ATTORNEY FEE INSANITY MUST STOP
We will admit that the greed-bordering-on thievery of two particular attorneys has launched us on a now four-year long effort to bring some change to how fees are awarded. Of course, systemic flaws in the attorney fee program such as paying attorneys over $800 an hour added some thrust to our effort as well. After opening this morning’s e-mail traffic, we have yet another motivator. It seems that the U.S. 2nd Circuit Court has refused to stop an attorney from taking $23,000 of the $25,000 that he won for some clients in an FLSA suit. So, if some poor worker was screwed out of overtime pay by her employer for a year and filed a lawsuit, the U.S. Courts think it is only fair that her attorneys rather than her employer be allowed to screw out of any overtime pay winnings. The court held this is reasonable because otherwise attorneys might not want to take employee cases if they risk not winning a bundle of cash for themselves. There was no hint that the court recognized that now employees may not want to take cases if winning them will only result in 90% of the cash going to the attorney.
A few weeks ago we heard a rumor that Trump was furious with Abbott and Kiko for their decision changing the criteria for awarding attorney fees. He was ready to tweet-shame them as dunces and wimps, although he was going to use a more vulgar term for wimp he has previously reserved for attractive young women. It seems that he wanted them to read 5 USC 5596 to mean that FLRA and arbitrators were limited to awarding fees only in the same kind of cases that MSPB can, e.g., adverse actions, discrimination, USERRA, etc. He wanted them to rule out attorney fees for contract or regulatory violations. But then he got distracted by his effort to punish everyone who blew the whistle on him over his Ukrainian extortion effort and lost track of the attorney fee issue. At least that is the rumor on the streets—and it does seem to fit within the foundation of his heritage.
As we said long ago, attorneys would be wise to clean up the abuses in their fee system before they lose the equivalent of a very golden goose.
In the Second Circuit case, the employee was owed, at most, $585 in backpay, and at most, would have received another $10,585 in liquidated and statutory damages. The notion attorney fees such as the one in the 2nd Circuit case will discourage FLSA cases gets it exactly backwards. As the Court aptly says:
If plaintiffsʹ attorneys in these so‐called ʺrun of the millʺ FLSA actions are limited to a
proportional fee of their clientʹs recovery (here, a maximum of $11,170), no rational attorney would take on these cases unless she were doing so essentially pro bono.
Without fee‐shifting provisions providing compensation for counsel, employees like Fisher would be left with little legal recourse.
Since this was a settlement, we will never know how much the employee was entitled to. The court said that if he won on all counts, he could have received over $11,000. While I think the District Court went overboard in giving the employee $15,000 of the $23,000 settlement figure, I share its sense of injustice at the lawyer taking so much. Given that the employee claimed he was entitled to about $11,000 and the attorney to about $50,000, the employees share was about 18% of the combined figures–and total settlement amount. Perhaps justice would be that they each take the percentage of the settlement pot that they originally claimed, i.e., 18% for the employee and 72% for the attorney rather than the 91% he took. That doubles the employee’s check.