Last session WCJC supported 2011 Wisconsin Act 92, which sets forth a number of criteria courts are to consider when awarding attorneys’ fees in fee-shifting cases. The act also sets a rebuttable presumption that attorneys’ fees are no more than three times compensatory damages. Trial attorney Vince Megna, who is running for a seat on the Wisconsin Supreme Court, recently got a false rating from PolitiFact after he alleged Act 92 destroyed 200 Wisconsin consumer laws.

Vince Megna says Gov. Scott Walker destroyed 200 consumer laws with Act 92

Vince Megna, the Milwaukee attorney known as “King of the Lemon Laws,” is mincing no words as he runs a partisan-style race attempting to unseat Wisconsin Supreme Court Justice Patience Roggensack.

In a profanity-laced, theatrical series of YouTube videos and on his campaign website, the man who built a national reputation taking on auto companies and other big corporations goes after Gov. Scott Walker and other Republicans.

Megna is running in the spring 2013 race as a liberal Democrat even though the contest is officially nonpartisan. He considers Roggensack a Republican, a claim we won’t deal with here.

One of Megna’s big talking points is the measure by GOP lawmakers in 2011 — in what became Act 92– that limited attorney fees in the kind of cases that are Megna’s bread and butter.

“Governor Scott Walker signed into law the most destructive anti-consumer protection bill in Wisconsin history,” Megna’s website says. “With one swipe of the pen, 200 consumer laws were destroyed and more than 40 years of case law development was rendered moot.”

We’re not going to compare the measure with every consumer bill since statehood.

But we will test whether “200 consumer laws were destroyed” by it.

A bit of background first.

Rep. Robin Vos, R-Rochester, who is now the Assembly speaker, shepherded through the 2011 bill after a car dealer in his district fought a lawsuit by a man who said the dealership did about $5,000 of unauthorized work on his new truck.

Megna was an attorney for the truck owner. A Racine County judge ruled in the dealer’s favor. But the state Court of Appeals ruled the truck owner didn’t have to pay if he didn’t authorize the work.It sent the case back to the lower court.

Three days before subsequent trial at the lower court, the two sides settled, with the dealer paying $12,500 for damages and interest, $151,250 in legal fees and $5,284 in costs.

The Vos-backed bill said judges should presume that reasonable attorneys fees do not exceed three times the amount of compensatory damages. But judges can lift the cap under certain circumstances.

Over the objections of Democrats and consumer advocates, the law took effect in December 2011, so it’s slightly more than a year old.

When we asked Megna how the measure “destroyed 200 consumer laws,” he backed off a bit, saying he did not mean it in a literal sense.

Indeed, in 2011, he told reporters the effect would be to “virtually repeal” the statutes.

He repeated that to PolitiFact Wisconsin, saying that Walker’s action amounts towiping out the statutes because lawyers will be wary of representing tenants, discrimination victims and buyers of defective cars given the possible fee limits.

“Those are effectively wiped out because you can’t find attorneys who will represent you,” he said.

Let’s take a look under the hood.

The law clearly can affect lawyer’s fees in many matters brought under so-called “fee-shifting” cases — matters in which laws give consumers the right to recover attorney’s fees from the other side if they prevail.

As many as 280 statutory and administrative causes of action could fall under the three-times-damages cap, according to an October 2012 analysis in the Wisconsin Lawyer, a publication of the State Bar of Wisconsin. The Bar opposed the legislation, saying it would also hurt businesses’ legal defense against frivolous claims brought by someone who has actually violated the law.

Many of those 200-plus statutes are related to consumer protection; some are not.

But did the legislation “destroy” them?

We contacted consumer lawyers and those who defend businesses and found general agreement that the law will spawn changes, some potentially significant — and in the eyes of lawyers for consumers, harmful to their cause because they believe getting a lawyer will be more difficult.

But none went so far as to say consumer laws that allow legal action had been destroyed or eliminated.

Attorney David Dudley represented many low-income clients from an office in Madison and relied exclusively on attorney-fee-shift provisions for its operation. He closed the office after the law took effect, blaming the legislation for the move. He now works for the federal government.

DeVonna Joy, a southeast-Wisconsin consumer lawyer, told us she now turns down more potential clients. Proving even small claims cases can cost a lot, the cap is “absurdly low” in many cases, and defense lawyers are dragging out more cases to pressure plaintiffs to settle, she said.

Joy acknowledged that other lawyers might be picking up some of the clients she’s rejected, but she said many already have been turned down multiple times when she hears from them.

Brian Schuk, a Delavan attorney who represents tenants and sometimes landlords, says he now refuses many smaller cases even when there is an obvious violation of the law. So now, more of those people don’t end up suing, or try to take on landlords without representation, he said.

At the University of Wisconsin-Madison, two professors active in public-interest law, Sarah Orr and Mitch, said it was too early to judge the ultimate impact, but both said fewer cases would be brought on behalf of consumers and tenants in matters such as fraud, debt collection and consumer-law violations. Note: Mitch officially has no last name.

But not all lawyers are trimming their caseloads — including Megna himself.

Megna told us that his own practice is mainly intact because he handles some big-ticket cases that allow him to continue to handle smaller cases.

We also spoke with lawyers who often find themselves defending clients against consumer claims.

Tristan Pettit, a Milwaukee lawyer who frequently represents residential landlords and businesses, said he has not seen much effect one way or another.

Lisa Lawless, another Milwaukee lawyer, said the law’s impact is still an open question, but predicted that lawyers representing consumers would be more “reasonable” about settling cases faster. She praised the law, and said the fee cap was fair, but added that it could be an issue for lawyers taking on small damage claims.

Both say they have not noticed a drop-off in cases.

Finally, it’s worth noting again that the new law presumes a cap at three times damages, but a judge can go higher.

Megna acknowledged that it’s too early to say whether judges will allow fees above the suggested cap. Many cases in front of judges now were filed before the law went into effect and thus not covered by the limits.

But many lawyers who handle cases affected by the law predict the cap will become the standard — in part because busy judges can’t take the time to sort out what is reasonable on fees.

Our rating

Megna described the impact of Act 92 in stark and dramatic terms saying that “200 consumer laws were destroyed” when Walker signed it.

It seems clear that the changes tilt the playing field against consumers in some significant ways, but the laws remain on the books and litigation will continue at some level — perhaps reduced, but it’s premature to say.

Megna’s claim misleadingly suggests Walker and Republican legislators wiped hundreds of statutes off the books.

We rate his claim False.