Even with the most economical approach to handling a dispute, attorney’s fees and costs can often overwhelm a dispute if the amount in controversy is less than $10,000 or even $20,000. In order to insure that meritorious claims are still economically viable, Washington enacted two rules.
- In cases involving less than $50,000 in controversy, the parties must go through mandatory arbitration.
- In cases involving less than $10,000 in controversy, a party can make an offer of settlement and, if after arbitration they recover as much or more than offered, they can recover their attorney’s fees and costs.
The Washington Supreme Court, in Williams v. Tilaye (2012) looked at the interplay of the mandatory arbitration rules and the offer of settlement rules and overturned an award of attorney’s fees to the plaintiff because the plaintiffs’ offers to settle came AFTER the mandatory arbitration.
The issue before the Court was this: whether the plaintiffs in a personal injury suit who made an offer of settlement after mandatory arbitration but before trial de novo, and recovered more after trial than they offered in settlement, are entitled to attorney fees under RCW 4.84.250.
In his long, but unanimous opinion, Justice Sanders explained policy rationale and language between the two statutory schemes which should be required reading for any practitioner handling smaller dollar value claims or matters subject to mandatory arbitration. For everyone, litigants and counsel alike, the rule in these cases should be to make those offers to settle early so as to preserve your right to collect an award of attorney’s fees.
In his case, the plaintiffs were each received a judgment. One judgment was for $20,512. The other received a judgment for $7,482.
The trial court had awarded attorney’s fees of $49,847.50 and $25,722.00. The failure to make a timely offer meant that these awards were overturned.
If you have a claim or are defending against a claim where the damages sought are less than $10,000 it is important to have discussion with your attorney about the strategic and tactical reasons for making early offers to settle.