Attorneys' Fees and Code of Civil Procedure section 998

Marc Alexander and Mike Hensley have a good post in yesterday's California Attorney's Fees on our Code of Civil Procedure section 998, the California equivalent of FRCP 68.  The statute, and the cases interpreting it, make for a fairly complex set of rules, but as they point out, attorneys who master this statute can have a big and favorable impact on their clients' exposure to attorneys' fees.

There is a significant potential for fee-shifting under section 998 when there is otherwise be a right to fees under contract, statute, etc. Essentially, the scenario is this: at the onset of the litigation (or early on, in any event) where the successful plaintiff will have a right to fees, defendant offers the amount in controversy to the plaintiff, plus fees and costs to be determined by the court.  Since it's early on in the litigation, the fees and costs presumably don't amount to much at that point. Plaintiff rejects the offer. In the trial of the non-fees part of the case, the plaintiff gets a judgment in his favor, but only for the amount the defendant offered him way back when. To get to that point, the plaintiff ran up $400K or $500K in fees, perhaps more than the underlying damages.  The rule in this scenario is, no post-offer fees to the plaintiff. And if it's a scenario (tort, statute, contract, whatever) where the prevailing defendant can recover fees, then the defendant gets post-offer fees. That's the decision in Scott Co. of California v. Blount, Inc. (1999) 20 Cal. 4th 1103, and more recently, Duale v. Mercedes-Benz USA, LLC (2007) 148 Cal.App.4th 718.