Everyone has heard the horror stories. Small businesses or individuals forced to pay federal taxes or fines they didn't think they owed, giving up without a struggle because it's cheaper to pay the taxes or fine than to hire an attorney to fight them.
For a lot of people who have despaired of ever being able to fight the U.S. government on an equal footing, relief may be here.
Starting yesterday, any federal agency that loses a case, unless the agency can prove it had a good reason to bring its case (so far undefined), is going to have to pick up the legal costs of the winner.
Except for the wealthiest individuals and biggest corporations in America, people could be eligible to collect legal fees when they win a lawsuit against the government.
"For the first time, it will give the average citizen a chance to stand up on a stool eye to eye with Uncle Sam and slug it out," said Sen. Dennis DeConcini (D-Ariz.), one of the major forces behind the new law.
Any citizen whose net worth is $1 million or less and any business with no more than 500 employes and $5 million or less in net worth can take advantage of the law. In addition, non-profit businesses and agricultural cooperatives are eligible, regardless of their net worth, if they have no more than 500 employes.
The government would have to pay up to $75 per hour in attorney fees and the costs for any sort of expert witnesses needed to prove the case.
The intention of the new law, which will be tested for a three-year period, is to discourage the government from bringing frivolous or unwarranted cases.
"It's . . . going to force these agencies to think before they bring some frivolous sort of action. It will also give the appropriations committees a yardstick to measure quality over quantity," DeConcini said.
"What we've had is agencies coming up and saying they need a 15 percent increase in funding because they're bringing 15 percent more cases. What they never tell you is whether they're losing half of them," he said.
"The little guy just can't afford it. They're guilty before they even start," he said. "There are just too many instances of individuals on the government payroll having unrestricted authority to ruin the lives of average citizens. It's just not fair. It should not be the responsibility of a single individual to face down the entire U.S. government."
During congressional hearings on the issue, most complaints centered on the Internal Revenue Service, the Environmental Protection Agency and the Occupational Safety and Health Administration.
While small business groups are understandably delighted with the law, government agencies have opposed it.
Some government officials say they fear that the change will have a chilling effect on agencies' enforcement efforts.
But DeConcini said, "Some people say it's going to have a chilling effect, but I think it's going to force agencies like the IRS to ask, 'Is this really in the best interest of the government? Is it worth what it costs in attorney fees to go after a $75 or $200 tax bill?' I hope that's going to be the chilling effect."
In addition, no one knows what the law will cost or where the money to pay the fees will come from. No funds have been appropriated, and it is unclear whether the money will come from agency budgets or the Treasury.
Steve Babcock of the U.S. Administrative Conference, which is acting as a consultant to the government agencies as they draw up their rules for paying the fees, said some estimates are running as high as $400 million for the first year. But he added that it will probably be considerably less.
"I think the agencies are going to have a lot of incentive to engage in some real quick quality control," he said.
The Congressional Budget Office has estimated that the government will pay $92 million in legal fees in the coming fiscal year, increasing to $109 million in the second year and $129 million in the third.
Associate Deputy Attorney General Bruce E. Fein said it is impossible to know what the law will cost or what its effects will be until the courts begin to interpret it.
The government would have to pay fees in cases it loses unless the agency can prove it was "substantially justified" in bringing the case. Fein pointed out that no one knows how the court will define that.
Fein said some cases against the government apparently were dragged out so that they still would be pending now and eligible for reimbursement. In addition, he expects an increase in the number of cases filed against the government challenging regulations.
Estimates prepared for Congress indicated that the government is losing about one out of every five cases that come before federal district, claims, customs and appeals courts. The estimates assumed that the government would have to pay costs in about 25 percent of the cases it lost.
In hearings before the agencies' administrative law judges the loss rate is much higher, 55 percent, and the estimates assumed that the government would also have to pay fees in about 25 percent of those lost cases.