Second Thoughts on Attorney Fees

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Earlier this week, I posted on a settlement in the case of the Pennsylvania public school accused of illegally spying on its students. Noting that the bulk of the settlement will go the students' attorney, I wrote:

So public school officials get caught illegally spy on students. But no one gets fired. And none of the offending parties will be fined. Instead, a municipal insurer (which will ultimately affect taxpayers) will pay a decent settlement to one student, a small settlement to another, and a small fortune to their lawyer.

After reading some analysis by Max Kennerly and Scott Greenfield, I'm persuaded that I was off-base with my snark (in other words, I was wrong).

Here's Kennerly:

If the Lower Merion case had gone to trial, and the plaintiffs had won on any of those claims — and they definitely would have won on the first — then the school district would have been liable for all of the plaintiffs' attorneys' fees in litigating the case.

The settlement of the case reflects that eventual reality: if the School District had not paid the plaintiffs' lawyer now, they were going to pay them later…

But why did this case, where liability was obvious, cost so much? There's a simple answer for that: because the School District litigated the heck out of the case. Their own lawyers, as of the end of July, had already billed $743,000 to the school district. I bet the final bill will exceed $1 million.

Viewed through that lens, Mr. Haltzman was downright frugal in accepting less than half what his opponents charged to fight him.

And here's Greenfield:

While the wrong in this particular case seemed abundantly clear, especially since it received broad attention and near-universal condemnation, the deprivation or violation of constitutional rights that seem so obvious to the victims often fails to get to trial.  Sure, getting your "day in court" is a fine platitude, just like so many that make us feel warm and comfy even though they defy reality in the trenches.  The hard fact is few civil rights cases are ever heard, and fewer still recover damages, whether for some variation of governmental immunity or some banal rationalization which makes the wrong "good enough for government work." 

That means that the efforts of a lawyer to pursue the violation of rights may not only fail to result in a payday, but leave the lawyer out of pocket for whatever unreimbursed expenses accrued in the process.  This can be a very risky business, trying to protect our constitutional rights by representing a person whose rights were deprived.

So Mark Haltzman "made" more money from this case than did his clients.  Was he supposed to eat the cost of this litigation, as if he, rather than the school administrators, committed the wrong?

These are all great points. As someone who would like to see a heck of a lot more civil rights suits against government officials who abuse their power, I was wrong to direct scorn at an attorney who actually brought one (even in an obvious case like this one). It would be even better if the responsible parties actually had to pay out for their actions, and not have the taxpayers bail them out. But that's beside my point here, which is that Haltzman shouldn't be blamed for getting compensated for his time and expense in bringing this lawsuit.

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  1. I am a lawyer. Two things that would really fix our legal system: 1) remove governmental immunity for intentional torts, and 2) loser pays.

    1. Loser pays wouldn’t fix pour legal system. It would put small clients at a significant disadvantage* and it would prevent people with cases that are borderline, but correct from bringing cases. If you’re on the side of right and you have a 40% chance of being forced to pay for an exorbitant legal bill, you’re not going to take that chance and will settle rather than seek justice.

      Lawyers love loser pays as a solution because it will lead to an overconsumption of legal resources by both sides. Only those with slam dunk cases against them have an incentive to spend within reason. If you have a close case, your best option is to throw as many resources at the problem as you can in the hope that you win and force the loser to pay your bill.

      * Who do you think is more likely to afford a team of expensive, hot-shot lawyers, a wronged citizen or the government?

      1. No. Loser pays would force people to settle and pay their debts. Under the current system big litigants like insurance companies can afford to drag cases out even if the claim is legitimate. They can always settle before trial if they have to. And if they drag it out a bit, a desperate plaintiff will take less than the claim is worth. If they risked paying attorney’s fees, they would settle for a fair amount early.

        Your example doesn’t consider the other side. The other side has a 60% chance of paying exorbitant attorney’s fees. They are going to have a motivation to make a fair offer.

        Like most liberals you assume that corporations print their own money and somehow won’t act to avoid risk. That is bullshit. The risk of loser paying would just make people pay fair settlements earlier and lead to less litigation and more justice not less.

        1. You contradict yourself in your argument. First you say that big litigants drag cases out because they can afford to pay the fees and then you turn around and say that corporations will settle because they don’t print their own money and will pay fair settlements to reduce their payout. Which is it, John? If they settle, they don’t have to pay legal fees if they lose either.

          You should try reading what I wrote rather than pretending I’m joe. The litigant I said that would be able to abuse loser pays was the government, which in many cases CAN print their own money. Loser pays can and will be abused and the government will be on the forefront of those innovations.

          1. You are not getting the point. Insurance companies don’t pay up front because it is cheaper to drag the case out and force the plaintiff to get desperate and take pennies on the dollar for their claim. Entire business are built on buying claims from plaintiffs who would rather have a few dollars now than what they actually deserve.

            If you had loser pays, insurance companies couldn’t do that anymore. Every day they didn’t pay a legitimate claim would mean more attorneys’ fees they risked having to pay later. That would cause them to make more fair offers upfront to avoid litigation.

            And your initial post said nothing about the government. Where did that come from? And if you are worried about the government abusing it, fine don’t let the government ever collect attorneys’ fees. But private litigants should.

            1. “Who do you think is more likely to afford a team of expensive, hot-shot lawyers, a wronged citizen or the government?”

              John, that’s from mo’s initial post…Jesus your reading comprehension is downright retarded.

              1. Shut the fuck MNG you nasty little shit. You really are just a nasty lousy person. My reading comprehension is just fine thank you. And Mo’s point doesn’t make any sense. You don’t want the government to collect attorney’s fees, fine don’t let them. But that doesn’t mean you couldn’t have the English rule in every other case.

                Why are you such a nasty prick? Seriously. You are the most unpleasant, dishonest person who posts on here. The trolls are at least entertaining.

                1. I think John’s actually crying…

                  1. You used the term “retarded”. Insensitive.

            2. Try learning how to read.

              * Who do you think is more likely to afford a team of expensive, hot-shot lawyers, a wronged citizen or the government?

              What’s to prevent insurance companies from doing the same thing in a loser pays situation? They’ll weigh the odds appropriately* and drag it out if they feel like they have a shot at winning. They’ll settle the slam dunks and drag out the close calls. There are a lot more close calls than there are black and white cases. If they think they have a shot at winning they get a two-fer, they don’t have to pay the litigant and they don’t have to pay their lawyers.

              * Insurance companies make billions based on the fact that they know the odds a lot better than you or I do.

              1. Right now they don’t even settle the slam dunks. It is very difficult to get an insurance company to pay if you are not an insured. You have to hire a lawyer and file suit and then wait months for them to make an offer. Under a loser pays, the slam dunk cases would get settled. That in and of itself would be an improvement.

                As far as the border line cases, yeah those will get litigated. But they are borderline cases, aren’t they supposed to get litigated? And further, I don’t see how your situation is bad. If I don’t really have a legitimate claim against someone, maybe I shouldn’t be suing.

                The insurance companies don’t want to pay the other guy’s insurance fees either. If there is a good chance the case will go against them, they will settle accordingly. You seem to assume that they will take any case to court on the off chance they might win attorney’s fees, which in many cases would be unrecoverable anyway. And that is just bunk.

                1. My point is that the legitimate, borderline cases won’t get litigated because few will want to risk being on the hook for an insurance company’s gigantic bill to Cravath. People will rightly figure that risking being on the hook for $1-2mil isn’t worth the $10-20K they may be rightly owed.

          2. We have loser pays for civil rights suits. Do you think that should be eliminated?

            1. Loser pays only goes one way in civil rights cases.

              1. But by your logic, shouldn’t that have caused abuse?

                1. Why do you think Mark Haltzman is getting paid $425K?

      2. Lawyers love loser pays as a solution because it will lead to an overconsumption of legal resources by both sides.

        That is not the revealed preferences of the actual lawyers funding Democratic politicians — and about half of those politicians’ campaign contributions come from trial lawyers. If this is the legal regime lawyers desired, it would already have happened. It would have been at the top of the agenda when Democrats controlled everything, not something that got no mention at all.

        1. Plaintiffs lawyers would hate it. Insurance companies would start settling cases up front to avoid paying legal fees. As it is now, it is a total racket. The insurance companies drag out the case to force the plaintiff to get desperate and settle for less. The plaintiffs’ lawyers don’t care because a third of a small settlement still translates into big money for the work that was done. The lawyers on both sides win. And the actual aggrieved party gets fucked.

        2. Not necessarily, it doesn’t account for risk aversion. People prefer certain income over uncertain income, even if the latter is greater*. Consider that most people will take a certain $100 over a 50% chance at $300. Even though the expected value of the latter is higher than the former. Revealed preference does not say anything about the expected value, just that people are risk averse.

          * To a point.

          1. Consider that most people will take a certain $100 over a 50% chance at $300.

            Citation needed. Who but the most feeble-minded would turn down an average instant gain of $50?

            Now, if you’re talking about $100 now versus a 50% chance of $300 years and years down the road, then perhaps people have a rational interest in the sure $100.

            1. You’ve never heard of risk aversion? Considering the insurance industry is built People don’t care solely about EVs, that’s why the risk curve exists. The higher the risk involved, the higher the return demanded. It doesn’t matter that there’s a positive EV. FFS, that stuff is taught in high school econ.

              I couldn’t find the right Kahneman and Tversky study, though Postrel mentions it in her article, The one I found mentions it was $1000 and $2500. The interesting thing is it doesn’t work in reverse. If the option is given of losing $1000 or a 50% chance of losing $2500, people will choose the latter. People would rather have certain gains and uncertain losses even though the expected values are against them.

              http://www.sjsu.edu/faculty/watkins/prospect.htm

              http://dynamist.com/articles-speeches/nyt/cognition.html

      3. Lawyers love loser pays as a solution because it will lead to an overconsumption of legal resources by both sides

        And as with awards of fees currently, the judge will reduce such overcharging to a reasonable and fair number. I see it all the time – a successful plaintiff’s attorney will move the court for fees, claiming 1,000 hours at $450 per. The judge will say “OK, you get fees, but 1000 hours is too much to do what you did. I’ll give you 850. And $450 is too high for the kind of work you did. I’ll give you $435.”

        Happens all the time.

      4. Instead of “loser pays”, how about “loser pays (up to his own expenditures)”? If you spend $10,000 on your lawyer, and your opponent spends $100,000, then if you win they’re out $110,000 and if they win you’re out $20,000 and they’re out $90,000.

        So if you overconsume legal resources by spending too much on a simple case, you’re still on the hook for that; but if you overconsume legal resources by litigating when you should have settled, you’re now on the hook for that too.

        1. Now that’s an interesting idea.

        2. I like that idea a lot. It skews the incentives a lot less.

        3. But then people would be dissuaded from litigating legitimate claims. Sometimes there are disputes over facts that need to be settled by a factfinder. Under your rule, such claims might never be brought (not because the plaintiffs haven’t been wronged) because potential plaintiffs don’t have the resources in case a factfinder doesn’t see things their way.

    2. What’s up with the municipal insurance? Doesn’t this create some moral hazard problems? I have the same feeling with insurance against the misdeeds of corporate directors.

      1. I used to work for a law firm who had a whole division that did nothing but represent an insurance company that insured towns and counties. We had a saying “the county is always killing somebody”. If these clowns ever had to pay for their own misdeeds, there wouldn’t be a town in America not facing bankruptcy.

        1. Aren’t the towns paying for it with insurance? I assume the insurance companies weren’t losing money, so the towns were paying more in premiums than they were paying out.

          1. Yeah they are paying for their insurance. But all it would take is one big jury verdict and many of those towns would be bankrupt. Yes, most of them don’t get a big jury verdict so the insurance companies make money. I was being factious. But make no mistake, the people in state and local government are generally morons.

            1. I don’t want to see the towns (or in this case, a school district) bankrupted. I want to see the superintendent/principal (or whichever school officials actually did the spying) dragged out of their houses hair first as the county auctioner seizes the houses to pay off the debts.

              Preferably when they’re being dragged out, it’s in full view of their children.

  2. Who threatened you into this bullshit?

    Mark Haltzman “made” a sheep.

  3. Hey please don’t blame the lawyers for the school district, we were just earning our money too!

    See ya at the club, Haltzman, drinks are on me.

  4. Couldn’t these douchebags at the school district admitted their violation, given a public apology and paid the kid, say, $1,000? I’ve seen this kind of scorched earth at work, too: spend $100,000 on attorneys to
    prove you were right about some $10,000
    contract dispute.

    1. Indeed. Paying the “injured” students some compensation and firing the people responsible seems like a better solution than enriching a trial lawyer.

    2. When it’s not your money, you don’t really care.

  5. So the district is actually on the hook for $610,000 plus another million from their own attorneys. I can’t help but think if I made a single 1.6 million dollar mistake at work I’d probably be fired.

    1. Basically the dickheads litigated the hell out of a case where they were both on the hook for attorneys fees and obviously wrong. The people responsible for this ought to have to pay, not the tax payers.

  6. I think we’re missing the fucking point here. Why the hell are the school officials not on trial?

    1. I imagine the reason starts with an “s” and ends with “overeign immunity”.

      1. Do school administrators have sovereign immunity? They’re not cops.

        1. Well I imagine if the state can use “sovereign immunity” to shoot an unarmed woman in the back of the head from a quarter of a mile away, they can use the big SI for whatever the hell they want.

        2. They are state employees. Generally speaking, sovereign immunity applies to the state, its agencies and officials. Not just cops.

        3. “Sovereign immunity, or crown immunity, is a type of immunity that in common law jurisdictions traces its origins from early English law. Generally speaking it is the doctrine that the sovereign or state cannot commit a legal wrong and is immune from civil suit or criminal prosecution; hence the saying, “the king (or queen) can do no wrong”. In many cases, states have waived this immunity to allow for suits; in some cases, an individual may technically appear as defendant on the state’s behalf.”

          If the school administrators are public employees, and the claim is for monetary damages, then the level of government protecting them gets to decide whether any suit against them goes to trial.

          That, and after dumping that much money down the shithole denying responsibility, the prosecutor’s office has to think this is not a slam dunk case to spend scarce resources on.

          Which may have been the entire point of spending so much money fighting the civil claims — to protect one of their own against criminal claims.

        4. “Do school administrators have sovereign immunity?”

          Let me ask Justice Thomas.

          He nodded yes.

    2. They only accidentally turned on the cameras a couple hundred times.

  7. I was wrong

    Seriously, though, how could you not like this Balko guy?

    1. “”Seriously, though, how could you not like this Balko guy?””

      Be a Mississippi medical examiner?

  8. The offensive aspect of this case is the amount of money involved. That a system can be manipulated into delivering that much money to a lawyer is patently wrong. It is just another reason why our current system is in trouble. I’m sure Edgar Snyder is not struggling to get by. Vultures…lawyers…same thing.

  9. 100 laptops for the students, 100,000 dollars.

    Defense lawyer 1,000,000 dollars.

    Avoiding the cost by pushing it on the taxpayer, priceless.

  10. “As someone who would like to see a heck of a lot more civil rights suits against government officials who abuse their power, I was wrong to direct scorn at an attorney who actually brought one”

    Hear, fucking hear!

    It’s always been odd to me that when people talk about tort “reform” they never talk about moving to the English rule of attorney compensation. I mean, if you really think we need to ditch regulation in favor of tort/contract remedies, and you think privatization is good (“private attorney’s generals” vs. something like the EEOC), then this should be a no-brainer.

  11. “Their own lawyers, as of the end of July, had already billed $743,000 to the school district.”

    WHAT?!

    There is a difference between litigating a case vigourosly and simply letting the spigot run. I represent some large municipalities with multiple lawsuits against them annually, and $743,000 represents nearly two years of work on all their cases.

    1. Even at $500 an hour (and not even to Manhattan firms get that these days) that is 1,500 worth of work. How could you justify 1,500 hours of billable on a fairly simple case that never even went to trial? Yeah, I would say they got ripped off badly. I would wonder what the relationship between the town and the lawyer is. That is just a kickback.

  12. the School District litigated the heck out of the case. Their own lawyers, as of the end of July, had already billed $743,000 to the school district. I bet the final bill will exceed $1 million.

    “Millions for defense, not one cent for tribute!”

  13. “I mean, seriously; what would happen if those damned dirty apes civilians got the idea in their heads that they could hold us accountable? Chaos. Chaos, I tells ya!”

  14. Right now, loser pays is pretty much a one-way street. Plaintiffs in civil rights, class actions, and various other kinds of cases can collect legal fees from defendants who lose. The contrary is never the case, except in contract cases where it is a term of the contract.

    This seriously distorts the incentives toward more litigation, for what should be self-evident reasons.

    Even at $500 an hour (and not even to Manhattan firms get that these days)

    As a purchaser of legal services, I assure you, you are wrong about that. Top law firms get $700/hour and up for partners, and often in the neighborhood of $400-500/hour for seniorish associates.

    That isn’t to say the defense firm didn’t rape the school district; I’m sure they did. Because they could. The school district was spending other people’s money, after all. What do they care what the bills are?

    1. Plaintiffs in civil rights, class actions, and various other kinds of cases can collect legal fees from defendants who lose. The contrary is never the case, except in contract cases where it is a term of the contract.

      This is what confused me a bit about the recent Westboro Baptist Church case (although I haven’t taken the time to read the briefs or the opinion or anything) – the father of the fallen soldier won at the trial court, but the appeals court overturned the ruling AND awarded the WBC attorney fees. So not only does poor dad not get his win against those evil fucks, he has to pay their attorney fees because he brought suit against them and ultimately lost.

      1. Poor dad needs to understand the 1st amendment and not be an evil fuck.

        1. Apparently you’re having a little First Amendment comprehension problem yourself. The First prohibits Congress from making any law abridging the freedom of speech. Dad is not Congress, and he’s not making any law abridging their freedom of speech. He is asking that they be held accountable to him and his family – not to the government – for the consequences of their actions.

          It’s not a crystal clear, simple and cut-and-dried a question as you make it out to be.

  15. Good question, Barely Suppressed. I’m not sure either. Court costs in appeals (typically in the low thousands) are generally charged to the loser of the appeal.

    They may be collecting them under the Civil Rights act (Section 1988?), which is typically used to give attorney’s fees to plaintiffs bringing civil rights cases. Maybe when your defense is based on your civil rights, it also allows a defendant to collect. If so, I overstated, but the basic distortion of incentives is still there.

  16. You have nothing to apologize for. There is obviously something wrong with a system that runs up 1.2 million dollars in attorney fees for this case. Perhaps the plaintiff’s attorney was not as bad as he could have been but that is hardly an endorsement.

    The problem with the legal system is simple – there is no outside oversight. The lawyers, the judges, and the BAR association all make their money off the legal system so their incentive is to bring as much money into the system as possible. Until victims of the legal system can bring complaints to non-lawyers who have the power to sanction lawyers and judges, the situation will not improve.

    1. +1.7 Million

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