Why Can't I Recover Everything I Lost?

I settled a case recently right before jury selection. It was a legal malpractice case. My client had lost a good bit of money because the lawyer representing him in a real estate transaction did not read the rules closely enough. I spoke with my client today and he asked a very reasonable question – why is it that I end up with less than a whole loaf when I did not do anything wrong? After I pay your fee and expenses, he said, my recovery is less than what this whole ordeal cost me.

Though I agreed with his math, I reminded him of our conversations early on about the damages that he could recover. The lawyer here did not try to cheat him, he just didn’t give the matter the proper attention it deserved. As such, punitive damages would not be available. Moreover, he could not recover emotional distress damages, even though he clearly went through a lot. In Alabama, if you haven’t suffered a physical injury, emotional distress damages are not available for negligent acts unless you can show that you were exposed to the threat of bodily harm – in the "zone of danger."

On top of all that, he could not recover the attorney’s fees he had to pay me. That is because we follow the "American Rule" in the United States. Each side pays their own lawyer unless there is a contract that provides that the winner recovers such fees or there is a law that does the same thing (as in Federal discrimination cases). While this can result in an anomaly like this, there is a good reason for the rule. If lawyers knew that the loser would have to pay the other side’s attorney’s fees, it would close the courthouse doors to a lot of folks where the prospect of paying fees to the other side would chase off lawyers from getting involved. It is a lot like democracy – it’s not great, but it’s better than every other system out there.