The Concept of Recoverable Fees & Oregon Procedure

Interviewer: You mentioned recoverable fees; that’s what you’re talking about as far as obtaining attorney fees as part of your claim, right?  Is that what you mean by recoverable?

Daniel Hoarfrost: Yes.  There are situations where, in an injury claim, the injured party can recover the attorney’s fees.  It applies, basically, to smaller claims.  It’s a statute here in Oregon, but the problem the legislature was trying to address is that in sort of typical smaller claims with relatively minor injuries – typically soft tissue or what’s known as whiplash cases – the insurance companies really hate to pay out and they have a lot more leverage by way of the ability to resist the cases then most of the claimants do.

The problem that the legislature was addressing is that the insurance company, in a sense, can simply just offer very little on the case and rely on the fact that it’s economically impractical to chase after them in a lawsuit for a claim that’s not going to generate a lot of money by way of jury verdict.

In order to try to address that, they passed a statute that says that if the injured party offers to settle a claim for $10,000 or less, and the parties aren’t able to reach an agreement, then you can file a lawsuit for that amount.  You have to limit your claim to the amount that you offered to settle for (so $10,000 or less) but also get to include a claim for your attorneys’ fees to level the playing field a little bit.  Really, the final result of that statute is that it evens up the bargaining leverage that both sides have, and it tends to break loose in settlement negotiations when they’re deadlocked and the insurance company or the defense is simply refusing to budge.

It gives the injured party a little more leverage to move the settlement amounts up in injuries.  They wouldn’t necessarily result in a much larger jury verdict.

Interviewer: Recoverable fees and obtaining fees is part of your claim in an injury case.  So I can wrap my head around this concept here, and just to recap, how and why does that occur?

Daniel Hoarfrost: Well, the general rule is that attorneys’ fees are not a recoverable expense.  That’s not just in injury cases; that’s true in all litigation, basically.  The only exceptions are when there are specific provisions that allow for it, either by statute – which is the one we were talking about for injury claims – or by contract, because most contracts are going to include a negotiated provision of, “if there’s a dispute then the prevailing party recovers their attorney’s fees.”  But in general, it’s just that the parties are expected to cover the attorney’s fees out of whatever recovery’s involved.

That’s almost always true in injury claims, with the exception of the statutory provision that allows you to include claims for attorneys’ fees when the amount in dispute is $10,000 or less.  The specific provision that the legislature put into Oregon law to address those situations of smaller or routine claims, then it can include attorneys’ fees if the parties aren’t able to settle.  The purpose of the law, basically, is to encourage both sides – both the injured parties and the defendants who are usually covered by insurance companies – to settle in good faith and resolve the cases, rather than drag them out.

Interviewer: What are the steps in that whole process?  What steps does the client have to take in order to be eligible for that?

Daniel Hoarfrost: Well, the basic step is, you have to make a demand on the other party and offer to settle for a figure that’s $10,000 or less. The responding party has 30 days to respond, and if you’re not able to settle it within 30 days, then you go ahead and file a lawsuit, restricted to the amount that you had proposed to settle for, but also including a claim for attorney’s fees on top of the settlement amount.

Interviewer: How long does that process take, generally, do you think?

Daniel Hoarfrost: Well, less than 30 days if you’re able to settle.  If a lawsuit’s involved, then it’s going to take longer, except you have to keep in mind that, since the amount of the claim is less than $50,000, by definition, since you’re restricted to $10,000, then the case is automatically referred to arbitration, which tends to be a little quicker scenario than going through the court system to a regular jury trial.  But you’re usually looking at six to eight months while the case is pending in litigation.

Interviewer: Is this only an Oregon thing?

Daniel Hoarfrost: Yes, that is an Oregon statute and Oregon procedure.

Interviewer: If the case is recoverable fees, what percentage of the attorneys’ fees is reimbursed?

Daniel Hoarfrost: Well, that’s up to the judge.  You submit a statement of time invested and the judge makes an award.

Interviewer: Do you think, in Oregon, this a common option for people?  How often does this occur?

Daniel Hoarfrost: Well, in the negotiation process, it occurs quite frequently, because in cases that you can’t readily show damages that are a lot larger than $10,000, then it frequently makes more economic sense to simply demand the $10,000 and threaten a lawsuit including attorneys’ fees.  That tends to get the attention of the defense side, because then they’re looking at not just whatever dollar amount they assign to the injury claim, but the prospect of having to pay for an attorney’s time to slog through the litigation process, so that affects their evaluation considerably.

More often than not, basically it just encourages the parties to reach a settlement, so the defense side will offer maybe a little bit more than they were willing to offer before, or to put the case to rest and bring it a resolution.  There are frequently times when you still can’t resolve the case, and you end up having to file a lawsuit.

I’ve got at least one pending right now where the attorney fee provision is in play.

Interviewer: Have you seen a pattern or have you seen any sort of common injuries or common kind of cases that would constitute that option?

Daniel Hoarfrost: Well, yes.  It’s almost always soft tissue injury cases, or what’s referred to as whiplash where there’s been a moderate amount of medical expense incurred and a complete recovery by the injured party, so that in those types of cases, the insurance companies on the defense side really don’t like to pay out a lot of money and tend to minimize the claim.  Quite honestly, juries, for whatever reason, don’t tend to award large verdicts, so there’s motivation on both sides to reach a common ground and put the claims to rest at a moderate recovery.

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