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Attorneys’ Fees to Successful Party with Genuine Financial Obligation to Pay ARS § 12-341.01

Posted by Ted A. Schmidt | Feb 07, 2020 | 0 Comments

Attorneys' Fees to Successful Party with Genuine Financial Obligation to Pay ARS § 12-341.01

Fields v. Elected Officials Retirement Plan,No. 1 CA-CV 18-0126 (App. Div. I, February 6, 2020) (J. Weinzweig)


Plaintiffs are retired judges and members of the Elected Officials Retirement Plan who sued the state for declaratory and injunctive relief claiming A.R.S.  §  38-810 unconstitutionally changed the way employer contributions to the plan were set to their detriment. They won. Plaintiffs' contract with their lawyers provided the lawyers would be compensated under a contingency fee, but further provided the law firm would “limit recovery of [its attorney] fees to  those  fees  and  costs awarded  by  the  [superior  court] under  any applicable fee shifting statute. [And] Clients agree to pay those fees and costs over to Attorneys.” The defendant challenged any such award of fees under A.R.S.  §  12-341.01 on the basis the statute requires the party seeking fees have a “genuine financial obligation “ to compensate their attorneys and that no such obligation existed here. The trial court awarded plaintiff $46,088.80  in  attorney  fees and  $1,899  in costs.  The Arizona Court of Appeals affirmed

 Plaintiffs promised first to “petition ”the superior  court  for  an award  of  attorney  fees  and  costs under the fee-shifting  statute,  and promised then to surrender “those fees and costs over to” counsel. Those twin promises are contractually   enforceable under   Arizona   law   and represent a genuine financial obligation to compensate counsel. The  conditional  nature  of  payment does  not diminish  the genuine financial obligation.  Arizona  courts  have  long recognized that attorney fees are recoverable under § 12-341.01 “when the contract between the party and the attorney is a contingency-fee agreement,” reasoning that “[a]fter obtaining a judgment, a client who has retained counsel on a contingency  basis  must  surrender  the  agreed  upon percentage  of  the judgment as remuneration.

About the Author

Ted A. Schmidt

Ted's early career as a trial attorney began on the other side of the fence, in the offices of a major insurance defense firm. It was there that Ted acquired the experience, the skills and the special insight into defense strategy that have served him so well in the field of personal injury law. Notable among his successful verdicts was the landmark Sparks vs. Republic National Life Insurance Company case, a $4.5 million award to Ted's client. To this day, it is the defining case for insurance bad faith, and yet it is only one of several other multi-million dollar jury judgments won by Ted during his career. He is certified by the State Bar of Arizona as a specialist in "wrongful death and bodily injury litigation".


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