Posted on April 28th, 2017
Attorney fees you pay to your attorney to defend you against an employment claim can easily run you in the five figures and if it the case goes to trial, six figures is the norm.
But crazy enough your attorney fees may not be your biggest expense.
As discussed before, the real risk lies in one of the many “unique” features of California Employment Law.
Employee Side Legal Fees
Employee plaintiffs hire their attorney on a contingency basis and essentially receive all of their attorney fees for free unless their attorney wins the case.
A no risk proposition for an employee with an Axe to grind.
The “unique” part comes in the fact that if the employee’s attorney wins on even ONE cause of action, you the employer will have to pay the attorney fees to the lawyer that sued YOU except in a few limited instances.
Let that sink in a minute. Yes, your $5,000 problem potentially just became a $150,000 problem now that you have to pay the judgment and the attorney fees to the other attorney.
Here’s the breakdown:
“Attorney Fees” and “Costs” are distinct from one another. Attorney fees refer to the cost of council, which in employment case range about $350 an hour to $550 an hour.
Now multiply that by the months and sometimes years that litigation can go on and that is a lot of money you could potentially owe to the lawyer that sued you for the labor claims.
Not pretty.
“Costs” refer to filing fees for court documents, transcripts of depositions, court reporters, even postage and shipping costs for documents sent between parties.
Understandably, these expenses can easily add up to thousands of dollars over the life of a case.
Protecting Your Business From Employee Lawsuits
Sunny California, a great place to live, a great place to have a business, a terrible place to have employees if you have not protected yourself from the risk associated with employee lawsuits.
As an attorney and business owner myself, I have had to also navigate the treacherous California waters to both prevent and minimize the damages that can be caused by baseless lawsuits brought by opportunistic employees and attorneys who seeks to exploit you and your business for a payday.
The predatory plaintiff side attorneys do not hesitate taking employment cases whether they have much merit or not because of the incentives built into California labor codes.
If your business is successful you will become a victim if you do not have all of the protections in place to remove the incentive to sue you.
Even cases that are small or look simple can run up legal costs so that there is an incentive to settle even if you believe that you can prove you have not done anything wrong.
If a case does not resolve quickly, the attorney fees become the driving factor to settle cases whether they have merit or not.
If you lose, the attorney fees are already factored into the award. Thus, what might have been a $10,00 award for an issue that was not intentional and could have been resolved without litigation, can cost you upwards of $50,000-$100,000.
The more cases these attorneys take, the more money they cash in at the expense of the business and brand you’ve dedicated your time, labor, and savings to create.
There’s no doubt that there’s a “pay me” attitude when it comes to California employment law. More often than not, this occurs with discrimination cases after an employee has been terminated for cause.
This doesn’t mean that discrimination or sexual harassment cases are never legitimate, justified or necessary. But from my experience this is the most common form of groundless, exploitive cases against employers.
Many times these cases are retaliatory against an employer they disliked, have recently been fired by, or feel “wronged” them (Note: wronged is not the same as illegal) and the law has incentivized these revenge lawsuits.
What’s the best way to combat these cases?
Arbitrate. Arbitrate. Arbitrate.
The key is to remove and minimize employee litigation incentives that force employers to unfairly pay for the employee’s attorney, as well as the jury award, damages, penalties.
Solution? Stay away from juries and have an agreement that everyone pay their own attorney fees.
A good arbitration agreement shifts the attorney fees and removes the money making incentive out of the equation. This frees both sides to attempt an amicable resolution to real problems because there is not an incentive to file a lawsuit where one is not warranted.
If you have any questions on how to avoid the financial nightmare of employee related claims, feel free to reach out.
I offer a FREE 15 minute consultation to ANY California Employer.
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