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“In business litigation does the other side pay my attorney’s fees?”

| Feb 9, 2014 | Business Litigation

One of the most common questions that clients ask Buffington Law Firm’s business trial lawyers is whether the losing side (i.e. the other side) will have to pay the winner’s attorney’s fees.  In a large lawsuit this obviously can be a significant amount of money and even in a small suit it is natural for clients to want the court to require the other side to pay their attorney’s fees as part of the judgment.

The general rule in California is that the loser does not pay the winner’s attorney’s fees.  This is the general rule in the United States and differs from the British legal system in which the loser does usually pay the winner’s attorney’s fees.  The system here in America is often referred to as the “American Rule” — where each side, regardless of outcome, pays their own attorney’s fees.  The American Rule has the advantage of lowering the risks of litigation — if one side sues and loses that side at least will not be liable for the other side’s attorney’s fees.  Under the British system of “loser pays,” litigation is much more risky for everyone since each side is risking having to pay the other side’s fees.  The “American Rule” is both praised and criticized — on the one hand it makes litigation less risky for everyone.  On the other hand, since usually the winner does not receive fees, a favorable judgment in the lawsuit may not make the winner completely whole since he or she has had to pay attorney’s fees in order to win the judgment.

There are exceptions to this “American Rule.”  In California, the winner can get a judgment that includes attorney’s fees in a breach of contract lawsuit if the contract itself provides for this.  It is not at all uncommon for lawyers who draft contracts to include a provision that in the event of litigation the prevailing party shall be entitled to attorney’s fees.  When a contract includes an attorney’s fee provision like this, it is generally enforceable in California.

It should be obvious that whether or not to include an attorney’s fee provision in a contract is a hugely important decision.  This can greatly change the risk dynamics of a lawsuit, which can be a good or bad thing. 

Certain types of lawsuits in California provide for attorney’s fees by statute, as an exception to the general “American Rule.”  Certain types of employment and civil rights litigation falls into this category.

Incidentally, do not confuse “attorney’s fees” with “court costs” or “costs of suit.”  The latter basically means certain limited types of expenses incurred in litigation other than attorney’s fees, such as fees paid directly to the court, or other incidental costs of litigation.  In California the winner usually does receive costs of suit in most (but not all) types of litigation.  While this can be a significant amount of money, it is rarely comparable to the dollar cost represented by attorney’s fees, and is not to be confused with the latter.

If you have a lawsuit or are considering one, we invite you to speak with us about these questions as they specifically apply to your case.  You may call us to arrange for a free legal consultation in which you can discuss your case directly with one of Buffington Law Firm’s experienced business and trust trial attorneys.

Questions? Contact Us.

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