Two retired state court judges, both members of the Elected Officials Retirement Plan (“EORP”), a defined benefit retirement plan for judges and other elected officials that is funded, in part, by employer and employee contributions, hired a law firm to pursue claims for declaratory and injunctive relief arising out of the legislature’s cap on employer contributions to the EORP. The judges entered a contingent fee agreement that limited attorney recovery to the fees available and awarded under any applicable fee shifting statute.
After Plaintiffs were successful in their suit, they were awarded attorney fees under A.R.S. § 12-341.01, which courts have held allows for fees if the successful party has a “genuine financial obligation” to compensate an attorney. The State appealed, arguing that Plaintiffs did not qualify for an award of attorney fees under A.R.S. § 12-341.01.
The Arizona Court of Appeals affirmed the superior court’s fee award based on the plain language and motivation behind A.R.S. § 12-341.01. The statute allows the court to award reasonable attorney fees to a successful party in a contract when the successful party shows (1) there was an attorney-client relationship and (2) there was an assumed genuine financial obligation to compensate the attorney. The Court held that the conditional nature of the agreement between the plaintiffs and the law firm does not diminish the plaintiffs’ payment obligation, noting that to decide otherwise would go against the motivation of the statute – to mitigate costs of litigation and provide assistance for indigent plaintiffs.