A Plaintiff Lawyer’s Contingency Fee: Does That Math Really Add Up?

Usually, lawyers and judges go to law school because they hate doing math.  Unless he practices tax law, an attorney usually leaves number crunching and mathematical calculations to the guys with calculator watches and pocket protectors.  However, the Supreme Court of Georgia recently called for a different formula.

Georgia’s “Offer of Settlement” Statute, O.C.G.A. § 9-11-68, allows a plaintiff or defendant, to present the other side with an offer to settle the case for a fixed amount, let’s call it x, and if that offer is rejected, the offering party is entitled to reasonable attorney fees and expenses from the date of rejection through entry of judgment.  If a plaintiff rejects a defendant’s settlement offer, and at trial, the jury returns either a defense verdict or awards plaintiff less than 75% of x, the defendant can recover his attorney’s fees and expenses.  Conversely, if a defendant rejects a plaintiff’s offer and the plaintiff is awarded more than 125% of x at trial, the plaintiff can recover his attorney fees and expenses.

The question that the Georgia Supreme Court recently addressed was what happens to a plaintiff that is allowed to recover under the statute but has a contingency fee agreement with his attorney.  It may seem that a mathematical shortcut would be to use the contingency fee agreement to calculate the award.  But the Supreme Court says otherwise; it requires that all attorneys, like algebra students, must show their work to get credit and to recover under the statute.  It held a plaintiff’s contingency fee agreement is neither an ipso facto showing of reasonableness, nor the proper measure of attorney fees to be awarded.  Ga. Dept. of Corr. v. Couch, Case No. S13G1555 (Sup. Ct. Ga. June 16, 2014).

In the Couch case, the Department of Corrections defended a tort suit filed by Couch for injuries suffered while on prison work detail.  Before trial, Couch made an offer of settlement for $24,000 which the Department rejected.  The case went to trial and the jury awarded Couch $105,417.  The trial court also ordered the Department to pay Couch $49,542 in attorney’s fees based on Couch’s 40% contingency fee agreement with his attorney including post-judgment interest.  The Georgia Court of Appeals affirmed the award, but the Supreme Court reversed and remanded the case instructing the trial court to re-calculate the attorney’s fees award.

The Supreme Court explained that any fees awarded under the statute must be reasonable, and while proof of a contingency fee agreement might be a factor in evaluating reasonableness, it is not conclusive.  Thus, even plaintiff’s attorneys have to show their work if the form “evidence of hours, rates, or other customary indication regarding the value of the attorney’s professional services actually rendered.” Id. at p.29 (emphasis added).

The second error by the trial court was a failure to separate Couch’s attorney fees incurred prior to the Department’s rejection of Couch’s offer from those incurred after rejection.  Since a party may only recover fees and expenses incurred from the date of the rejection through entry of final judgment, all parties must show that the fees and expenses sought were actually incurred after the other side rejected the settlement offer.  This holding makes the timing of an offer of settlement critical to the overall recovery.  The earlier an offer is made and rejected, the more litigation fees and expenses can be recovered.

The unfortunate irony for the Department of Corrections is the law of unintended consequences.  By winning their attorney fees argument on appeal, the Department may end up paying an even larger attorney fee award to Couch if Couch’s attorneys can show that their fees totaling $92,475 (from the date of the rejection of Couch’s offer through final judgment) are reasonable.  Of course, to get credit, they and the trial court will have to show their work.

by Matt G. Moffett & Rishi D. Pattni

Social Media and the Dram Shop Case

When a drunk driver kills or injures someone as a result of their intoxication, one would think that the fault lies entirely with the person who made the decision to consume alcohol and then get behind the wheel of the car.  They made that bad decision and should suffer all the consequences, right?  Not necessarily . . .

In Georgia, under certain circumstances, the provider of alcohol can be held liable for the damages caused by that drunk driver.  That means that the bar, restaurant or homeowner who provided alcohol to a patron or visitor may find themselves facing lawsuits over the customer or guest at the party who drank too much and drove recklessly as a result.

Like many states, Georgia has enacted legislation providing a cause of action to a person injured by an intoxicated person not only against the intoxicated at-fault party, but also against the person selling or furnishing the beverage that caused the intoxication.  This Code Section (O.C.G.A. § 51-1-40), referred to in Georgia as the Dram Shop Act and passed in 1988, is in derogation of the common law and provides an entirely new basis of liability that did not exist prior to the enactment of that law.  Importantly, it is the exclusive remedy for those seeking to impose liability on a provider of alcohol for damages caused by a driver who consumed the alcohol.  Shin v. Estate of Camacho, 302 Ga. App. 243, 244 (2010).

There are two components necessary to a Dram Shop Act claim in Georgia.  First, the Plaintiff must prove the condition of the other driver that injured him (either underage or in a noticeable state of intoxication).  Second, the Plaintiff must prove the knowledge component of the alcohol purveyor (that the provider knew the person at issue would be driving soon).  Although the body of law arising out of this statute is relatively small, several cases have made their way to the Georgia Supreme Court.  In recent years, the Court has held steady, refusing to enlarge the parameters of the statute to turn the applicable standard into one resembling Georgia law on negligence.

DRAM cases are often challenging to defend.  Cases regularly involve catastrophic injury or death caused by a drunk driver and his alleged supplier, which leads to the precarious combination of juror sympathy and anger, which jury research tells us may result in large adverse verdicts at trial.  Although Georgia requires apportionment of fault, even to non parties, there is no guarantee that a jury will apportion significant fault to the drunk driver over his supplier.

Comprehensive investigation and discovery is a key strategy for successful evaluation, defense and resolution of DRAM claims and actions.

A careful social media search often reveals relevant evidence about the drunk driver, the injured party, and even the Defendant establishment.  It amazes us what people will post publicly on Facebook (or similar) and not remove or filter upon the filing of a lawsuit.  We’ve been able to uncover photos and social media posts from decedents showing potential gang activity, medical conditions not disclosed in discovery, specific references to their level of intoxication on a given night and previous experience/interaction with the Defendant establishment.  We’ve also vetted friends and family of an injured party for anything they might have said about the cause of a wreck.

Just this past winter, we uncovered evidence that the real cause of the car crash may have been a lover’s quarrel wherein a passenger pulled the wheel away from the driver during an argument.  This, combined with uncovering some significant criminal history of the witnesses in the case allowed us to resolve the matter favorably by leveraging these issues during a pre-trial mediation.

We’ve also been successful in vetting the Defendant and getting on top of any negative press, photographs, or social media references regarding the DRAM establishment.  In this tech-savvy era, we must assume not only that the other side will uncover this information but that a juror may disregard the instructions of the Court and seek out information on the Defendant at home in the middle of trial.

Bottom line: social media searches, background checks, and the use of competent private investigators can go a long way towards successful settlement or strengthening of trial strategy in an emotionally charged area of litigation.  Knowing what you’re up against (and showing the other side what they’re up against) can ultimately save you money.

Matthew G. Moffett and Jennifer Guerra – for the defense.

Is there really no such thing as a free lunch?

Everyone “knows” there is no such thing as a free lunch, right? Well, maybe there is and maybe it is quite satisfying…

We often discover that a company’s vendor contracts promise protection for the company in the event of a lawsuit. When we see indemnity or insurance procurement provisions in these contracts, we evaluate risk-shifting and money-saving opportunities for the company we represent.

Often, these contract provisions mean the other party and its insurer will pay for your “lunch” by paying your defense costs and settlement costs. This is exactly the result we achieved for a client in a recent premises liability negligent security lawsuit.

Our client managed an apartment complex and had hired a third-party vendor to provide security patrol services. The Security Contract shifted risks “arising out of” vendor security services to the vendor; there was both an indemnification and an insurance procurement provision. Although the vendor was not a named defendant, we tendered anyway to the vendor and its insurer. After litigating the issue, as part of the underlying case against our client, the end result was a recovery of our client’s legal fees and defense costs from the vendor and its insurer who also paid in full to resolve the underlying case against our client. Our client certainly enjoyed that free lunch!

Pursuing the vendor and its insurer on parallel tracks under the indemnity and insurance procurement provisions meant two potential pots of money from which to obtain recovery for and protection of our client, and also meant we did not need to worry about the possibility that the vendor would be judgment-proof. Hats off to our client for its careful negotiation and inclusion of indemnity and insurance procurement provisions in this vendor contract. Careful examination of the subject contract on the front end of any lawsuit of claim is the key to shifting risk, saving money, and planning the best tender strategy.

Please feel free to contact us if you have a question about the interpretation of your contract’s indemnity and insurance procurement provisions and to discuss tender/recovery strategy for that “free lunch” you bargained for.

Matthew G. Moffett and Jeffrey M. Wasick – for the defense.

Georgia Legislature Passes Bill to Regulate Pre Suit Time

The Georgia Legislature recently passed House Bill 336 to regulate and establish procedures for pre suit policy limits time demands in motor vehicle accident claims. The bill was initially drafted by a group of yet to be identified plaintiff and insurance defense lawyers and quickly passed both the House and the Senate. The bill has been submitted to Governor Nathan Deal for his signature. Once signed into a law a new code section , O.C.G.A 9-11-67.1, will be enacted that specifies certain requirements for a valid pre suit time demand.
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Spoliation: Can it really work for the defense too?

Spoliation letters sent by plaintiff lawyers are commonplace in litigation. These letters typically demand that the defense “preserve” any and all evidence that might be relevant to contemplated or pending litigation, with the threat that if the evidence is not preserved the plaintiff will seek to have the Court sanction the defense (strike the answer). Wouldn’t it be nice if the defense could turn the tables on the plaintiffs and make them subject to sanctions for spoliation of evidence? Recently, we were able to do that and secure a dismissal of a case where the plaintiff was seeking more than $2 million in damages from our client.
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I would like to make a reservation…

The Georgia Supreme Court has issued a ruling on insurance coverage and reservations of rights adverse to liability insurers.

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Holding the criminal accountable, even if the plaintiff’s lawyer doesn’t want to!

The GA Supreme Court has ruled in favor of a jury apportioning “fault” to a criminal in a case brought by the victim against the property owner. Couch v. Red Roof Inns, Inc. The result of this landmark decision will serve, potentially, to reduce the liability of a property owner and otherwise lower its share of money damages as to any plaintiff’s verdict in the given case.
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The Legal Tender

If your company or insured gets sued over something “arising out of” a contract with another company, why should you have to pay to defend or settle the case? Shouldn’t the other company pay your tab? Well, perhaps they should!

If you are interested in how we made that happen in a recent case, click on the below link.

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Loser Pays!

When the plaintiff wins, the defense pays money. When the defense wins . . .

When the defense wins, why should the defendant and insurer have to eat the defense bill? Why doesn’t the plaintiff who loses the case have to pay the defense fees and expenses? Is that fair?

Well, thanks to a recent appellate court ruling in one of our cases, a strategically secured defense win may require that losing plaintiff to pay!
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Paying your fair share (but only your fair share)!

Did you know that the issue of jury apportionment of “fault” in premises liability, criminal attack cases is hanging in the balance and will be decided soon in our Georgia appellate courts?  So, how will the upcoming decision impact you if you handle these cases for your insurer, TPA or company?
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