Fee Shifting Bill Introduced in Maine

Democrats in the Maine House of Representatives have introduced House Bill number 1259 (Bill) to shift attorneys' fees to the prevailing party in litigation. If passed into law, the Bill will impact those who file lawsuits to recover debts. A hearing about the bill will be held in Maine on April 6, 2023, at 1 pm. 

The Bill addresses litigation between "Institutional Entities" and "Covered Individuals" and states that if a Covered Individual is a "Prevailing Party" in litigation, the Covered Individual will be awarded costs and reasonable attorney fees. 

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• "Covered Individuals" are defined as people whose gross household income does not exceed 400% of the federal poverty level; OR individuals who are eligible for certain assistance programs for low-income households. According to recent data, this would cover the vast majority of Maine residents.
  
  
• "Institutional Entities" are defined as any type of business recognized under Maine Law.
  
  
• "Prevailing Party" includes any defendant in which "no relief is recovered by the plaintiff" and also includes a party that obtains a monetary recovery or nonmonetary relief via judgment or settlement.

Covered Individuals will be required to produce records to show they meet this definition. There is a rebuttable presumption that a party other than a Covered Individual is an Institutional Entity.  The presumption can be rebutted if a court finds that the entity's tax records for the prior three years show that the entity and its owners have an average annual net income below $100,000.00.

insideARM Perspective

This Bill is comparable to Florida's fee-shifting statute 57.105, which increases litigation costs and causes all kinds of absurd outcomes. As a result of Florida's fee-shifting statute, voluntary dismissals are often met with demands for fees, and attorneys have sought fees in separate actions after reaching settlements to pay debts.  Some Florida consumer attorneys have even refused to sign settlement agreements that do not include fee payments.  

Those with legal interests in Maine should pay attention to this Bill and consider attending the hearing if feasible. 

**Update May 1, 2023: This bill did not pass committee; it is no longer on the table.