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Attorneys' Fees in a Discrimination Case Can Bankrupt an Employer

The costs associated with a discrimination case can be overwhelming for an employer. Consider a case in Fresno, California from 2009. In the case, the employee claimed he was the victim of discrimination based on a perceived disability. The case proceeded through discovery, which is an extremely expensive part of the case for any litigant. The parties attempted to settle, but without any luck. The employer even made an offer to compromise for a six-figure amount. Nevertheless, the employee would not accept the offer. At trial, the plaintiff was awarded approximately $42,000 in damages. This is not an insignificant amount.

However, considering the circumstances, this was probably considered a "win" by the employer. And in fact, for most mid to large sized companies, the award would be insignificant. In fact, the $42,000 amount was probably 4 to 5 times less than an attorney would spend defending a "garden-variety" case like this. The employee's attorney then made a motion seeking attorneys' fees and costs. The attorney claimed he spent more than $300,000 in time litigating the case. The court made modifications to the attorney's request and then awarded more than $420,000 to him. This is ten times the amount of the award given to the employee who allegedly suffered the wrong! This is not unusual in a discrimination case. Attorneys' fees often exceed the value of the employee's case. For this reason -- the threat of losing and paying the employee's attorneys' fees -- lawyers will push discrimination cases hard. And they are reluctant to settle a case that does not include a substantial amount. Is it possible to obtain attorneys' fees from an employee if the employer wins? Probably not. Typically, the employer must show that the employee's claim lacked all merit. Moreover, even if a court ordered attorneys' fees, few employees could ever pay them.

Can you fight the award of attorneys' fees? Sure, but it costs money. Consider the case of Chavez v. City of Los Angeles. In 2008 a court awarded the employee $11,000. His attorneys then sought $900,000 in attorneys' fees. The defendant appealed the ruling and eventually prevailed, after two more years of litigation. What should an employer do to prevent this type of situation? First, the employer must implement good HR practices. The best defense to a discrimination case is to avoid the case in the first place. Spend money and effort to combat discrimination in the workplace. Second, consider settling discrimination claims with employees before the employee's attorney can spend an extraordinary amount of time on the case. Settlement can often be less costly than litigating. This will require the employer to put emotions aside and make a decision based on the economics of the case. Third, in the event a settlement cannot be reached, the employer's attorney should do all that (s)he can to obtain a summary judgment. This is a process that allows a judge to review the evidence, and if the facts are not in dispute, render a decision. It avoids the extra costs of trial and the uncertainty of a jury. Discrimination cases are costly cases for employers. Many awards, including attorneys' fees, can seriously damage a company, or even put it into bankruptcy. Therefore, an employer's best defense is to implement good HR practices in an effort to avoid litigation.

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