Wednesday, February 8, 2012

A Light at the End of the Tunnel for MN Employers? MN House Bill Limits Attorneys’ Fees

I recently read an article in the Star Tribune highlighting four bills that have passed the Minnesota House which are intended to limit the costs of lawsuits. According to the article, the bills are favored by a coalition of business groups. What caught my eye was the statement that one of the bills would limit attorney fees in “certain cases, such as wrongful termination or sexual harassment, where state law requires the fees be paid as part of the lawsuit.” I wasn’t sure how fees could be limited in sexual harassment cases but not in other types of harassment cases. I did some digging and learned that the bill’s limit on attorneys’ fees actually applies to all types of lawsuits where the winning party is awarded fees by statute. That means that if the bill becomes law, discrimination and harassment cases of all kinds, as well as whistleblower cases and other statutory employment claims, would be affected.

The bill does two things to limit attorneys’ fees. First, it requires the court to consider the reasonableness of the attorneys’ fees sought in relation to the amount of damages awarded to the prevailing party. Second, it limits the amount of attorneys’ fees that a winning party can obtain if that party previously rejected a settlement offer that was more than the amount ultimately recovered. Although a little on the technical side, if this bill passes it will be very helpful to employers, particularly as they try to negotiate settlements of employment lawsuits. Although the bill is expected to pass the Minnesota Senate and be sent to Minnesota Governor Mark Dayton, the governor is expected to veto it. It remains to be seen whether similar legislation or a different version of this bill could become law in Minnesota, but it’s a possibility and a debate worth following.

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