Know when to settle! Even small jury awards can lead to huge attorneys’ fees

by on
in Discrimination and Harassment,Human Resources

Need a way to sell a possible lawsuit settlement to managers? Try explaining that even a small jury award can mean having to pay huge attorneys’ fees on the employee’s side, in addition to the company’s own legal costs.

Recent case: Paula Newberry, now 57 years old, worked for the Burlington Basket Company, a family-owned and -operated wicker product manufacturer. When the company patriarch retired, a younger family member took over.

Then business took a turn for the worse and the new boss claimed he needed to contain costs. He fired Newberry to reduce the payroll, but kept three other employees who were considerably younger.

Newberry sued, alleging age discrimination.

A jury awarded her just $25,000 in damages. But then the judge ordered the company to pay Newberry’s attorneys. The tab: more than $140,000.

The company appealed, but the 8th Circuit Court of Appeals refused to reduce the amount. While acknowledging that the jury didn’t award Newberry anything near what she had asked, it still said her attorneys should be paid for their success. More than five times damages was not unreasonable. (Newberry v. Burlington Basket Company, No. 09-3082, 8th Cir., 2010)

Final note: Family-owned businesses sometimes think they don’t have to follow the same rules as other companies. That’s not true. Size is what matters—companies that employ enough employees to be covered by various laws have to comply.

Leave a Comment