does not preclude a court's consideration of settlement amounts.
Yes, we all like to win. But dealing with attorney fees if our client is not victorious is part of a lawyer's job. Bake the 3rd Circuit case into your overall litigation strategy.