Lawyers concerned about Idaho Supreme Court’s ‘loser pays’ ruling

If you lose in an Idaho court, you may have to pay the winner’s attorney fees. The Idaho Supreme Court passed a decision people are calling “loser pays” — you lose a case, you pay the opposing side’s fees in addition to your own. This has lawyers and legislators uneasy.

“Most lawyers, that I have talked to, are very troubled by the decision. They’re troubled that that’s going to be the ongoing standard. And If that’s the case, and it does shift or potentially become ‘loser pay,’ I think that’s unhealthy. I don’t think that’s good public policy,” Idaho Sen. Bart Davis said.

With the Supreme Court’s split 3-2 ruling, Idaho is the only state in the country that could possibly change the way attorney fees are paid.

In September, a court case named Hoffer v. Shappard questioned whether the losing side should pay the winner’s attorney fees. The Supreme Court used to interpret the attorney fees code with the Civil Rule of Procedure — both requirements had to be made.

There needed to be a winning party and the case had to be deemed frivolous, unreasonable or without foundation for the losing party to pay the other side’s attorney fees.

But this week, the justices decided to interpret the attorney fees code by itself without reference to the civil rules — meaning the court removed the requirement that the case needed to be unreasonable for the loser to pay for the winner’s attorney.

The Supreme Court made this written decision for “loser pays,” so it is official. But state legislators do have a chance to change the rule, before it goes into effect March 1.

“A lot of clients will look at the financial muscle of the guy across the table. And they may say, “I take that chance.” And I worry about that as the legal standard,” Sen. Davis said.

“Loser pays” stems from the English Rule, but the rule in place now is the American Rule which states, in part, that all parties involved pay their own legal fees unless stated otherwise.

“With this decision, it tends to push from the American Rule toward the English Rule. But to how far, is unknown,” said David A. Johnson, a practicing attorney in Idaho Falls.

This decision also has people confused, because no one really knows what the language means.

“It’s something which they’ve created that says, ‘As justice so requires.’ And nobody knows what that particular phrase means. As attorneys, we like consistency. We want to know exactly what is the standard that is going to be applied,” said Johnson.

Nevertheless, our state legislators are able to discuss the ruling at the legislative session and decide if they really want the standard to go into effect in a few months.

“They kicked the can down the road only as a courtesy, I believe, to the litigants and to the legislature to give them a chance to look at it and say, ‘You know what? We want the old standard’ or ‘We like this standard,'” said Sen. Davis.

If it is left unchanged, this new attorney fee rule won’t go into effect until March 1. It will apply to all cases already in progress as of that date.