Court-Ordered Attorney Fees Explained
Court ordered attorney fees are a term of art with specific legal meanings and origins. Statutory authority for the award of attorney fees can be found in several statutes, and the fee award can be based on either a unilateral offering of attorney fees between parties to an agreement, or it can be awarded by the court because of a party’s unlawful or oppressive conduct, or because the family law court believes that the wronged party should not have to divert its assets to pay the other party’s attorney fees. While California is a "win; lose; draw" system of law, the awarding of attorney fees is not limited to the one who prevails. As Gatory and Gatory, 30 Cal. App. 4th 370, 36 Cal. Rptr. 769 (1994) establishing, the court may award attorney fees against a party who has acted in bad faith or whose litigating position is not supported by the law. (see also In re Marriage of Cheriton, 92 Cal. App. 4th 169, 111 Cal. Rptr. 2d 855 (2001)) This is based on the philosophy that no party should gain an unlawful advantage over another party, and if a party has wasted legal resources, or failed to act in good faith, then that party should be compelled to pay the other party’s attorneys fees, even if it is losing the case. Based on these concepts, the family law court has broad discretion to award both need and conduct-based attorney fees in family law cases . As for need-based attorney fees as provided by Family Code 2030(a), the family law court must consider the 1) ability of each party to pay the fees, 2) the balance of hardships, 3) whether there has been a substantial disparity in access to funds to pay for litigation and 4) whether payments of fees would adversely impact the party’s ability to obtain housing or a visit with children. Conduct-based attorney fees are authorized by Family Code2334(a) pursuant to family code 271b. In such a case, the court may order reasonable attorney fees, if it finds a party has "persistently frustrated the policy of the law," "sought to unreasonably increase the costs of litigation" or has engaged in "bad faith tactics which are frivolous or without substantial merit." "In considering the reasonableness of the fees on an award of conduct-based attorney fees, the family law court will consider the attorney’s hourly rate and their skill in relation to similar rate and skill in the community." (In re marriage of McElroy, 124 Cal. App. 4th 151, 21 Cal. Rptr. 3d 791 (2004)) The Family law Court can also award attorney fees without regard to need or conduct based attorney fees pursuant to local court rules and practice. Many courts have standing orders or local rules authorizing family law courts to award attorney fees to a party who has incurred difficulty in collecting payment of existing support or whose share of the community estate is being unduly reduced.
How to Implement the Court Order
Once the attorney fee decision is final, there are a number of legal procedures that can be used to enforce the judgment once it becomes final. This will depend on what assets can be reached and attached, as well as the state rules on enforcement of attorney fee awards.
For example, the American Bar Association notes that in order to enforce a fee award against an unincorporated entity or a sole proprietorship, a creditor must use the judgment debtor’s name withstand the steps of post-judgment execution. Miller, The Collection Process (ABA, 2005).
The California Judicial Branch website discusses the ins and outs of enforcing pre-judgment and post-judgment attorney fee orders, noting that after a judgment for attorney fees and costs is made, you may be able to collect by garnishing the debtor’s wages or by obtaining a writ of execution (Judicial Council of California Website).
Although not an exhaustive procedure, here are a few steps for enforcing a court order: Talk to your Attorney about which methods fit your case and what fits within your state’s guidelines.
Legal Recourse If Full Payment is Not Received
If the opposing party fails to pay the sum awarded, there are several legal and practical options. One of the first options that should be considered is filing a motion with the court. Many jurisdictions have a standardized motion that can be filed to attempt to compel the payment of either the percentage of any future income (wage garnishment) or a specific sum of money. After filing this type of motion, the court will likely set a hearing date. Depending on the circuit, the court may enter an order for payment of the fees, if unpaid.
Another option is to file a lien against all real property in the name of the Payee. This too may require the assistance of the court in order to properly complete. A judgment lien may be obtained via the Florida Judgment Lien Recording Act, which provides a lien against the debtor’s real property for 10 years (See Fla. Stat. §55.201-55.209). While such a lien can be recorded, it is important to note that the Payee has to locate the property. If a smaller sum is owed and attached to wages, garnishment may be the best option.
A third option is more drastic, and that is filing a contempt of court action. This may also require a hearing and evidentiary proof of the non-payment. Again, while enforcement of such an Order is possible, a judge is typically not interested in hearing about a matter that has not been in front of his court.
When to Involve an Attorney For Collection
You may want to consider hiring an attorney or a collection agency to assist in collecting the fees. An attorney may be able to utilize one (1) of the collection methods described above using the legal system to augment your own collection efforts. An attorney will typically charge you either by the hour (which can add up quickly) or on a contingency basis where they get a percentage of what they collect from the other party (which might leave you feeling less-than-good about how much you got, but nervous about trying to prove another hour , especially if you are trying to collect from an ex). Be careful with taking that route – without proper documentation, the attorney may not know what they are entitled to, and you may end up having to pay an hourly fee for extra work you must perform to back up their collection demand. A collection agency generally works on a contingency basis as well, and can be an effective tool to let someone handle the collection process for you. If you choose to go that route, keep in mind to hire an agency that is licensed in Pennsylvania, since many of them are not, and can end up doing you more harm than good.
Issues That May Arise During Collection
Many times the most difficult part of representing a client is collecting compensation for the legal work that you’ve completed. Indeed, an attorney is much more aggressive when pursuing a fee than defending against a claim. This ‘dynamic’ is found in courtrooms all over America: when a litigant raises a claim against an attorney for improperly billing or misappropriating funds, it quickly turns into a he-said/ she-said over time records and telephone calls, with billing experts (that the client can’t afford) brought in to review complex billing practices. However, when the tables are turned and the attorney is pursuing a fee, as the ultimate "gate-keeper", we have the opportunity to really apply pressure through a variety of regular and unusual techniques.
Often, with non-paying clients, we’ll engage in the collection dance: sending letters, making repeated telephone calls, on down to creating a false sense of urgency. And this gambit often works. However, there are circumstances where the client fails to pay the bill, and one is left with two choices: take the loss, or pursue collections through the courts.
The collection of court-ordered fees is also a tricky proposition. After all, we are making a claim against a client that has already won a case. I’ve seen many cases like this be disposed of at a court hearing in a matter of moments. I’ve also seen them drag out for years. It all depends on the judge and his or her personal experience with attorneys bringing collection actions.
If you find yourself in a situation where you are owed attorney fees, the following tips might be of assistance:
• No matter what, do not delay filing suit! Waiting a few months to file a collection suit may seem harmless, but it opens yourself up to losing a statutory right. In New Jersey, trying to collect a debt falls within the purview of a six year statute of limitations from the date of the breach. If from the last invoice, court papers are not issued until seven years later, then the claim will not only fail, but the debt may be invalid as well. Thus, as much as we would all like to maintain good relationships with our clients, sometimes a suit must be filed to protect your right to recover on that claim.
• Just because you can collect interest does not mean that you should collect interest. Frequently, attorneys find themselves in a precarious position where, during the period of the legal representation, they extend credit to their client – and once the legal representation is over, the client does not pay the bill. As a result, an extraordinary amount of fees and costs are incurred in collecting on that judgment. Then, the lawyer charges interest on that unpaid balance. This will almost always be found to be in violation of the Rules of Professional Conduct, specifically RPC 1.5(b), and you can expect the client to bring this up in every conversation throughout the collection action.
• Also, it’s unlikely that a court will actually award interest on the fees. Even in the face of a contractual or statutory provision, a court may still withhold that award because it is excessive or unfair.
• While the statutory rate of interest is 10%, the actual practice of the courts has been to award 3%. Keep in mind that award will likely only be available on the principal balance of the case, and not on the full amount of fees, costs, and disbursements sought.
• Supplemental proceedings, which are ways to investigate, examine, and locate the assets of a debtor, can be used to asset the collection of an awarded fee. These proceedings include a writ of execution and a subpoena. Both procedures allow the creditor to obtain information about a debtor’s assets by taxing the judgment debtor about his or her assets.
Even during the process of collection, attorneys find most clients to be sympathetic victims. Nonetheless, the law protects an attorney’s right to be paid. Understanding how to navigate the court system is key to maintaining those relationships.
Avoiding Future Issues
One of the most effective preventive measures is to include a provision in the court’s order for how payment is to be made of the ordered fees. For example, in an order awarding attorney’s fees, you can present to the court evidence of the monthly amount the person owing the fees can afford to pay and ask that the court order timely payments that mostly reflect that amount. The order should further provide that the monthly payment has to be automatically deducted from the sender’s bank account every month so that, if the person fails to timely pay the attorney fees, the attorney fee creditor/obligee does not have to continue to spend money on collection efforts that are time-consuming and expensive when the court can order the non-paying party to comply with the court’s earlier order for the fees to be paid.
Another consideration is for the court in the order to place a weekly or monthly interest rate on the fees owed so that , again, if the fees are not paid timely, the court can hold the non-paying party in contempt of court. Even if the court does not order that the fees being awarded bear interest, the awarded/court-ordered fees will often accrue simple interest at the legal rate of 6% per annum, which does end up being quite a lot of money on a large award of fees.
Arrears for the unpaid fees should be addressed in subsequent orders, either by providing an opportunity to cure the deficiency or by simply awarding the full deficiency amount, with interest, in the order. When a motion to compel payment of fees is pending, you should go ahead and schedule the hearing for the motion for at least a month out so the other attorney has an opportunity to be heard on the issue, but prior to the hearing, the other attorney can be advised of the amount owed and given an opportunity to pay the deficiency to avoid the hearing on the motion to compel.