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Historically, the law in this country has always required the parties to a lawsuit to pay for their own legal expenses. Over the years, state and federal legislators have modifies the so-called American Rule by allowing counsel fees where the wrongdoer has violated certain protected rights. Generally, these fee-shifting opportunities relate to claims involving civil rights, consumer fraud, anti-trust violation and debtor/creditor transactions, to mention a few. The purpose of a fee shifting statutes is to make sure that people with these types of claims, especially those who have little or no financial resources, can engage an efficient and effective advocate.

New Jersey’s Rules of Professional Conduct prohibit a lawyer from representing a client if the client’s position can be compromised by the lawyer’s interest in the case. In cases where there is an opportunity to recover attorney fee’s because of a special provisions in a statute, etc. a rule of court, or some other principle of law (i.e. legal malpractice claims), the attorney’s ethical responsibility can create some troublesome problems because sometimes, a wrongdoer will make a generous offer to pay the attorney fees and a small offer to the claimant in order to entice the lawyer to convince the client/claimant to settle. At other times, the adverse party will reverse the tact and offer a hefty figure to the claimant and little of no money for attorney fees. Indeed, the adverse party may even demand a waiver of attorney fees as a condition of the settlement. In both situations, the conflict between the interests of the client and the attorney is palpable.


In the context of class action litigation, the federal courts have ruled that because of the innate conflict in fee shifting cases, negotiations relating to attorney fees cannot begin until after the court approves the settlement of the underlying claim. Indeed, the United States Supreme Court has specifically ruled that a lawyer could be held to a waiver of counsel fees despite the extraordinary influence that an exceptionally generous settlement offer to the client can have on the attorney waiver.

In New Jersey, however, the courts have taken a dim view of efforts to dilute the fee shifting capabilities provided under the state’s CFA. Specifically, it has been concluded that in all non-class action CFA cases, negotiations relating to attorney fees and the underlying claim can be conducted simultaneously. In creating this rule, the court looked to the language of the CFA and concluded that the policy considerations in the statute that seek to entice competent attorneys to energetically prosecute CFA claims could require no other result.

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