Adding insult to injury: the risk of rejecting case evaluation
In Juarez v. Holbrook, et al., the Court of Appeals upheld a judgment that substantially reduced the Plainitiff's injury recovery, by subtracting almost $70,000.00 in fees incurred by the Defendant. Both parties had rejected a unanimous case evaluation (or recommended settlement) in the amount of $650,000.00. At trial, the Plaintiff was awarded $300,000.00, much of which was in future earnings and suffering (and thus had to be reduced to present value).
Because Plaintiff had rejected the case evaluation and did not improve his position by ten percent, he was obligated to give the Defendants a credit for reasonable fees and costs incurred after rejection. The Defendants attempted to charge 706.6 hours for trying the case, allocated among six lawyers, at rates from $160 to $250 per hour, despite the fact that their contract with the insurer allowed the attorneys to charge only $97.50 per hour.
The trial court was skeptical of the number of hours claimed by the Defendants; it also acknowledged that defendants were not limited to the "actual" fees charged and could charge a higher fee if it was "reasonable". The trial court concluded that it would award the full number of hours charged, but limited the hourly rate to the actual rate. The Court of Appeals upheld this compromise position and approximately $70,000.00 in fees and costs were deducted from the Plaintiff's injury recovery, leaving him with a recovery well under $200,000.00 [which would be further reduced by his own costs and fees]. Not very much for an injury that was severe enough for a group of case evaluators to unanimously value at $650,000.00: rejecting such an evaluation is a gamble that can backfire on either party at trial.