Consumer Protection Laws

It is quite possible for a matter to be too complex for a plaintiff to pursue it without an attorney, too small (in terms of the possible recovery) to justify an attorney taking the case on a contingent fee basis, and too large for the plaintiff to not be seriously affected by the loss.

To help alleviate this situation, at least with respect to disputes arising from consumer transactions, many states have enacted general consumer protection laws. The law serving this purpose in Pennsylvania is the Unfair Trade Practices and Consumer Protection Law, (the “CPL”). Among other things, the CPL provides that, when a person “purchases or leases goods or services primarily for personal, family or household purposes” and suffers a loss for one of 21 specific reasons listed in the statute, that person will receive an award of damages of at least $100 (even if actual damages are less, and without an upper limit if damages are more) and may receive an adjustment to the award of up to 3 times damages and “costs and reasonable attorney’s fees.”

In determining how much attorney’s fees are reasonable, the court considers: (1) the magnitude of the effort and skill required to properly conduct the case; (2) the customary charges for similar services by other attorneys it the area; (3) the amount at stake and the benefit resulting to client; and (4) the risk taken in pursuit of the case. In balancing these factors, it has been found by Pennsylvania courts that attorney’s fees of between 11 and 12 times actual damages can be reasonable. However, Pennsylvania courts have also found attorney’s fees of between 3 and 4 times damages to be unreasonable. It all depends on the facts and circumstances of the case and on how the court works through the above factors

When balancing the four factors, courts will look more kindly on a large fee request where plaintiff has actually paid the fees and seeks reimbursement. Courts will typically be less generous where the fee was contingent, with the fees only being paid to the extent they could be recovered under the CPL. Though the contingent nature of an attorney’s fee does not make it unrecoverable, it will draw closer scrutiny from the court. It should also be noted that the court will reduce an award of attorney fees proportionately by the amount of effort the attorney spent pursuing legal theories outside of the CPL.

Finally, as you might have noticed, attorney fees under the CPL go to the prevailing plaintiff, not the prevailing defendant. If a prevailing defendant wants to pursue the costs of defense, it will have to look elsewhere for the authority to do so. Possibilities include: statutes, common law and rules governing claims made in bad faith, abuse of civil process and, if applicable, the express terms of an underlying contract.

The information contained in this blog is not legal advice and should not be relied on as such. For legal advice or for answers to specific questions, please contact the blog's author.