Set Deadline for Legal Fee Motions

A uniform statutory procedure to postpone applications for attorney's fees until after a final judgment, i.e., "a judgment that is final and not appealable," would have three benefits. It would:

(1) enable the court to review a fee application based on the outcome of the litigation, rather than review multiple applications in duplicative or piecemeal fee litigation; (2) eliminate procedural anomalies; and (3) ensure that New York courts apply Federal fee-shifting statutes consist- ently with the U.S. Supreme Court precedent.

This measure would reinforce New York's historical treatment of attor- ney's fees as costs in an action rather than as an element of a cause of action. It also would align New York's practice with the procedures in Federal courts of waiting until the parties have litigated and resolved the underlying dispute before requiring a party to submit an application for attorney's fees. See Fed. R. Civ. P. 54(d); see also Ray Haluch Gravel Co. v. Cent. Pension Fund of the Int '1 Union of Operating Eng'rs, 134 S. Ct. 773 (2014).

The measure would apply only to procedural issues about the timing and nature of a motion for fees, and would not change the substantive law governing whether a party would be entitled to fees.

BACKGROUND TO FEE AWARDS

New York law historically has held that attorney's fees in a litigation are costs that are "incidents of litigation," even when the parties agree to fee shifting in some form. E.g., Mount Vernon City Sch. Dist., 19 N.Y.3d 28, 39 (2012); see Roe v. Smyth, 278 N.Y. 364 (1938); In re Low, 208 N.Y. 25, 32 (1913) (striking "allowances for counsel fees and disbursements" except as statutorily permissible as "costs" under Code of Civil Procedure); cf Osterneck v. Ernst & Whinney, 489 U.S. 169, 175 (1989) (at common law, attorney's fees "were regarded as an element of costs and therefore not part of the merits judgment"). Attorney's fees are not damages that are part of a cause of action. See, e.g., Avalon Const. Corp. v. Kirch Holding Co., 256 N.Y. 137, 145 (1931) (stating that any attorney's fees should be assessed in a bill of costs, not as damages to be recovered); Lurman v. Jarvie, 82 App. Div. 37 (1st Dep't 1903) (stating that fees are costs governed by statute and ordinarily cannot be awarded as damages), aff'd on op. below, 178 N.Y. 559 (1904).

This historical practice relating fees to costs or expenses is reflected in many statutory fee-shifting provisions that allow attorney's fees to be awarded at the conclusion of the litigation. For example, the State's Equal Access to Justice Act directs that certain parties may submit a fee application within thirty days after a final judgment, i.e., "a judgment that is final and not appealable." See CPLR 8601(b), 8602(c); see also Agriculture & Markets Law § 308-a(2)(b) (thirty days); Tax Law § 3030 (same); cf. CPLR 8303(a)(4) (after exhaustion of appeals). The law governing class actions similarly anticipates that a fee application would be filed post-judgment. See CPLR 909. In addition, U.S. Supreme Court precedent holds that a fee award under Federal law is not an element of damages; the award is separate from the merits. See White v. N.H. Dep't of Employment Sec., 455 U.S. 445, 452 (1982).

But some cases have categorized attorney's fees under fee-shifting provisions as "damages" that are an "integral part" of a cause of action. See, e.g., Burke v. Crosson, 85 N.Y.2d 10, 17 (1995) (fee award under 42 U.S.C. § 1988) (citing Manko v. City of Buffalo, 294 N.Y. 109 (1945)). Under this approach, the parties must resolve a fee application before they can exhaust appellate review of the merits through the Court of Appeals. This approach creates an anomaly: fees cannot be assessed until action on the merits is complete.

BENEFITS OF PROPOSED AMENDMENT

Determining eligibility for and the amount of a fee award while the merits of the claims remain subject to further review is an inefficient use of judicial resources. The better practice would be to enable the court to consider the substantive merits of a fee application based on the outcome of the litigation, i.e., after the merits judgment is final and not appealable. Accordingly, courts and parties would benefit from predictability and consistently treating attorney's fees as incidental to the litigation, regardless of the basis for fee shifting.

By postponing a motion for attorney's fees (and other costs or expenses) incurred by a party in that action until after a final judgment, the amendment would mitigate problems of prematurely litigating fees in the face of uncertain outcomes on the merits. If a judgment is overturned in whole or in part-perhaps with an expectation of further trial court proceedings-then a previously litigated fee motion would be either in vain, or subject to significant revisions after applying the same analy- sis to the same billing records a second time. And even if a judgment were affirmed, then the parties would return to the trial court to liti- gate the fees incurred during appellate proceedings. This CPLR amendment would also ensure that New York State courts follow binding U.S. Supreme Court precedent interpreting Federal law.

This amendment would not affect the law governing an application for attorney's fees from a fund (e.g., a structured settlement) or based on a contingency agreement. See CPLR arts. 50-A, 50-B. Nor would this amendment affect an application under laws that expressly contemplate an award of fees during an action not based on a final determination of the merits of a complaint or petition. See, e.g., Domestic Relations Law § 237 (award of fees to enable party to litigate); Rules of the Chief Admin. (22 N.Y.C.R.R.) § 130-1.1(a) (sanctions for frivolous liti- gation).

This amendment also would not affect, for example, an action to recover attorney's fees incurred in a prior litigation. It would apply only to fees incurred within an action. This measure, which would have no meaningful fiscal impact on the State, would take effect immediately.

Legislative history

None. New proposal.