Fee Shifting

June 14th, 2015 / By Deborah J. Merritt

I recently interviewed Pete Barry, a lawyer who represents plaintiffs suing debt collection agencies for violations of the Fair Debt Collections Act (FDCA). You can listen to the interview in this “I Am the Law” podcast.

Pete is quick to acknowledge that his clients should pay their debts; he’s not in the business of shielding deadbeats. At the same time, Congress found that abusive debt collection causes job losses, marital breakups, and bankruptcies–all events that hinder debt repayment. To prevent these outcomes, Congress outlawed some debt collection practices.

Rather than create an agency to police debt collection, Congress chose to rely upon private enforcement. When a plaintiff establishes an FDCA violation, she recovers actual damages, court-ordered compensation of up to $1,000, court costs, and an attorney’s fee.

The fee shifting produces some eye-opening results. As Pete explains in the podcast, many defendants know that they’ve crossed the line and are willing to settle. Unless the plaintiff has provable actual damages, she may recoup only $1,000 through settlement. Pete’s court-approved hourly rate, however, is $450. He tracks his time carefully and defendants pay those bills when they settle. Even an easy case can generate $4,500 in attorney’s fees.

Did You Learn This in Law School?

Pete’s practice intrigues me because of its business model. Rather than rely upon clients to pay his bills, Pete built his practice around a federal fee-shifting statute. He notes that there are many such statutes, and that too many lawyers overlook them when designing a practice.

After talking to Pete, I realized that law schools also overlook these statutes. Some fee-shifting laws, particularly those related to civil rights, appear in the law school curriculum. Even courses teaching those statutes, however, tend to focus on substantive rules rather than the potential for attorney’s fees.

When we do talk about attorney’s fees in law school, we usually discuss the policies surrounding fee shifting. We may use noble language like “creating private attorneys general,” but we rarely analyze the potential for these statutes to create a viable law practice.

Vindicating Congressional Policies

Congress didn’t create fee-shifting statutes to support lawyers. Instead, these statutes protect important interests–primarily ones held by the poor and middle class. Potential plaintiffs have suffered from our lack of attention to these statutes.

Imagine if the required 1L year included a course on fee-shifting statutes. That course would deepen students’ knowledge of statutory law, highlight rights that Congress (or state legislatures) considered important enough to enforce through attorney’s fees, and expose students to injuries that disproportionately affect poor, middle class, and minority clients. The course would also remind students that legal remedies aren’t free and most lawyers earn their living from private clients.

I doubt that many law schools (if any) would add my proposed course to the first-year curriculum. Just imagining such a course, however, helps me see the distortions in the current curriculum. Our traditional courses help students master fundamental legal concepts, like negligence or breach of contract. I suspect, however, that we could teach the same concepts through modern statutes–and perhaps give students better grounding in the statutory remedies that define most contemporary legal rights.

At the same time, we would focus students on a fact that is fundamental to both the rule of law and their future as practicing attorneys: Lawyers can’t promote justice unless someone pays their bills. If law schools paid closer attention to this truth, including the business side of law practice, we might widen the scope of legal services.