Attorney’s Fee Provisions a Danger Sign in Breach of Contract Cases
When a contract contains an attorney’s fee provision, this can be a danger sign in a breach of contract dispute involving that contract. Buffington Law Firm’s breach of contract trial attorneys often must deal with breach of contract lawsuits in which the contract provides that the winner, i.e. the “prevailing party” can recovery attorney’s fees from the loser. One of the most frequently asked questions that breach of contract attorneys encounter is: “Can I recover my attorney’s fees and court costs?” Under California law and the law of most states, for a breach of contract lawsuit the winner can force the loser to pay his or her attorney’s fees only if the contract explicitly provides for that.
This can be a danger sign. Unfortunately, many times parties enter into a contract with an attorney’s fee provision and pay little attention to that provision, often dismissing it as “boilerplate.” In fact, an attorney’s fee provision in a contract represents a situation where the contract drafter is “opting out” of the general rule concerning attorney’s fee recovery. And most times the parties to the contract are not aware that the attorney’s fee provision may change the entire dynamic of litigation if one side decides to sue on the contract.
The reason for this is straightforward. Not infrequently, business litigation and commercial lawsuits can become expensive. Especially when one side of the lawsuit is less cost-averse than the other, it is not uncommon for the attorney’s fees in the case to approach a significant percentage of the amount in the dispute. Often one side would find it ruinous to have to pay the winner’s attorney’s fees and this danger would not be present but for the attorney’s fee provision in the contract. Even if that party believes that he or she is likely to win, all lawsuits entail risk of an adverse outcome. In some breach of contract lawsuit situations the attorney’s fee provision in the disputed contract becomes a huge consideration in weighing the risks of going to trial. Unfortunately, many or most times the parties accepted the attorney’s fee provision without much thought when they entered into the contract. In reality such provisions are worthy of careful thought and often times are a bad idea or disadvantageous to one side.
There are several points on this topic worthy of discussion. Firstly, when entering into a contract do not accept an attorney’s fee provision as boilerplate. It is a material condition of the contract that should be negotiable. Many breach of contract litigation attorneys advise against attorney’s fee provisions in most situations because such provisions can greatly increase the risks of potential litigation. At a minimum such provisions require careful thought before a party agrees to such. While an attorney’s fee provision can sweeten the “thrill of victory,” it also exacerbates the “agony of defeat.” And defeat is always possible in any lawsuit; there are few sure things in a courtroom, however meritorious one side’s case may seem.
If you are involved in a breach of contract dispute, Buffington Law Firm’s breach of contract attorneys have decades of experience in dealing with such matters. We invite you to call us for a free legal consultation. In all consultations you will speak directly with an experienced breach of contract trial attorney. All calls are completely confidential, are protected by attorney-client privilege, and there is never any obligation.