Appellate Adventures, Chapter Two: “What’s the Payout?”

MOSKOVITZ ON APPEALS

Rising star trial lawyer Flash Feinberg had just lost a case. Judge Buller (aka the "Mad Bull") had just granted summary judgment against Flash, rejecting Flash's claim that Topspin Tennis Club had breached its contract with Flash's client (tennis pro Debbie Dropshot) by firing her for flunking a drug test.

Flash was now considering whether to appeal. He was guided by his former law Professor Patty Plato, who had suggested that Flash approach the problem the way he might bet on a horse.

Flash had explained his methodology: "I estimate the odds of the horse winning and compare that to the payout. So if I think the odds are only 2-1 against the horse winning, but the payoff is better than 2-1, it's a good bet."

He had performed a careful analysis of his chance of getting a reversal, roughly estimating it at 50 percent, i.e., he had a one in two chance of his horse coming in. Now he turned to the possible payout.

Plato said, "The 'payout' analysis for appeals is pretty complex. You need to consider the expenses, the risks, and the possible recovery at the end."

Flash did some research on expenses before he reported back to the professor. "There's the cost of preparing the record on appeal. The appellate court can't reverse unless they see what the trial court did, and it's the appellant's responsibility to provide them with that record. The record breaks down into two parts. First is the collection of documents -- complaint, motions, rulings, and the like. I can have the superior court clerk put those in a 'clerk's transcript,' but it's cheaper and faster for me to do in an 'appellant's appendix' that I'll prepare myself, and file it with my opening brief. Shouldn't cost more than a hundred bucks for copying. Second is the 'reporter's transcript' of the court proceedings. That's more expensive, as I need to pay the court reporter to type up the transcripts. Our trial lasted four days, so the reporter's transcript will probably cost a couple thousand. Does that sound about right?"

Like most law professors, Plato was infected with the Socratic Syndrome: She found it hard to answer a simple question without asking one in return. "OK, but what about the big ticket items?"

"Right. Like my attorneys fees. Since I've never handled an appeal, how do I estimate how many hours it will take me?"

"A lot depends on the size of the trial court record," Plato said. "It takes an appellate attorney longer to review the reporter's transcript of a month-long trial than some summary judgment papers. And complex legal issues will take more time to research than simple ones -- though you might have already done most of that research at the trial court level. After doing all this and writing your appellant's opening brief, you'll need to review your opponent's respondent's brief, then write a reply brief, and then orally argue the appeal."

Flash estimated the time it would take him to perform each task, then multiplied this by his hourly rate. The resulting number surprised him. "Wow, appeals are expensive. So, any other expenses?"

"Well," Plato responded, "if there's any money judgment against your client, the opposing party can execute on it during the appeal -- unless you get a stay by posting an appeal bond for one and a half times the judgment. Insurance companies usually charge about 10 percent of the amount of the bond per year, and the appeal might take a year or two."

Flash said, "my client is a plaintiff who lost, so there's no money judgment against her. But her contract with Topspin provides for an attorneys fee award for the prevailing party, and Topspin has filed a motion for their attorney fees. Will we need to post a bond to stop execution on that award during the appeal?"

"Maybe," said Plato. "The law requires a bond to stop execution on a money judgment, but gives the trial court discretion to order a bond to stop execution on an attorney fee award."

"What if we win the appeal?"

"If the appellate court reverses the summary judgment, you will go to trial. If you win the trial, you will recover damages. Is the potential damage award large enough to make this worthwhile? And is it collectible?"

"And if we win the trial, what about the expenses?"

Plato replied, "If you win the trial, Debbie will be the winner of the case and the 'prevailing party.' That will mean that she pays none of Topspin's attorney fees, and Topspin pays hers, because her employment agreement provides for attorney fees. She will also be able to recover the cost of her appeal bond."

"That's great! And we'll be done!"

"Done? You never know, Flash. If you win the trial, Topspin might find some ground for appeal. So it could take quite a while to actually get some money out of this. And there's more risk. If you lose the trial -- or a subsequent appeal -- that could run up Topspin's attorney fees that Debbie would have to pay -- as well as your own fees." "I think that completes the picture. You've estimated your chance of winning the appeal, the costs of appeal, the chance of those costs increasing, the chance of recovering some of those costs, and the possible size and collectability of the jackpot at the end -- the damage award. Now it's time to put this all together, explain it to your client, and advise her whether it's worthwhile to appeal. Seems kind of overwhelming and very speculative, but that's what you need to do when deciding whether to appeal."

Flash said, "This turned out to be much more complex than I'd expected. I thought all you had to think about was whether you'd win the appeal." He spent a couple of days working on this before returning to Plato. "All in all, I think it's worth going ahead. That's what I advised Debbie, and she agreed we should appeal. Now what? How do I get the appeal going?"

That's for our next column.