Attorney Fees and Litigation Costs in a California FEHA Case: What Fee Shifting Does—and Does Not—Mean

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Who Actually Pays Your Attorney During a FEHA Case

One of the first questions people ask when considering a discrimination or harassment claim under California’s Fair Employment and Housing Act is deceptively simple: Who pays the lawyer? The answer has several layers, and confusing them can lead to unexpected financial surprises.

A lawyer’s payment terms begin with the representation agreement. That may be a contingency arrangement, hourly billing, or another lawful agreement; a possible court award does not replace those terms. Under a contingency arrangement, the attorney receives an agreed-upon percentage of any recovery obtained by settlement or judgment. Read the contract to determine the agreed percentage and treatment of expenses, subject to applicable law. Do not infer either from FEHA’s separate fee-shifting provision.

Separately, litigation expenses—such as filing fees, deposition transcripts, expert witness fees, and document copying—are often advanced by the law firm during the case. Whether those advances are repaid from a monetary recovery or handled differently depends on your specific fee agreement. Private retainer arrangements are distinct from court-awarded fees.

Understanding fee arrangements upfront helps clients make informed decisions about pursuing legal claims without unexpected financial friction. Before filing a lawsuit, review our overview of employment litigation in California to understand the procedural context of a civil claim.

What Fee Shifting Under Government Code Section 12965 Really Means

California Government Code section 12965 permits a court, in its discretion, to award reasonable attorney fees and costs to a prevailing party in a FEHA civil action. Statutory fee shifting moves the legal fee obligation from one side to the other by court order rather than leaving each party to bear its own legal representation costs.

Courts evaluate whether requested attorney fees and costs are reasonable based on the specific circumstances of the case. Statutory fee shifting is designed to ensure access to justice for employees enforcing civil rights protections, but the court retains discretion over whether an award is issued and in what amount.

Key limits shape how statutory fee shifting operates in practice:

• Discretionary award: The court has discretion to determine whether to grant fees and what amount is reasonable under the circumstances.
• Separate from private retainer: A statutory fee award is distinct from the contingency percentage or retainer terms established in a private representation agreement.
• Not all expenses are recoverable: Fee shifting does not automatically cover every out-of-pocket litigation cost incurred during the suit.
• Settlement terms control: When a case resolves through settlement before judgment, fee and cost allocations are negotiated as part of the settlement agreement.
• Formal settlement offers: Section 12965(c)(6) expressly preserves the limit on a prevailing defendant’s FEHA fees and costs notwithstanding Code of Civil Procedure section 998. Rejecting a formal settlement offer does not by itself erase that protection. Other claims and consequences require separate review; do not apply a generic settlement-cost warning without checking FEHA’s rule.

The Asymmetric Standard: Why Defendants Face a Higher Bar for Fee Awards

Section 12965 does not apply identical standards to prevailing plaintiffs and prevailing defendants. A prevailing plaintiff may seek an award of reasonable attorney fees and costs, but a prevailing defendant faces a significantly higher standard.

Under Government Code section 12965, a prevailing defendant may not receive attorney fees and costs unless the court finds that the plaintiff’s action was frivolous, unreasonable, or groundless when brought—or that the plaintiff continued to litigate after it clearly became so.

This asymmetric standard protects workers from paying the defense’s FEHA fees and costs merely because the worker lost. The Senate Judiciary Committee’s explanation of existing law, at pages 3–4, identifies both the defendant’s heightened threshold and the express section 998 limitation. Simply losing a FEHA claim does not expose a plaintiff to an adverse fee award. The defendant must meet the high legal bar of demonstrating that the action lacked any reasonable foundation.

Because of this protective policy, courts apply the frivolous, unreasonable, or groundless standard strictly against prevailing employers. A case is not groundless simply because evidence was disputed, witness testimony was contradicted, or legal arguments were ultimately rejected by the court.

Practical Steps Before You Sign a Fee Agreement

Understanding the distinction between statutory fee shifting and private contractual obligations helps you evaluate representation agreements effectively. Before signing a written fee agreement, review this practical checklist with prospective counsel:

• Confirm the contingency percentage: Ask if the percentage remains fixed or changes if trial or appeal becomes necessary.
• Clarify expense advancement: Determine whether the firm advances litigation costs and whether you must reimburse those expenses if there is no monetary recovery.
• Identify recoverable costs: Ask how expenses such as expert fees, deposition costs, and document reproduction are defined and tracked.
• Ask about a separate fee award: If the court awards fees or the settlement allocates them, how does that affect the attorney’s percentage and the amount you receive?
• Ask about the defense-cost risk: Which facts support the claim, what evidence cuts against it, and could continuing after new evidence create a different fee risk?
• Review the written contract: Read the entire fee agreement carefully to ensure all verbal representations match the written terms.

Our guide on how to choose a California employment attorney outlines additional factors to consider when evaluating legal counsel.

Taking time to organize relevant documents, record key timelines, and clarify financial terms in writing ensures a clear understanding of rights and obligations before entering litigation.

This content provides general legal education and does not constitute legal advice. Fee awards and litigation outcomes depend on specific case facts and court determinations.