Reasonable ≠ Ratio

“Circuit court litigation comes at a price, sometimes a heavy price.”

Does your contract include an attorneys fees provision?  Does it include words like “reasonable” or “prevailing party?”  If so, then the prevailing party may be reimbursed for its “reasonable” attorneys fees expended in the litigation or arbitration process.

On April 13, 2017, the Virginia Supreme Court held the trial court of the City of Virginia Beach abused its discretion when the plaintiff recovered the entire amount it sought from the defendant ($500), but defendant only had to pay $375 out of the $9,568.50 total attorneys fees expended to reach the judgment.

Under Virginia law, a Court or tribunal (e.g., arbitrator or arbitration panel) will typically consider at least seven different factors to determine how much is “reasonable.”  Determining a reasonable amount is not a simple ratio calculation nor can it be predicted with certainty.  The Court stated “merely applying a ratio between the damages actually awarded and damages originally sought will not satisfy the reasonableness inquiry.”

The Court also cautioned that parties should be careful not to overinflate their damages as “an unreasonably exaggerated claim for damages provokes a proportional response.”  “This unnecessarily inflates the costs of litigation for both sides and increases the possibility that one will end up liable to the other for an exorbitant award of attorney’s fees.”

Lambert v. Sea Oats Condominium Association, Inc., Record No. 160269 (April 13, 2017).

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