One of the most common questions that clients ask Buffington Law Firm's business litigation attorneys is whether they can recover their attorney fees if they prevail in their litigation. This is understandably an important issue in business litigation disputes.
California, like most states, generally follows what has sometimes been called the "American Rule" where both winner and loser bear their own attorney's fees, i.e. the loser is not liable to pay the winner's fees. (In many other countries, they follow what is often called the "British Rule" where the winner can recover his or her attorney fees from the loser.) California Code of Civil Procedure Section 1021 provides that except as provided by statute, the payment of attorney's fees is left to the agreement by the parties. California Civil Code Section 1717 clarifies this by providing that in an action on a contract, if the contract provides that the prevailing party can recover his or her attorney fees from the loser, that such clause is enforceable. Put simply, if a contract does not provide that the winner can recover attorney's fees from the loser, then the "American Rule" applies and each side bears its own attorney's fees. However, if there is an attorney's fee provision that does provide that the prevailing party in a dispute deriving from the contract can recover from the loser, then this clause is enforceable.
What this all means is that for breach of contract actions normally each side, regardless of which side wins, will bear its own attorney's fees unless the contract specifically provides otherwise. Certain types of non-contract disputes may be governed by a specific statute that provides that the winner can recover attorney's fees against the loser. For example, certain types of employment claims and civil rights claims are specifically governed by statutes that provide for a winner recovering attorney's fees. But this is not the general rule and for most types of non-contract claims in California each side will bear its own attorney's fees.
Court costs are another matter. In most types of litigation in California the winner can recover court costs against the loser. Normally court costs involve far less expense than attorney's fees, although in a large case this can still be a considerable amount. Court costs include such things as party appearance fees, filing fees, and certain other costs. Incidentally, in most forms of Trust litigation the winner cannot usually recover court costs.
This brief Blog article is not intended to address all of the intricacies as to whether or not attorney's fees or court costs can be recovered in a given case. If you seek legal representation in a lawsuit for which this is an issue, we invite you to call our office for a free legal consultation directly with one of Buffington Law Firm's experienced business litigation attorneys.