How do contingent fees work when the judge makes losers pay attorney fees & damages?

Simple hypothetical: A righteous group (Righteous) seeks to recover $90,000 from an evil organization (Evil). They have no money to pay an attorney, but their case is taken by an attorney on a contingent basis: the attorney will get 30% of the settlement if Righteous wins, zero if Righteous loses.

In the simplest scenario, the judge says “Evil must pay Righteous the full $90k.” Then Righteous gets $60k and the attorney gets $30k.

But what if the judge is so appalled by Evil that she says, “Evil must pay $90k to Righteous, also pay attorney’s fees for Righteous, and also $30k in damages”?

How does this work? Now Righteous gets $90k award and $30k damages for a total of $120k; the attorney’s 1/3 share of that would be $40k. But… Evil must pay the attorney $40k while Righteous keeps the $120k?

Or something else? I can imagine several scenarios and I have no idea which one is correct.

Oops … should have said, the real-life organizations, and the court where the real-life case is being heard, are in the State of Hawai’i, if it matters.

There’s a lot that doesn’t make sense about your scenario, but the answer to your basic question is highly likely to be involve knowing the exact terms of the retainer agreement, which you don’t provide.

Specifically, what doesn’t make sense? Is it not quite possible that someone would cheat an organization out of $90K? I’ll (probably) be happy to explain, as long as I can do so without worrying about compromising an ongoing court case.

ETA: our contract with the attorney is pretty simple. I’m too tired to look at it now, but maybe tomorrow I’ll quote some relevant parts of the agreement, if you think it would be help.

It’s irrelevant for the purposes of your GQ which is about how the percentage is worked out. That is, as I said, very likely to involve knowing the exact terms of the retainer agreement

Sorry, which part is irrelevant? The part you said doesn’t make sense? (And if it’s irrelevant, why bother to say it doesn’t make sense? I think I’m probably missing something here.)

What the attorneys receive will likely depend upon the detail of the retainer agreement. Without that detail, your question is probably unanswerable. That is the answer to your GQ question.

Your description of the amounts payable in an action doesn’t make a lot of sense but it’s irrelevant because - regardless - the answer to your GQ question will likely depend upon the detail of the retainer agreement.

Okay, thanks for answering … the retainer is 0. This is purely a contingency agreement.

Yes but there will be an agreement about fees, even if that agreement does not involve an up front payment.

Under a normal fee arrangment in the UK (which i all I know anything about), when costs are awarded they submit an amount based on hourly rates that’s always excessive, and the judge reduces that somehow to a more reasonable figure.

The interesting part of OPs question is that a contingency fee (if successful) will obviously be far higher than any normal hourly fee, because of the prior risk of losing. It seems unfair to the losing side that adverse costs could ever be awarded to reflect the much higher contingency fee. The contingency aspect is really a separate “triple or nothing” arrangement between attorney and client, and “triple” does not reflect the true costs.

I don’t think that accurately models the general situation every time. What’s unknown when a case is taken is just how much legal time will be consumed. A regular by-the-hour billing arrangement will pay accordingly.

A contingency case could result in a huge pay-off for very little work, if a case is filed and there is an immediate ruling in favor of the lawsuit bringer. However, the attorney might still have to work for their fee. It’s a crapshoot as too how much time will need to be invested to bring a case to closure.

Obviously a smart attorney will bet that a case can be easily and favorably concluded, thus bringing a nice fee without too much work. But it’s always a risk since the outcome isn’t known.

(NM, won’t bother to answer without the actual contract in front of me.)

A contingency fee also might result in no pay at all - and that means the rate will have to be high enough to make up for the cases where the attorney doesn’t get any fee at all.

Judges don’t award arbitrary amounts for legal fees.

That’s certainly true, but it’s been my observation, in more than twenty years in IT at law firms, that lawyers don’t take cases where there’s any significant risk of not getting paid.

What is an issue for lawyers who work on contingency is that it is quite likely to be years before a case is settled (or tried), and so for their fee to be paid.

What can also be an issue, but for clients, not the lawyers, is that the interests of the client and the interests of the lawyers may not be 100% in alignment when it comes to settling vs. going to trial, or when it comes to a quick settlement in a matter of months versus going the distance for a couple of years.

Of course, that would only happen with unethical lawyers.

Under the so-called “American rule,” a party is expected to pay its own attorneys fees. The primary exception to this is a number a statutes allow the prevailing party to recover fees (for example, civil rights actions under Section 1983). Contingency fee agreements should be uncommon in this situation, because the “contingency” is the ability to make a fee petition if you prevail (indeed, a little bit of Googling tells me that Maine, at least, may prohibit contingency fees in such situations); on the other hand, Oklahoma appears to allow you to contract with the client to combine the damages award and fee award and take a contingency fee based on the total amount and that opinion has a lot of discussion which might be helpful to you on the various approaches).

The big exception to the American rule (other than where modified by statute) would be bad faith during the litigation. I’m not really sure how that would work, but the Oklahoma Ethics Opinion says that the majority rule (where fee awards and contingency fees intersect) is that “[a]s a general rule, when a contingent fee agreement is ambiguous or silent as to how statutory fee awards are to be treated, the contingent percentage should be calculated on the total amount minus the court-awarded fees, with the attorney awarded the greater of the two amounts.” That seems like a plausible approach to me.

From the non- American perspective, court costs in Commonwealth countries generally are set by a tariff established by the court.

The usual rule is partial indemnity (“party and party costs”): the successful party recovers some but not all of their costs, and it doesn’t allow full recovery of what the successful party paid their lawyer. The costs are not paid to the lawyer, but to the successful party.

In exceptional cases, the court can order costs on a full indemnity basis (“solicitor and client costs”). In that situation the successful party can recover the full amount of their costs from the unsuccessful party, including the full amount paid to their lawyer. That type of costs award is rare.

So if the situation described in the OP occurred in my jurisdiction, the court order would be party and party costs (partial indemnity), based on the court tariff of allowable costs. The tariff has several columns, based on the amount recovered in the action; the allowable amount for the various items increases with the amount awarded. It’s not based on the amount recovered by the successful lawyer in the contingency agreement.

The issue raised above, about the interests of lawyers and clients diverging based on how long the action continues, is normally dealt with by stepped contingencies. The percentage of contingency starts low if the action settles quickly, and increases if the action proceeds through the various steps, particularly the ones that require considerable preparation and work by the lawyers, such as examination of the opposite party, examination of documents, pre-trial hearings, and the trial itself. The increasing percentage recognizes that the farther along the process goes, the more resources the lawyer is putting into the file.

This is the bit where the OP’s scenario becomes implausible. You’re either in a scenario where the American rule applies (both parties bay their own lawyers’ fees), or in one where the English rule (winning party gets reimbursement for its lawyers’ fees from the loser) applies. The American rule is the default in the U.S.; there are some exceptions where recovery of lawyers’ fees is possible also in the U.S., depending on the scenario (e.g. consumer protection legislation is often open towards allowing such recovery). It might also become possible to recover fees from the other side if that other side intentionally delayed the proceedings in a manipulative manner. But the choice between the English and the American rule is not a function of how appalling the losing party’s behaviour was in the facts that are the subject matter of the litigation. You’re noto going to hear a judge saying, “Righteous won this case, and normally both parties would have to bear their own costs, but in this case Righteous won so big time that Evil has to pay for Righteous’ lawyers too.”

Plus, a judge wouldn’t just award damages. As described in the OP, Righteous is only seeking the recovery of the money. There’s no mention of Righteous suing for damages, punitive or otherwise. If Righteous isn’t asking for it, the judge won’t award it.

That can be the basis for solicitor-client costs in the Commonwealth, again depending on the local rules. If the conduct of the losing party is so atrocious, that can trigger an application for solicitor-client costs (full indemnity). But that isn’t how it works in the US, as I understand it.