A huge part of every personal injury lawsuit is damages. Damages are what is awarded to a successful plaintiff to compensation him or her for the injury and other loss associated with the occurrence, whether it is an auto accident, defective product, or fall. There are quite literally libraries of books written on the subject of damages alone. However, one common question potential plaintiffs have is: Will the defense pay for my attorneys’ fees? The answer to this question is often very surprising and frustrating, because it is simply the case that each party pays its own attorneys—win, lose, or draw. Below is a very brief overview of damages and an explanation of why this rule exists and when it may not apply.
What are the types of damages?Damages are divided into two broad categories: compensatory and punitive. Punitive damages exist to punish the defendant, rather than to redress the plaintiff’s injuries. Compensatory damages are the exact opposition, seeking to redress the plaintiff’s injuries only. It is easy to keep these two separate by thinking about the two categories this way: punitive damages go up depending on how egregious and bad a defendant’s actions were; compensatory damages don’t look at the defendant’s actions at all, but only the plaintiff’s injuries.
Compensatory damages breakdown into two additional categories: economic and non-economic. Non-economic damages compensate a plaintiff for things that do not easily boil down into dollars and cents. In personal injury cases, these damages are awarded for emotional distress, as well as pain and suffering. These damages are notorious for being difficult (truly impossible) to predict, because a jury is truly just making up a number. Again, there is no translation into clear dollar amounts. Economic damages are much different, as they are things that are naturally measured in dollar amounts. For a personal injury suit, common economic damages are medical bills, lost wages, and future medical costs. But attorneys’ fees, even though they are certainly measurable in dollars and a natural result of a lawsuit, are excluded from economic damages altogether.
What about legal fees?Worldwide, there are two main systems of paying legal fees. Under the British rule, the non-prevailing, or losing, party pays for the legal fees of both parties. As the name suggests, this manner of awarding fees is used in Britain and in most “common law” nations.
However, America is different. In the United States, legal fees are paid by using the American rule. This means that each party pays for its own legal fees, regardless of whether or not that party wins or loses. Why this change occurred is interesting, but the real question for most potential plaintiffs is how attorneys get paid.
Lawyers largely collect fees in one of two ways. First, lawyers may charge hourly plus expenses. This type of fee is how defense attorneys get paid. More common for personal injury plaintiffs is a contingency fee. As the name implies, a contingency fee is dependent on the party collecting. Rather than charge an hourly fee, the attorney simply takes a percentage of the recovery earned, whatever that amount may be. There are countless variations on contingency fees, including varying percentages by phase of the litigation, i.e., charging more if the case must be tried before a jury.
Are the ever any exceptions?In Snider v. American Family Mutual Insurance, the Kansas Supreme Court reaffirmed that there are only two ways a Kansas trial court can award attorneys’ fees. First, the parties can contract to shift fees. In a personal injury lawsuit, this will virtually never be the case. This exception largely deals with breach of contract causes of action, where the parties know one another before the harm occurs. The second exception is when a statute shifts fees. These statutes general exist to incentivize attorneys to take smaller claims where less money is at stake. Common examples include employment cases and consumer protection cases.
On exception to the American rule that is widely recognized outside of Kansas is an equitable ground exception. This means that a court can award fees when equity or fairness requires the court to do so. This generally operates similarly to punitive damages discussed above, being reserved for only the most outrageous conduct by an opposing party. Unfortunately for plaintiffs in Kansas, Kansas trial courts do not have this third option available. The court made this clear in U.S. Fidelity & Guaranty Co. Because no statute applies to shift fees in personal injury suits, this means that any evidence of those fees or discussion of paying attorneys stays out of Kansas lawsuits.
Paying an attorney is obviously an integral part of pursuing legal relief. The American rule does not permit a party to receive reimbursement or payment from a defendant after succeeding at trial. To overcome this rule, many personal injury attorneys will offer a contingency fee agreement. Unlike hourly fees, a contingency fee agreement requires an attorney to be confident that he can recover for the injured plaintiff. Make sure that your attorney is willing to put his money on the line right next to yours, because there is no way to collect your fees later from a losing party.