Under the traditional “American Rule” each party to a lawsuit must pay for their own attorneys. The “American Rule,” however, created a stark economic reality where many plaintiffs were unable to find competent legal representation. To remedy this problem Congress passed the Civil Rights Attorney’s Fees Awards Act in 1976. The Act institutes a “loser-pays” system in which losing defendants must pay the prevailing plaintiff’s reasonable attorney’s fees. The Act applies to most federal civil rights actions, including nearly all employment discrimination actions. Congress’s purpose in enacting the Act was to provide an incentive for attorneys to take on lawsuits they might not otherwise have taken for reasons such as the uncertainty of damages in civil rights actions, the existence of immunities or statutes that limit or restrict damages, or the unpopularity of suing certain defendants.

However, the United States Supreme Court is currently reviewing an attorney’s fees case that may create an extra incentive to plaintiff’s attorneys. In Perdue v. Kenny A., the Court is considering whether an attorney’s fee award can ever be enhanced based on the quality of the attorney’s performance or the results obtained. Basically the Court is considering whether a successful plaintiff’s attorney can be awarded a “bonus.”

The outcome of the case may greatly influence the way federal employment discrimination cases are litigated. First, attorneys may take on riskier, more challenging cases that they would not have taken on before in hopes of earning a bonus upon winning the case. Second, defendants who risk trial and lose may end up having to pay not only the plaintiff’s attorney’s fees and costs, but a hefty bonus as well. It will be interesting to see if the Court decides to alter the awarding of attorney’s fees in such a radical way. We will let you know.

By Kenneth T. Short, kshort@dsda.com