Every attorney representing a plaintiff (this mediator included) has told a defendant that, in addition to the claim amount, the plaintiff is demanding its attorney’s fees and costs in the litigation. As parties and attorneys know all too well, the costs of litigation, particularly in a complex, multi-party construction defect litigation, can be significant, sometimes even approaching or exceeding the claim amount! Thus, they cannot be ignored. However, the plaintiff must consider that the defendant has likely spent just as much (if not more) defending the claim, and is not interested in paying them twice. There is no escaping the reality that too often litigation costs “drive the train” and sometimes make it nearly, if not, impossible to settle. The case devolves into a fight over attorney’s fees with a “winner take all” mentality. No attorney wants to be in that position, with his or her client upset and wondering how the attorney let the case go sideways.
In addition to fees and costs incurred prior to mediation, another factor to consider is the costs of litigation moving forward if the case does not settle. Not only will the parties have to try the case, but there is at least one guaranteed appeal, and possibly other proceedings before appeal such as post-trial motions for new trial, additur, remittitur, etc. Parties need to fully expect (and understand) what is to come if the case does not settle so they can make informed decisions about whether to throw in the towel or keep fighting. While future costs of defense do play into a defendant’s decision in this regard, a plaintiff should not expect or hope that the defendant will simply pay that over to the plaintiff to settle the case. To be sure, a defendant, particularly an insured one, may and likely will put up some measure of defense costs if it will settle a case. However, insurers evaluate the risk of proceeding to trial and factor in the costs to get there. In mediator’s experience, if the plaintiff’s demand is too great measured against the perceived risks and costs of defense, the insurer will surely roll the dice.
Understanding Florida Proposals for Settlement
Another consideration is Proposals for Settlement. These are a valuable tool which shifts the risk of paying attorney’s fees, and the mediator must know whether and when they have been served. Particularly in a case where there is no other basis to recover fees, fee exposure, while not necessarily determinative of whether a case will settle, does change the dynamics. Even where there is an independent basis to recover fees (such as by contract or other statute), a Proposal for Settlement may have a significant impact on risk assessment. For example, although the plaintiff may be deemed the “prevailing party” by contract or statute, it may nonetheless fail to recover an amount sufficient to “beat” a Proposal for Settlement, which results in the plaintiff’s recovery being offset by the amount of fees to which the defendant is entitled under the proposal. If the proposal is served early enough in the proceedings, the defendant’s fee recovery could negate most if not all the plaintiff’s fees! As the above discussion illustrates, while fees and costs are a factor that must be considered, they should not rule the day.
To learn more about Florida proposals for settlement, contact Florida construction mediator and lawyer Gary L. Brown at (954) 370-9970 or (954) 448-1133.