Generally, Nevada law encourages settlement through the offer of judgment rules. These rules dictate that if someone makes an offer to settle a case that is rejected, and that rejecting party is awarded less at trial, the rejecting party has to pay the offering party’s attorneys’ fees incurred after the offer. But, whether this rule applies when a third party pays someone’s attorneys’ fees had not been decided by the Nevada Supreme Court until the recent case of Logan v. Abe, et al.((131 Nev. Adv. Op. 31))

In Logan, the Plaintiff sued the Defendants after he was shot at a hotel owned by Defendants. Prior to trial, Defendants offered Plaintiff $55,000.00 to settle the case, which the Plaintiff rejected. At trial, the Plaintiff was awarded less than $55,000.00 by the jury. As such, the Defendant was entitled to an award of attorneys’ fees and costs incurred since pursuant to NRS 17.115 and NRCP 68. When the Defendant moved for their attorneys’ fees to be paid, the Plaintiff refused to do so, arguing that the Defendant did not incur any attorneys’ fees since his insurance company paid for the defense. Essentially, the Plaintiffs argued that the insurance company, and not the Defendants, was the rightful party to pursue repayment of attorneys’ fees.


Did the Logan Court say the Plaintiff has to pay the fees?

The Court entertained the Plaintiff’s argument because technically the Defendants had not “incurred” any attorneys’ fees and costs since they were not obligated to pay the attorneys’ fees incurred by their insurance company. However, the Court ultimately rejected Plaintiff’s argument by finding that an expense is still incurred even if someone else is paying for it. The Court cited to other states who have analyzed the issue and found that the arrangement between a party and its defending insurance company is irrelevant to the issue of repayment of attorneys’ fees. The Court noted that it would extend the offer of judgment principles to fees paid by a third party because in actuality the Defendants would have had to pay their attorneys’ fees and costs had the insurance company not paid it. In other words, the Plaintiff cannot avoid payment of fees for failing to improve upon the offer of judgment simply because someone is paying for the Defendants’ defense. Someone has to pay the expenses, so the analysis is the same regardless of who foots the bill.

This finding seems to fit well within the already existing laws of Nevada. Since so many lawsuits are defended by insurance companies, offers of judgment and settlement would be greatly stifled if the rules did not apply to parties defended by insurers. Further, even if someone pays legal fees on your behalf, you are still the one with the attorney-client relationship. The attorney owes you all of the special duties that come with the relationship, such as confidentiality, and this does not change just because someone pays your legal expenses.

If you are involved in a lawsuit and receive an offer of judgment, you should always consider whether rejection is the best thing in light of the potential for paying the other side’s attorneys’ fees and costs down the road if you do not obtain a better settlement at trial.

For advice on offers of judgment and other litigation related matters, schedule a free consultation today.


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