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Why Attorneys Fees Matter
By Ann Jacobs
In a largely unnoticed move, our Wisconsin Legislature recently took away the ordinary citizen’s sword of justice and replaced it with a paper airplane. The act? Changing how attorney’s fees are determined in consumer cases (2011 Act 92, which became effective on December 21, 2011).
Attorney’s fees in consumer cases (security deposits, lemon law, false advertising, etc.) are the keys to the door of the courthouse. An unscrupulous landlord knows that the average tenant would be unwilling to spend several hundred dollars in attorneys fees to recover a few hundred dollars in improperly withheld security deposits. In fact, they depend on that fact, thereby keeping monies they are not entitled to.
Previously, Wisconsin law permitted the victims of such unscrupulous behavior to not only get their security deposit back (or their lemon car fixed, or their damages from false advertising paid), but also allowed payment to their attorneys of whatever fees it cost to bring the case. This opened the courthouse to those who otherwise would not have had access, and was an important guarantee of our ability to bring forward meritorious claims.
The changes to Wisconsin law have largely closed the courthouse door by presumptively limiting the amount of attorney’s fees to three times the amount of damages. Thus, in the case of a security deposit of $300, attorney’s fees would be limited to $900. This is a terrible blow to Wisconsin consumers. It creates a perverse incentive for defendants to “over-litigate” a case, thereby making it inefficient for any reasonable attorney to either (1) take the case in the first instance, or (2) maintain the litigation.
Consider the recent example seen in the news. A Wisconsin consumer had his car held hostage over $5,000 in repairs he didn’t authorize. A lawsuit was filed by the consumer, and the parties ultimately settled on damages of $12,500. However, to get to the point of settlement, the attorney expended over $150,000 in fees, which were ultimately required to be paid by the defendants. (Even at a very high billable rate of $500 per hour, such fees reflect 300 hours of work). The court confirmed that the attorney had, in fact, worked those hours to effect the settlement.
Under the new law, such victories of the ordinary consumer over the deep-pockets of a car dealer will disappear, as attorneys fees will be limited to merely $15,000 – three times the amount originally at issue (and, at $500/hour, only 30 hours). Defendants can simply wait until the attorney can no longer afford to work the case and walk away with no penalties.
Attorneys fees open the courthouse to ordinary consumers – our new law sadly closes that door.
Ann S. Jacobs is a shareholder with Domnitz & Skemp, S.C. She has been named one of Wisconsin's top 25 women attorneys by Superlawyers since 2006. She focuses her practice on medical malpractice and personal injury. She is a frequent lecturer to other attorneys, and an author of the book "The Law of Damages in Wisconsin", published by the Wisconsin State Bar Association. She is currently treasurer of the Wisconsin Association of Justice, and serves on many other organizations and committees.