How the Song-Beverly Act's Fee-Shifting Provision Affects Settlement Strategy

Attorney's fees are a factor in most civil litigation. In Song-Beverly cases, they are a structural feature of the dispute that shapes every significant decision both sides make, from the initial demand letter through the final resolution. Understanding how the fee-shifting provision actually operates in practice, not just in theory, is one of the more useful things a practitioner can bring to a lemon law file.

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The Basics

Song-Beverly's fee-shifting provision is found at Cal. Civ. Code § 1794(d). It provides that a buyer who prevails in an action under the statute shall be awarded costs and expenses, including attorney's fees based on actual time expended, determined by the court to have been reasonably incurred. Two words in that sentence do significant work: "shall" and "reasonably."

"Shall" means the award is mandatory, not discretionary. A prevailing buyer does not need to make a separate showing of bad faith or litigation misconduct to recover fees. Winning the case is sufficient. That distinguishes Song-Beverly from many other fee-shifting statutes where courts retain more discretion over whether to award fees at all.

"Reasonably" means the award is not automatic at whatever number plaintiffs' counsel submits. Courts apply the lodestar method, multiplying reasonable hours by a reasonable hourly rate, and have discretion to adjust the award based on the results obtained and the reasonableness of the time spent. See Serrano v. Priest, 20 Cal. 3d 25, 48-49 (1977). Fee disputes in Song-Beverly cases can be substantial, and the gap between what plaintiffs' counsel requests and what courts award is sometimes significant.

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How Fees Shape the Defense Settlement Calculus

For manufacturers and defense counsel, the fee-shifting provision changes the fundamental economics of the litigation decision. In a standard breach of contract case, the defendant's exposure is roughly bounded by the damages at issue. In a Song-Beverly case, the defendant's exposure includes the vehicle restitution, any civil penalty, and an attorney's fee award that grows with every day the case remains unresolved.

The practical consequence is that delay is expensive for defendants in a way that it is not in most civil litigation. A manufacturer that declines a reasonable early demand and litigates the case through trial does not simply risk paying the same damages it could have paid earlier. It risks paying those damages plus a fee award that may be two or three times the vehicle value, plus its own defense costs on top of that. Total cost of resolution is the right framework for evaluating any settlement decision in this context, and it rarely favors extended litigation when the underlying claim is reasonably strong.

That said, not every Song-Beverly claim is reasonably strong. Manufacturers facing cases with thin repair histories, disputed nonconformities, or consumers who declined repair opportunities have legitimate reasons to defend aggressively, and the fee-shifting provision does not change that calculus in weak cases. The statute rewards prevailing buyers, not merely buyers who filed suit.

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How Fees Shape the Plaintiff's Settlement Calculus

The fee-shifting provision is often described as a tool that allows consumers to find competent counsel despite the relatively modest damages involved in individual vehicle disputes. That is accurate as far as it goes, but it also creates pressures on plaintiffs' counsel that are worth understanding clearly.

The fee award requires prevailing. A defense verdict, or a finding that the vehicle did not substantially impair the consumer's use under the statutory standard, eliminates the fee award entirely and leaves contingency counsel with unrecovered time. That risk is real, particularly in cases where the nonconformity is intermittent, difficult to reproduce, or involves a subjective assessment of impairment.

Under the AB 1755 framework, the pre-mediation procedural structure adds another layer to this analysis. Because the statute limits pre-mediation work to initial disclosures and one two-hour deposition per side, Cal. Code Civ. Proc. § 871.26(b)-(c), the fee record at the time of early mediation is structurally smaller than it was under prior practice. Manufacturers that have opted into the framework are using this to push for lower fee components in global settlements, and some are insisting on bifurcating fees to be resolved by noticed motion after vehicle restitution is agreed upon. Plaintiffs' counsel need to think through both options before the mediation session starts, since the right answer depends on the specific fee record and the strength of the underlying claim.

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The Offer to Compromise Intersection

California's offer to compromise statute, Cal. Code Civ. Proc. § 998, intersects with Song-Beverly fee-shifting in ways that practitioners sometimes overlook. If a defendant makes a § 998 offer that the plaintiff rejects and then fails to obtain a more favorable judgment at trial, the plaintiff may be denied post-offer costs and, in some circumstances, required to pay the defendant's post-offer costs.

The interaction between § 998 and Song-Beverly's mandatory fee provision is not entirely settled, and courts have reached different conclusions about the extent to which a § 998 offer can limit a plaintiff's fee recovery. See Scott Co. v. Blount, Inc., 20 Cal. 4th 1103, 1114-15 (1999). What is clear is that both sides should be thinking about § 998 strategy early. A well-timed and properly structured § 998 offer can significantly affect the fee dynamics of a case, and ignoring that tool in Song-Beverly litigation is leaving something on the table.

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Fee Disputes Do Not Always Resolve Quietly

In cases that go to judgment, fee disputes can generate satellite litigation that is nearly as contentious as the underlying case. Defendants routinely challenge the reasonableness of hourly rates, the number of hours expended, and the degree of success obtained relative to the original demand. Plaintiffs' counsel who maintained detailed contemporaneous records are in a substantially better position in those disputes than those who reconstructed time entries after the fact.

For practitioners on both sides, this means that fee documentation is not a post-verdict concern. It is a litigation management issue that starts from the day the file is opened. Defense counsel who track plaintiffs' fee accrual throughout the case are better positioned to evaluate settlement authority at each stage. Plaintiffs' counsel who maintain clean billing records from the outset are better positioned to defend their fee demand whether the case resolves at mediation or proceeds to a fee motion.

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The Strategic Summary

The fee-shifting provision is not a guarantee of any particular outcome for either side. It is a structural feature of Song-Beverly litigation that raises the stakes of every decision and compresses the window in which settlement is economically rational. Cases that could resolve efficiently at mediation become progressively more expensive to conclude as they age, and that dynamic affects both sides of the table, not just one.

Practitioners who understand the fee mechanics going in, who model total cost of resolution rather than just vehicle value, and who treat the fee question as a live strategic variable rather than a number to argue about at the end, consistently navigate these cases more effectively than those who address it as an afterthought.

If you have questions about how fee considerations typically affect Song-Beverly mediations or want to discuss a specific case, we are happy to help.