Fee-Shifting Statutes and Compensation for Risk

Authors

Maureen Carroll, University of MichiganFollow

Document Type

Article

Publication Date

Fall 2020

Publication Citation

95 Indiana Law Journal 1021 (2020)

Abstract

A law firm that enters into a contingency arrangement provides the client with more than just its attorneys’ labor. It also provides a form of financing, because the firm will be paid (if at all) only after the litigation ends; and insurance, because if the litigation results in a low recovery (or no recovery at all), the firm will absorb the direct and indirect costs of the litigation. Courts and markets routinely pay for these types of risk-bearing services through a range of mechanisms, including state feeshifting statutes, contingent percentage fees, common-fund awards, alternative fee arrangements, and third-party litigation funding.

This Article mines those risk-compensation mechanisms for lessons about the proper interpretation of federal fee-shifting statutes. Those statutes encourage private plaintiffs to enforce a limited set of laws, including civil rights statutes, by authorizing the court to award a reasonable attorney’s fee to the prevailing party.

Although a law firm cannot receive a court-ordered fee shift unless its client prevails, current doctrine prohibits compensation for risk in federal fee-shifting awards. This Article argues that this prohibition should be eliminated, and to that end, it evaluates specific methods of including compensation for risk in federal fee-shifting awards.

Recommended Citation

Carroll, Maureen (2020) "Fee-Shifting Statutes and Compensation for Risk," Indiana Law Journal: Vol. 95: Iss. 4, Article 1.
Available at: https://www.repository.law.indiana.edu/ilj/vol95/iss4/1