The term “prevailing party” first appeared in a federal statute in the Bankruptcy Act of 1867, which provided that “[t]he party prevailing in the suit shall be entitled to costs against the adverse party.” Since then, it has become commonplace in fee-shifting provisions of statutes and contracts alike. In an adversarial process, such as litigation or arbitration, application of the term is simple: the party to which the court makes an award is the prevailing party and is entitled to attorney’s fees.
Application of the term is not so straightforward, however, when a lawsuit is resolved via the non-adversarial process of mediation. A mediated settlement often is the product of compromise in which neither side admits liability, but both sides are urged by a neutral to make concessions to resolve the dispute. The result, while avoiding further litigation, does not produce a clear “winner” or “loser” as does a court order.
Courts have generally employed one of three approaches in deciding whether a party prevailed: (1) the “no prevailing parties in mediation” approach, (2) the Buckhannon test, and (3) the catalyst theory. Of the three approaches, the Buckhannon test is by far the most common; however, few courts or scholars have paused to consider whether its application, rather than one of the other two approaches, is most appropriate in the context of mediation. The objective of this note is to survey how courts have applied the three tests in meditation and evaluate the effectiveness of each approach in the narrow context of mediation.
Two aspects of prevailing party status in mediation fall outside the scope of this note. First, courts often award mediation expenses to the party that prevails in a trial following an unsuccessful mediation. Second, after attorney’s fees are awarded to a party that prevailed, parties frequently litigate whether the fees awarded are reasonable. Neither of these topics are discussed in this note.
Rather, this note focuses on why and how prevailing party status is awarded following a mediated resolution of a case. Part II discusses why prevailing party status matters in mediation, focusing on increased use of both fee-shifting provisions and mediation. Part III explores in depth the three most common approaches to deciding when a party prevailed in mediation. Finally, this note will conclude by considering the merits of these approaches in the narrow context of mediation.