Need an incentive to settle? How about lower attorneys’ fees? — Business Management Daily: Free Reports on Human Resources, Employment Law, Office Management, Office Communication, Office Technology and Small Business Tax Business Management Daily

Need an incentive to settle? How about lower attorneys’ fees?

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in Discrimination and Harassment,Human Resources

Don’t let emotion get in the way of settling a case early on if it looks like the company may be liable. Dragging out the inevitable accomplishes just two things—neither of them good: (1) It adds to the fees you have to pay your own attorneys and (2) the fees you also may end up paying for the other side’s attorneys.

The reason? Federal courts are becoming very generous with the amount of money they order the losing sides to pay in employment discrimination cases—even when the cases are settled and the former employees received far less than they originally asked for.

Attorneys’ fees are calculated based on how successful the litigation was and the number of hours of effort that went into that success. As the following case shows, that means an employer may be on the hook for more than $1 million for the employee’s attorney.

Recent case: A foundation hired Mary Rozell to oversee its private art collection. She later alleged that her supervisor repeatedly touched her in a sexual manner and made off-color comments. She claimed that when she complained, the foundation fired her. She sued.

Rozell hired one of the most experienced and, therefore, the most expensive plaintiff’s attorneys in New York. By the time the contentious case settled (by confidential agreement), the fees that Rozell owed her attorneys were well over $1 million. She asked the court to order her former employer to pay the tab.

While the court did reduce the award somewhat, it also said that Rozell’s lawyers’ fees of $600 per hour were reasonable. It then ordered the foundation to pay $1,053,041 in attorneys’ fees, plus another $33,000 in costs. (Rozell v. Ross-Holst, et al., No. 05-Civ-2936, SD NY, 2008)

Final note: Gulp! And the foundation still has to pay its own attorneys. 

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