Law Tech: Following California Legislation.

If you would like to follow proposed new legislation in California including proposed amendments to existing statutory law try the state's website which allows users to track the progress of new legislation by searching with key words, names and/or numbers of bills.

Contract Law: Statutes That Make Contractual Relief Reciprocal.

Prior posts have covered exceptions to the American Rule, the generality that parties pay their own attorney fees in litigation. An additional point concerns a nexus which can exist between contractual and statutory exceptions to the Rule. In California, when a contract contains a clause providing that only one party may recover attorney fees in the resolution of a dispute, such a remedy (no matter how one-sided it is written) can be made reciprocal or mutual by statute.

Civil Code 1717 provides in pertinent part that: "In any action on a contract, where the contract specifically provides that attorney's fees and costs, which are incurred to enforce that contract, shall be awarded either to one of the parties or to the prevailing party, then the party who is determined to be the party prevailing on the contract, whether he or she is the party specified in the contract or not, shall be entitled to reasonable attorney's fees in addition to other costs." CC 1717.

In Washington, the law is similar. Revised Code of Washington 4.84.330 provides in pertinent part that: "In any action on a contract or lease entered into after September 21, 1977, where such contract or lease specifically provides that attorney's fees and costs, which are incurred to enforce the provisions of such contract or lease, shall be awarded to one of the parties, the prevailing party, whether he is the party specified in the contract or lease or not, shall be entitled to reasonable attorney's fees in addition to costs and necessary disbursements. *** As used in this section "prevailing party" means the party in whose favor final judgment is rendered." RCW 4.84.330. The relief afforded by the statute cannot be waived. Id.

It should be noted, however, that in both jurisdictions any clause awarding attorney fees and costs may by its terms pertain to only certain aspects of a given contract and hence the clause may not be applied at all depending on the nature of the parties' dispute. See e.g. Dragt v. Dragt/DeTray, LLC, 139 Wn.App. 560 (2007); Paul v. Schoellkopf, 128 Cal.App. 4th 147 (2005); ABF Capital Corp. v. GMC Properties, Co., 126 Cal.App.4th 204 (2005).

The enforcement of equity and the promotion of access to the courts are the primary reasons given for the statutory conversion of a non-reciprocal provision for attorney fees to a remedy that is mutual or in favor of all parties to a given contract.

Attorney's Fees: Is the Billable Hour Fatally Flawed?

I have worked with the billable hour compensation system in litigation for many years. The method has some flaws, one of which is the difficulty of the client (as well as the lawyer) to discern or appreciate value especially when the cost(s) of seemingly similar cases are compared. In the last few years there has been a lot of discussion about moving away from the billable hour altogether in favor of a flat, fixed or value billing methodology. These methods have been used more frequently in recent years but not typically in any uniform fashion. The notion is that the attorney and client would also communicate at various stages of the litigation to make compensation adjustments based upon the unique aspects and/or outcome(s) of a case. In the meantime, the billable hour remains dominant at least on the defense side, largely I think because alternative methods are not clearly articulated, massaged or even tried. Few wish to take the time or risk experimentation. The billable hour persists by momentum and clarity despite opinions of dissatisfaction which have echoed now for decades.

This month, lawyer Evan Chesler, the presiding partner of Cravath, Swaine & Moore, again questions whether the billable hour makes any sense at all in an interview in Forbes magazine. The opinions expressed by Mr. Chesler are not new but the sheer volume of response to the piece may signal that the time has arrived for some real change to occur. On the other hand, some saw Mr. Chesler's comments as a mere lure to clients in a weakened economy. At a minimum, however, it is important that everyone acknowledge compensation issues, the faults of the billable hour system and that we make a concerted effort to communicate about how compensation can be calculated during the life of a litigated case. In this manner, over time, some clearly defined and very workable alternative(s) to the billable hour system should rise to the top and receive widespread acknowledgment and use in litigation.

Law Tech: Another Opinion Concerning the Use of Social Media.

Despite the tenor of my last post, I don't believe that everyone is enthusiatic about Web 2.0 for business. There is the fear that the use of electronic social media (including e-mail) within a business environment can defeat mechanisms designed to protect confidentiality and business secrets, as well hurt productivity. These issues have been highlighted in e-discovery disputes and related litigation. However, the growth of different forms of electronic and social media including the increasing use of them by company employees has also compelled the conclusion by many that businesses (including those which provide legal services) must embrace social media (and incorporate them into business planning and operations) or they may simply be left behind. Mark Henshaw, a "global manager for information security strategy and planning at General Motors" addresses some of these issues in an article passed to me via a Twitter post from Kysen PR, the London based "...business development & marketing consultancy dedicated to professional services firms." There is obviously a tension building on several fronts between business interests that require secrecy/confidentiality and those that may depend upon new forms of social media optimized by open and quick means of communication. How these seemingly competing values are handled (if possible) by a given business including law firms and how they 'fall out' are obviously topics for further discussion.