Collection of Lawsuit Attorney Fees in Iowa
Attorneys’ fees can be significantly expensive for a party in a lawsuit, and often those fees cannot be recovered by the plaintiff even after winning a judgment. Many parties to a transaction will wisely include a provision in their contract stating that if a judgment is recovered with respect to the agreement then the prevailing party can seek attorneys’ fees. In Iowa, “[w]hen a judgment is recovered upon a written contract containing an agreement to pay an attorney fee, the court shall allow and tax as a part of the costs a reasonable attorney fee to be determined by the court.” Iowa Code § 625.22 (emphasis added). However, before a court can even consider the reasonableness of attorneys’ fees, the party requesting the fees must abide by certain procedural requirements.
Affidavit Requirement
In Iowa, to recover attorneys’ fees, a party must abide by a procedural rule requiring a signed affidavit. “The attorney fee … shall not be taxed in any case unless it appears by affidavit of the attorney that there is not and has not been an agreement between the attorney and the attorney’s client or any other person, express or implied, for any division or sharing of the fee to be taxed.” Iowa Code § 625.24. Put simply, no affidavit=no fee. However, “[t]his limitation does not apply to a practicing attorney engaged with the attorney as an attorney in the cause.” Id. So, attorneys can share fees with other attorneys that are working with them. “The affidavit shall be filed prior to any attorney fees being taxed,” and “[w]hen fees are taxed, they shall be only in favor of a regular attorney and as compensation for services actually rendered in the action.” Id.. The affidavit requirement used to apply at the commencement of the case, but in 1985 it was amended to comport with the notice pleading system.)
Clearly, the purpose of the is affidavit is to have attorneys attest to the fact that they did not engage in a fee-sharing arrangement. Sometimes though, attorneys will neglect to file the affidavit even though they most likely did not engage in an unlawful fee-sharing arrangement. The court has then had to decide whether attorney fees could be recovered at all—whether there are any exceptions to this rule.
Waiver of Affidavit
Iowa courts have dealt with many different cases where attorneys neglected to sign the affidavit, but have been reluctant to carve out any exceptions. Federal courts applying Iowa law have appropriately been similarly reluctant. For example, in Nutrena Mills, Inc. v. Yoder, the court held that the affidavit requirement applies where a party seeks attorneys’ fees from an action in a federal court acting in diversity. 187 F. Supp. 415, 429 (N.D. Iowa 1960). However, state courts have found one notable exception to § 625.24.
In Van Sloan v. Agan Bros., Inc., 778 N.W.2d 174 (Iowa 2010) the Iowa Supreme Court discussed whether the issue of failing to sign the affidavit in accordance with § 625.24 needs to be raised in a lower court before it can be raised on appeal. In this case, the court recognized that normally failure to raise an issue in the lower courts would preclude a party from being able to raise it on appeal. However, the court had previously recognized that failure to object to an opposing party’s failure to sign the affidavit required under § 625.24 did not completely waive an objection to paying attorney fees, and the issue could be addressed on appeal. The Iowa Supreme Court questioned whether the weight of the court’s precedential authority allowing parties to raise the affidavit issue at any time still applied given its recent cases distinguishing subject matter jurisdiction from authority. The court explained that “[t]he distinction is critical because a court’s lack of authority to hear a particular matter may be waived if it is not raised below, whereas an absence of subject matter jurisdiction may be raised by the parties at any time.” Van Sloan, 778 N.W.2d at 183. The court looked to the language and the historical development of the statute to determine that the affidavit issue is an issue of authority and should have been raised at the lower court. Thus, the claim was waived, and attorneys’ fees were awarded despite the failure to sign the affidavit.
A party may also be entitled to attorney fees incurred on appeal. Beckman v. Kitchen, 599 N.W.2d 699, 702 (Iowa 1999). However, in Van Sloan the court determined that the party requesting the attorneys’ fees must sign the affidavit again for those fees incurred on appeal. See Van Sloan, 778 N.W.2d at 183–84.
Reasonableness
Recall that the attorney fee must be “reasonable.” The courts determine a reasonable rate using the lodestar approach by multiplying the reasonable number of hours spent by the reasonable hourly rate. It is the duty of the party requesting the fees to prove that the services were reasonable and necessary. Determining a reasonable number of hours spent and a reasonable hourly rate defies a mechanistic approach and requires the court to make “[d]etailed findings of fact.” Dutcher v. Randall Foods, 546 N.W.2d 889, 897 (Iowa 1996). Courts will often dive into the billing records of attorneys and compare them to other similar cases. This can be a difficult process for courts, and the discretion leads to varying results with different judges and cases; but courts are experienced carrying out this duty.
Conclusion
Recovery of attorneys’ fees can be a contentious and expensive issue for parties to dispute. In Iowa, to pin attorneys’ fees on an opposing party based on a contract, the requesting party must file an affidavit stating that the attorneys are not engaged in a fee-sharing arrangement with their client or anyone else, and the fees must be reasonable as determined by a court. Failing to meet these simple requirements can nullify even otherwise-meritorious claim for attorney fees.
Sources:
Dutcher v. Randall Foods, 546 N.W.2d 889 (Iowa 1996).
Nutrena Mills, Inc. v. Yoder, 187 F. Supp. 415 (N.D. Iowa 1960).
Van Sloan v. Agan Bros., Inc., 778 N.W.2d 174 (Iowa 2010).
More Posts by this Author:
Categories: Financial, Writings/Articles
Comments
Comments are closed.