The sexual harassment case against Madison Square Garden and New York Knicks General Manager Isaiah Thomas has been settled on the eve of the compensatory damages phase of the trial. The terms of the settlement were not disclosed in this report from the AP. For background, here and here are our previous posts on the case.
The settlement avoids the assessment of compensatory damages, and also the potential for a court-ordered award of attorney's fees that alone could have run into millions of dollars.
Employment discrimination cases are a species of what lawyers call "fee-shifting" cases. That is, the loser can be ordered to pay the winner's attorney's fees. Usually that means that losing defendants pay winning plaintiffs, and seldom the other way around. In smaller discrimination cases, where less money may be in play in terms of compensatory and punitive damages, attorney's fees can become the "gorilla in the room." Defendants must always be aware of the potential for an award of fees to a successful plaintiff. It is quite possible that, depending on the cases, the fees could be greater than the damages awarded to the plaintiff. Thus, a realistic evaluation of the likelihood of complete success should always be a part of the defense strategy and should be evaluated on a continuing basis.
This is particularly important for small and mid-sized companies, which may not have the financial resources to absorb an attorney's fees judgment.