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Oops! This Law Doesn't Work
By Senator David Adelman
Georgia State Senator, District 42, Democratic Whip.
(Reprinted with permission.)
During the 2005 Session of the Georgia General Assembly, proponents
of the new tort reform law used procedural rules to preclude the
offering of amendments to the bill in the Senate Judiciary Committee
and on the Senate floor. By prohibiting debate and improvements,
they denied themselves (and the people of Georgia) the benefit of
any thoughtful trouble shooting of their legislation. So it should
come as no surprise, the law is a mess.
Here's one of many examples:
The new offer of settlement provision requires the offeree to get
a judgment that is 25% more favorable (or actually any set percentage
more favorable) than the offer in order to avoid paying the offeror's
attorneys fees.
One problem is that, under certain scenarios (that are not at all
unlikely), both parties could end up paying the other party's attorneys'
fees: Assume Plaintiff makes a settlement demand of $100,000 and
Defendant responds with a $70,000 settlement offer. Defendant needs
to do 25% better than $100,000 (i.e. defense verdict or less than
$75,000 judgment) to avoid paying Plaintiff's attorneys fees and
Plaintiff needs to do 25% better than $70,000 (i.e., at least $87,500)
in order to avoid paying Defendant's attorneys fees. If the verdict
comes in at between $75,000 and $87,500, neither side will have
done what it needs to do in order to avoid paying the other side's
attorneys fees. So the statute would require each side to pay the
other's attorneys fees.
Another problem is that it can penalize a party for not accepting
a defendant's settlement offer that is clearly less than the value
of the case or a plaintiff's settlement demand that is clearly more
than the value of the case: Assume a clear liability case with a
clear monetary value. Granted these are rare, but, for illustrative
purposes, assume a child is injured in an automobile accident where
the defendant clearly ran a red light so liability is clear. The
parents have the claim for the child's medical bills. It is a purely
special damages claim, no general damages for pain and suffering
(since that is the child's claim). Assume the hospital bill is $100,000
and this is all the parents are suing for. Under this scenario,
there is no question that the parents are entitled to recover $100,000
from the defendant. However, the offer of settlement statute (if
it requires the offeree to do 25% better) would allow the defendant
to make an offer of say $81,000. If plaintiffs rejected this offer
(which would normally be understandable since they are unquestionably
entitled to recover the full $100,000 hospital bill) and the verdict
came in at the expected $100,000, the plaintiffs would have to pay
the defendant's attorneys fees because they would have had to exceed
$100,000 in order to do 25% better than the $81,000 settlement offer.
Of course, this works in reverse too. Plaintiffs could make a counteroffer
of $120,000 (even though they are only entitled to the $100,000
hospital bill) and defendant would then have to pay plaintiffs'
attorneys fees when the verdict comes in at the expected $100,000
(since defendants would need a verdict of less than $90,000 to do
25% better than plaintiffs' $120,000 demand).
These hypotheticals leading to absurd results and others have been
material for a lot of laughter amongst lawyers around the state
who have struggled to apply the law the Governor rushed to sign
in mid-Session. It is my hope the lesson taken from this experience
will be in the future to slow down and take advantage of the expertise
and thoughtful experience of all 56 members of the state Senate.
http://www.davidadelman.info/
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