Effective Techniques for Court-Ordered Attorney Fees

Attorney Fees Ordered by the Court

Court-ordered attorney fees are money awarded to outside a settlement context by the judge due to what the judge perceives to be an excess of litigious behavior on the part of one of the parties, and/or an unwillingness to accept reasonable settlement offers. In workers’ compensation cases, for example, they can be awarded due to the workers’ compensation insurer’s refusal to authorize appropriate medical treatment. The individual who is ordered to pay court-ordered attorney fees must pay the fees directly to the other side’s attorney, not to the clerk of the court or to the insurer.
There are a number of different circumstances in which court-ordered attorney fees can be awarded. They are most commonly sought under statute when an insurer blocks medically necessary care and the injured worker must file a motion and request a hearing with the court in order to get the insurer to authorize the care and pay for it. For example, if a case manager refuses to approve a pain management referral but the doctor requests same, attorney’s fees can be awarded if a Motion is filed with the court . The situation has to be bad enough to merit a petition to court, and include an offer of reasonable settlement and denial of a reasonable and medically approved treatment.
It is also common in workers’ compensation when an insurer refuses to pay attorney’s fees otherwise due the attorney because they are not paid directly by the insurer or directly deducted from a settlement. These attorney’s fees are referred to as "statutory fees." Statutory attorney’s fees in Workers’ Compensation generally become an issue at the conclusion of a case when the injured worker has filed a Motion to Tax Costs, after of which the Judge will enter the Order regarding the payment of Attorney’s fees. Statutory attorney’s fees are awarded to the injured worker’s attorney at an hourly rate, which is dictated generally by state statute. Typically, this is the statutory attorney’s fee of 25% of the first $5,000 of an award, 20% of the next $5,000 of an award, 15% of the next $10,000 of an award, and 10% of the remainder of an award. In addition, the injured worker’s attorney can seek 30% of the total recovery, in lieu of the statutory attorney’s fees. This is a consumer protection mechanism that is built into the workers’ compensation laws.

Legal Bases for Attorney Fees

The authority to collect attorney fees awarded by the court may be statutory, court rule, or a product of common law. If the authority arises from a statute, it is vital to identify the statute or statutes supporting the award of fees in the particular case being handled. The most obvious source of such a statute is the Uniform Act for Enforcement of Foreign Judgments (C.C.P. § 1710.10-1710.70), and a specific case of enforcing a judgment of another state with an award of attorney’s fees granted by the foreign state’s law. The Uniform Act provides that attorneys’ fees granted by another state’s law are enforceable in California under California law. (C.C.P. § 1710.35(b).) If the order awarding attorney fees arises from a statute that does not by its terms authorize enforcement in another state, the practitioner must examine the "full faith and credit" clause of the U.S. Constitution, and related case law. Some statutes have actually been found, as a violation of the Full Faith and Credit Clause of the U.S. Constitution, to the extent they do not provide for reciprocal enforcement of foreign judgments. Another source of authority for collection of attorneys’ fees is the court’s equitable powers. Courts have discretion to issue injunctions, issue additional costs, and provide attorneys’ fees, to prevent material damage to the estate of the debtor. (In re Hassett (9th Cir. BAP 2001) 284 B.R. 389, 392; see also In re Schilke (7th Cir. 2013) 715 F.3d 403, 408.) Most often we find attorneys’ fees awarded as a matter of judicial discretion based on the statutes and rules for the particular area of law being addressed. For example, attorney fees ordered in business litigation can be based on the court’s discretion under C.C.P. § 1717. For domestic support orders, C.C.P. §§ 291, 292 and 290 apply, as well as equitable powers permitting temporary orders to enforce the specific financial obligations. Under family law rules, attorney fees are awarded per the court’s discretion under Family Code section 2030.

Laying the Groundwork for Collection

Once you have the court’s order awarding you attorney fees and costs, you can begin the collection process. Often the prevailing party will start by having a clerk’s certificate prepared, which certifies the entry of the judgment. Once this is done, you can request from the clerk a writ of execution. The writ is then usually served by either the sheriff or a private process server on the losing party. If the order awarding you attorney fees and costs includes a post-judgment interest rate, then you will need to calculate that and include it in your request to the clerk for a writ of execution. A judgment creditor may also seek to assist the execution or force the execution of a judgment through various other means. For example, in some cases like breach of contract actions, a motion may be used to collect on a judgment and get information about either nonexempt property that which can be applied to the satisfaction of the judgment or about the debtor’s ability to pay the judgment, as opposed to serving the judgment on the judgment debtor. In other instances, a judgment creditor can kind force the turnover of a judgment debtor’s assets or information or even impose a receiver upon the judgment debtor and its assets. This latter approach can be particularly useful if your opposing party may be hiding or selling off assets in an effort to avoid satisfying your award of attorney fees and costs. Each of these approaches has a differing degree and time commitment and costs associated with it. Some are complicated and lengthy while others are matter-of-fact, more routine, and less labor intensive. Contacting a local bankruptcy attorney will be able to assist you in deciding the best approach for your firm’s circumstances.

Tools for Enforcing Fee Collection

A number of mechanisms exist for enforcing or compelling the collection of court-ordered attorney fees. The simplest and most obvious is turning the collection over to an entity that specializes in doing just that. There are collection agencies and law firms that focus exclusively on collections. Depending on the amount of money involved, it may be more efficient and less expensive overall to hire one of these firms, than to invest the staff time and effort required to handle the collection in-house.
There are also legal mechanisms available to compel payment. For example, once a judgment on the fee award has been entered, Attorneys may obtain a writ of garnishment to garnish the debtor’s earnings, bank account, or personal property. Utah’s practice rules require an attorney to "after entry of judgment, take steps to collect the costs and any unpaid fees from the losing party or that party’s insurer." Utah R. Civ. P. 74 (a). An attorney may do this by obtaining and serving a writ of garnishment to the losing party or that party’s insurer within thirty days after entry of judgment. Utah R. Civ. P. 75 (b).
Attorneys may also obtain a lien on their client’s causes of action and personal assets to enforce payment of their fees in some cases. Utah’s attorney lien statute provides, "Every attorney has a lien . . . for compensation . . . on any cause of action, judgment or decree in favor of his client, and vested in his client, upon all papers, books, records, and other evidence of debt in his possession." Utah Code Ann. § 38-2-1. This statute does not create a right to a charging lien, however. See Berg v. Wood, 38 Utah 63, 114 P. 611, 613 (1911) ("[I]ndependently of statute, an attorney is entitled to retain for services rendered money received by him belonging to his client, in the absence of a contract or course of dealing with the client which gives him the right to keep it when demanded. Otherwise he must pay it over to the client on demand.").
Members of the Utah State Bar have also proposed lending money at a reasonable interest rate, to affected bar members, to assist them in paying their sanctioned fees. The issuance of loans, and terms and conditions for doing so would have to be carefully considered to ensure that members would not be left responsible for fees owed by other members that defaulted.

What to Do If You Can’t Collect

If the other side chooses not to pay the costs that they’ve been ordered to pay, there are several options that are open to you. If the costs involved were costs for paying an expert, the first thing you can do is file a motion for contempt. To do so, there has to be contempt in the case, meaning that the court has to find that they haven’t paid the costs under order and have the ability to actually pay the costs. You will have to prove to the court that the person that has been ordered to pay the costs of the expert either has the wages that can go to the expert for their bill, or funds in an account that can be attached. If they refuse to pay, the court will simply order that whatever those costs were be paid in full immediately. And if they choose not to, they can be held in contempt for the case and may face jail time for a day, for up to a year. Also, I’ve had a court appoint a master to collect. In other words, the master will receive the money from the opposing party and then distribute it to you. Another thing that you can do is file an abstract for the court-ordered fees with the clerk and get a judgment on the record. Filing the abstract will get you a judgment against that person for all the fees. At that point, you have a judgment against them in the amount of the fees , and you can foreclose against their real estate or attach a lien to their personal property. It’s very hard to escape a final judgment. Courts typically are not going to grant a motion to reconsider in a case where the person contracted with you in order to get the services they obtained, and those services were given. The difficult point here is that time can always be given, and time might fly by after you get that award and it may seem like nothing is happening. It may take months to set up the court dates for hearings, to get something in front of a judge after the motion has been filed, and so forth. These end up being issues of time versus money, because while you’re not getting paid the attorney’s fees and costs you’re entitled to, at the same time, it costs money to hire an attorney to follow up on the judgment by collecting on it and hiring someone to foreclose and hire a real estate agent, all that costs money. And then you have to worry about whether or not the opposing party will actually show up and fight your foreclosure. When following these procedures, it’s very rare that an attorney will take a fee. They get a percentage of the cost they are able to recover, and that’s it. If they get 40 percent, you get the other 60 percent, but you’re still ahead in the game.

Lawyers Serving Our Community

When all else fails you try to get the court that ordered you to be paid to enforce that order with the contempt power—if you find yourself unable to recover your attorney fees after you’ve received a favorable ruling on an appeal, consider seeking legal assistance if these problems arise:

• The fees are not paid in full; or
• There is a failure to cross-appeal in the event that the award is partial or the judgment offsets that award by a substantial amount; or
• The receiving party is judgment proof, unwilling, or unable to pay the fees, and forces collections efforts (e.g., NW Immig. Fund v. City of Tacoma, (2004) 125 Wn.App. 568; Mulder v. Muning, (2004) 122 Wn.App. 540; Farmers New World Life Ins. v. Kray, 2005 WL 1787274; Yuen v. Cunningham, (2004) 124 Wn.App. 1027).

At some point, a failure to pay becomes contempt, and such a contempt order will normally use the standard Washington court process, namely: (1) obtaining an order to appear; (2) using a writ of garnishment directing the sheriff to appear before the order to appear is issued; and (3) executing the writ of garnishment, and (4) attempting to negotiate payment.
If necessary, a show-cause hearing may be sought. Any final contempt judgment is then appealable.
If you have a dispute or a problem with the opposing party, contact the Washington State Bar Association (WSBA) for information about obtaining assistance from the Office of Disciplinary Counsel or the Office of the Chief Disciplinary Counsel, respectively.
If necessary, a show-cause hearing may be sought. Any final contempt judgment is then appealable.
If you have a dispute or a problem with the opposing party, contact the Washington State Bar Association (WSBA) for information about obtaining assistance from the Office of Disciplinary Counsel or the Office of the Chief Disciplinary Counsel, respectively.

Repose Prior to Litigation

One way to make sure that you get paid for your work is to address the issue before the work is performed. This can be done through a contract, but in most cases a retainer and/or pre-billing and getting payment into your trust account will give you the additional protection. If all goes well you will not have to pursue collection of any of the funds that are in your retainer, however, if things go badly, you will have already secured money from your client that corresponds with the time you have already invested in the matter and that is in a location where it belongs (i.e., your trust account).
One element of preventative action is that you have spent some time up front talking with the client about fees and retainer, although in Illinois, this is now required by Rule 1 . 5 of the Illinois Rules of Professional Conduct. Particularly if the matter is complex, you want to make sure that the client understands the nature of the matter and that you can at least give the client a range of likely fees. If the client was surprised by the amount of the fees and had a reasonable expectation that a lesser amount would be charged, it is unlikely that you could successfully collect—even if you do have a signed contract.
When sending out a final bill, you should also send a copy of the original fee agreement and highlighting the portions of the agreement that discuss fees and retainers. This can only be effective, however, if you follow the prior steps and have had a prior discussion with the client about the fees and have a signed written agreement.