I wrote last week about the new Wisconsin law signed by the governor on December 7, 2011, that presumptively limits attorney fee recovery to an arbitrary three times the amount of damages awarded. And I noted that this law would have unintended consequences for Wisconsin attorneys, clients, and businesses. It looks like the State Bar agrees.
The Wisconsin Legislature recently passed a new statute defining “reasonable” attorney fees. Effective on December 21, 2011, 2011 Wisconsin Act 92 lists categories to be taken into consideration in determining the reasonableness of attorney fees:
(a) The time and labor required by the attorney.
(b) The novelty and difficulty of the questions involved in the action.
(c) The skill requisite to perform the legal service properly.
(d) The likelihood that the acceptance of the particular case precluded other employment by the attorney.
(e) The fee customarily charged in the locality for similar legal services.
(f) The amount of damages involved in the action.
(g) The results obtained in the action.
(h) The time limitations imposed by the client or by the circumstances of the action.
(i) The nature and length of the attorney’s professional relationship with his or her client.
(j) The experience, reputation, and ability of the attorney.
(k) Whether the fee is fixed or contingent.
(L) The complexity of the case.
(m) Awards of costs and fees in similar cases.
(n) The legitimacy or strength of any defenses or affirmative defenses asserted in the action.
In addition, the statute places a presumptive (and arbitrary) limit of three times the amount of compensatory damages awarded. Because this is a new statute, there are now issues that will be litigated. For instance, does the presumptive limit apply to reasonable attorney fees contractually recoverable in the completely successful defense of an action?
The statute, I think, is a continuation of an effort to make Wisconsin more business-friendly. While I favor the goal, I think that some of the measures taken to try to reach that goal (at least as far as litigation-related topics go) have been under-considered and appear to arise from common, and sometimes incorrect, conceptions about the legal system from those who don’t work in the legal system. I don’t think this statute is going to make much difference at all, other than to give Wisconsin attorneys a statute to cite instead of case law. Time will tell, though.
Last week, I wrote about the Shadley case, and encouraged that care be taken in selecting causes of action and damages when there’s an attorney fee clause in the underlying contract. There are other lessons to be taken from that case, though, that apply to lawyers and clients alike.
It’s not unusual for clients to have unreasonable expectations, and for lawyers to do too little to correct the belief. In Shadley, we can’t tell whether it was the client that wanted the damaged piano and her daughter’s education paid for, along with repainting a variety of rooms in the broken home, or whether it was the lawyer who encouraged the claims. In the end, I guess it doesn’t really matter. We just know that it didn’t turn out well because expectations weren’t adjusted.
It’s the responsibility of both lawyers and clients to work together to set reasonable expectations about the outcome of a dispute. Clients come to lawyers to benefit from our experience and training — let’s face it, pretty much anyone can describe a dispute in writing and file it with the court. That’s hows small claims court functions.
Clients need to remember that part of what they pay for is our role as counsel: our detachment from the emotion of the dispute and our ability to dispassionately weigh the evidence and arguments on both sides. Sure, the advocacy part of the relationship is a big one, but that’s based upon a rational judgment as to what arguments and evidence are most convincing to someone who doesn’t care who wins or loses.
Lawyers, for their part, should immediately share their opinions about expectations, and begin to educate clients on the possible outcomes of the dispute. The Shadley case demonstrates that when the lawyer/client relationship doesn’t function completely properly, it can be costly.
