FEHA Attorney Fees Which Exceeds Fees Absent an Agreement

In Flannery v. Prentice (2001) 26 Cal.4th 572, the California Supreme Court held that attorney fees awarded under the Fair Employment and Housing Act (FEHA) (Gov. Code, 12965) "belong to the attorneys who labored to earn them," absent an enforceable agreement between the attorneys and their clients which allocated the fees to the clients. (Flannery, supra, at p. 575.) The court explained that by the time the predecessor to FEHA's attorney fees provision was enacted, "California courts, including this court, had determined that courts awarding attorney fees, including statutory fees, could pay them directly to the prevailing litigant's attorney." The court cited examples of cases involving a private attorney general fee award under Code of Civil Procedure section 1021.5, attorney fees awarded under Welfare and Institutions Code section 10962 for successfully challenging a welfare regulation, and an award of attorney fees in a class action brought to enforce a city ordinance. (Flannery, supra, at p. 582.) The Flannery court explained, "There is no doubt that '"privately initiated lawsuits are often essential to the effectuation of the fundamental public policies embodied in constitutional or statutory provisions"' , and '"without some mechanism authorizing the award of attorney fees, private actions to enforce such important public policies will as a practical matter frequently be infeasible."' " (Id. at p. 583.) The court continued by noting that, in "cases that vindicate fundamental public policies" embodied in statutes, an attorney fees statutory provision serves the purpose of enabling private parties injured by violation of such a statute to engage an attorney to help them seek redress, given that the attorney has some statutory assurance that he or she will be paid a reasonable fee. (Ibid.) The Court held that an award of FEHA attorney fees, which exceeds fees the client has already paid, belongs to the attorneys, unless there is a valid contractual agreement otherwise disposing of them (see also Lindelli v. Town of San Anselmo (2006) 139 Cal.App.4th 1499, 1512, 1516.) The court in Flannery stated that "attorney fees awarded pursuant to section 12965 (exceeding fees already paid) belong, absent an enforceable agreement to the contrary, to the attorneys who labored to earn them." (Flannery, at p. 590.) The fees do not necessarily belong to the attorneys "where the parties have made an enforceable agreement disposing of an award's proceeds." (Ibid.) The court in Flannery noted that "There is no indication and neither party suggests the Legislature intended FEHA's attorney fee provision to displace or diminish FEHA plaintiffs' freedom to contract with their attorneys." (Flannery, at p. 588, fn. 16.) In Flannery, the court remanded the case for a determination as to whether there was a contractual fee agreement and, if there was, what the terms were. (Id. at p. 590.)