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Why ORS 20.080 is Critical for Oregonians

(Note: this article originally appeared in The Multnomah Lawyer, February 2019 issue and was co-written with Ben Cox.)

In the December issue of the Multnomah Lawyer (“One Extra Dollar: The Impact of Attorney Fee Awards in Small Claims”), the author took issue with a fee-shifting statute that hundreds of Oregon lawyers regularly utilize in comparatively modest claims to achieve fair outcomes against insurance companies. As two such lawyers, we are writing to share our perspectives.

In claims seeking no more than $10,000 in damages to person or property, ORS 20.080 states that when a plaintiff makes a properly-supported pre-filing demand and provides at least 30 days to respond, if the case can’t be settled and the plaintiff eventually recovers more in litigation than the best pre-filing offer, the plaintiff will be entitled to her reasonable attorneys’ fees, as well as her damages.

The author correctly notes that, “ORS 20.080 was passed in 1947 to address the problem of small tort claims [...] Insurers in particular had discovered they could simply defend against every claim, and since the legal cost of prosecution was likely to exceed the claim’s economic value, there was no practical way for a claimant to ever collect.” This is as true today as it was in 1947. In fact, the insurance companies that defend these claims have become more aggressive with low-balling tactics than at any point in recent memory, and regular Oregonians with modest tort claims need the protection of this law more than ever before.

 

Insurance companies know that the worst enemy of an injured person with a modest claim is simple math. If a case is reasonably worth about $6,500 at trial, it makes no financial sense for either: a) the victim to pay an attorney by the hour, b) the attorney to work up, litigate, and try such a case for a maximum contingent benefit of a few thousand dollars, or c) even to represent oneself and incur the non-recoverable costs of pursuing such a verdict (e.g. $2,000 or more for the treating doctor to testify so the proper evidentiary burden may be met). This is why the Oregon Supreme Court has said: “unless [the victim] could collect with his claim a fair attorney fee, it would be impracticable for a plaintiff to pursue his legal remedy against a reluctant defendant.”1

However, even with the fee provision for litigated claims, most of these cases settle pre-filing. Oregon Justice Department (OJD) statistics reveal that any fear of rampant, opportunistic ORS 20.080 litigation is not well-founded. In 2016, over 700,000 matters were filed in the state’s circuit courts.2Over 73 percent were criminal cases.3 In June 2018, OJD’s Civil Justice Improvements Task Force reported that less than 1 percent of all matters were filed under the Tort-general code, which is where an ORS 20.080 case would be filed.4 Of that 1 percent, only 38 percent sought $10,000 or less.5 Seventeen percent of Tort-general filers were unrepresented, which means that the highest possible responsible estimate of attorney-represented ORS 20.080 cases filed statewide in 2016 yields just 2,096 matters.6

Having demonstrated there is no large-scale litigation problem, let’s take a small-scale example of the law in action. Lawyer represents Helen. Helen was hurt in an ordinary, rear-end auto collision, required six months of treatment, and is not responsible for medical reimbursement. Everyday claims like Helen’s can range widely in value, but let’s say her verdict range is $5,500 to $7,000.

Lawyer makes a properly-supported $10,000 demand. Within 30 days, the insurer offers Helen $4,500. If the case settles now, Helen will receive $3,000 and Lawyer will be paid $1,500. If the case is filed and Helen fails to beat the offer, Lawyer will work far harder for the same (or less) fee. If instead Helen recovers more than $4,500, Helen will receive the awarded amount (minus non-recoverable costs) and Lawyer will receive a reasonable hourly rate for all work necessary to obtain the outcome. Considering the extra risk and work involved, very few attorneys will advise Helen that filing suit is a smart risk to run, and the case will settle for $4,500.

The further below $4,500 the insurer offers, the better the chance that Helen and Lawyer will decide the risks of pursuing the full value of the claim justify filing the case. This is precisely how ORS 20.080 is supposed to work: the law’s existence means Helen will have the benefit of counsel, counsel will advise Helen not to inflate her claims beyond $10,000 because of the advantages this statute provides, and the carrier will have to promptly respond with a reasonably fair offer if it wants to avoid paying both Helen’s damages and her attorneys’ fees. In the Oregon Supreme Court’s words: “...[ORS 20.080 exists] to encourage settlement of small claims, to prevent insurance companies and tortfeasors from refusing to pay just claims, and to discourage plaintiffs from inflating their claims.”7

Without ORS 20.080, attorneys would not be able to assist a large class of Oregon’s tort victims. Rather than engendering needless litigation, ORS 20.080 instead increases access to justice and fair outcomes for those who would otherwise go unrepresented and undercompensated. Oregonians should celebrate this law, not criticize it.

 

1Johnson v. White, 249 Or 461, 463 (1968).2OJD 2017 Circuit Court Case Statistics, Table 1 - Cases Filed Trend Data (Comparing 2016), pg. 1.3Id. 4OJD’s Civil Justice Improvements Task Force Report to the Chief Justice, Appendix B, Fig. 1.5Id. at Appendix B, Fig. 2.6Id. at Appendix B, Fig. 3. 7Rodriguez ex rel. Rodriguez v. The Holland, Inc., 328 Or 440, 444 (1999)

 

If you or someone you know was injured because of another person's negligence or wrongdoing, it is critical that you seek legal advice as soon as possible.  Call our office today for a free consultation: (503) 288-8000.

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