Loser Pay Rules
Applicable to Negligence Cases in Georgia -
Crazy laws that lobbyists
can buy from Georgia legislators.
Craig Hardegree, Esq.
In 2005 the Georgia Legislature passed a
“loser pay” law dealing with litigants having to pay the
other side’s attorney fees when the verdict goes against
them. Insurance companies had argued that such a law was
needed to curb unnecessary lawsuits. Trial lawyers argued
that the law would have a chilling effect on people who
might have a meritorious claim but who might not have the
financial means with which to pay the insurance company’s
attorney fees, if the jury happened to disagree with their
valuation of the case.
The new law in Georgia went beyond simple “loser pays” and
legislated that the side which does not better its
position by more than 25%, has to pay the other side’s
attorney fees. For example, assume that you were
rear-ended by a drunk driver and you incurred $10,000 in
medical bills. Not wanting to appear to be over-reaching,
you decided to forego asking for pain & suffering and you
only asked the other driver’s insurance company for
$10,000, the exact amount of your losses. Assume further
that the insurance adjuster, who had no medical degree,
decided that some of your bills were not reasonable and
necessary and therefore offered you a settlement of only
$8,500. You reject the offer, file a lawsuit and go to
court. At trial, the jury agrees with you and awards you
the $10,000 which you had originally demanded.
Congratulations; you won!
But wait. Twenty-five percent of the $8,500 offer is
$2,125. The offer plus 25% totals $10,625. In order to
have bettered your position by more than 25%, you would
have needed to obtain a verdict of at least $10,625.
Unfortunately, your verdict of $10,000 fell short of that
target. Under the new law, even though you “won,” you will
now have to pay the insurance company’s attorney fees,
which could be several thousand dollars.
The law works both ways and it can even work both ways in
the same case. Assume in the above example that in
response to your demand for $10,000, the insurance company
offered $7,500 to settle your claim. At trial, you will
have to do 25% better than $7,500, meaning you will need
to get $9,375 or higher in order to avoid having to pay
the insurance company’s attorney fees. By the same
principal, in order for the insurance company to better
its position by 25%, it would have to obtain a verdict of
25% less than your $10,000 demand, meaning the verdict
would have to be $7,500 or less, in order for the
insurance company to avoid having to pay your attorney
fees.
Suppose the jury decided to split the difference between
your $10,000 demand and the insurance company’s $7,500
offer and came back with an award of $8,750. Each of you
did a little better than what the other side was willing
to do before court; you get $8,750 instead of the $7,500
offer and the insurance company only has to pay out $8,750
instead of meeting your $10,000 demand. However, since the
verdict was neither below $7,500 nor above $9,375, neither
side did 25% better; consequently, both sides will now
have to pay the other side’s attorney fees.
Update:
Sometimes it seems that the
Georgia Legislature puts very little thought into bills
which they pay. Of course, with all the dances, parties,
socials and hog suppers which they have to attend and with
having to keep track of all the money which the lobbyists
are funneling to them, who can blame them if they don’t
have time to actually read the laws which they are
legislating upon the common folk.
When the Legislature was told by practicing attorneys that
their new law was near unintelligible, they re-visited the
law in the 2006 legislative session.
The 2005 impossible-to-discern language was as follows: “If
the offeree rejects or does not accept the offer and the
judgment finally obtained by the offeree was not at least
25% more favorable than the last offer, the offeree shall
pay the offeror’s reasonable attorney’s fees.” In the
2006 Session, this language was struck in its entirety and
the following two paragraphs were inserted:
(1.) If a defendant makes an offer of settlement which
is rejected by the plaintiff, the defendant shall be
entitled to recover reasonable attorney’s fees if the
final judgment obtained by the plaintiff is less than 75
percent of such offer of settlement.
(2.) If a plaintiff makes an offer of settlement which
is rejected by the defendant and the plaintiff recovers a
final judgment in an amount greater than 125 percent of
such offer of settlement, the plaintiff shall be entitled
to recover reasonable attorney's fees.
In our example, you had $10,000 in medical expenses and
you had decided to only ask the insurance company for
$10,000. The insurance company had offered you $7,500. The
jury had given you $8,750. Under the 2005 law, both of you
had to pay the other side’s attorney’s fees because
neither of you bettered your position by more than 25%.
But what happens when we apply the 2006 law to the same
example?
Analyzing our example under the new paragraph one, the
defendant (the “defendant” is technically the other driver
but in practicality the “defendant” is the other driver’s
insurance company) offered you $7,500 which you implicitly
rejected by continuing the litigation on through to a
verdict. The verdict was $8,750. Seventy-five percent of
the $7,500 offer is $5,625. Since your verdict was not
less than $5,625, you do not have to pay the insurance
company’s attorney’s fees.
Analyzing our example under paragraph two, you offered to
settle for $10,000. The insurance company rejected your
offer. The insurance company would only have to pay your
attorney fees if the verdict was 125% of your offer to
settle, or $12,500 in our example. Since your verdict was
$8,750, the insurance company does not have to pay your
attorney’s fees.
Using the exact same example, under the 2005 law both
sides had to pay the other side’s attorney’s fees, but
under the 2006 law, neither side has to pay the other
side’s attorney’s fees. And, under our example, the 2006
law is how it should be – when a jury renders a verdict
which is squarely in the middle of what both sides want,
it’s probably a pretty good result and it makes no sense
to penalize both sides for a good result.
If you have been
involved in a car wreck, auto accident, truck collision, motor
vehicle crash or any other personal injury case and you live in
the cities of
Carrollton, Bremen, Bowdon, Villa Rica, Temple, Hiram, Dallas,
Douglasville or in Carroll County or Douglas County or in the
Counties of
Haralson, Paulding or Clayton, please
contact
our Douglasville Personal Injury Law Center for a free consultation
with a personal injury lawyer.
|
