When Are Attorney Fees Recoverable?
Are you filing a lawsuit? Defending a lawsuit? If so, you are naturally—and, inevitably—thinking about the excessive expenses. Being involved in litigation is a burden on your pocket—not to mention a burden on your mind. You can minimize your mental burden concerning expenses by learning that there are in fact ways to recover attorney fees.
The “American Rule”
The general “American Rule” places each party responsible for its own legal costs, including attorney fees. In other words, based on this rule even the prevailing party must pay his or her own attorney fees arising out of litigation. Surely, California follows this rule, regardless of what the cause of action may be and regardless of whether you win or lose the case. However, there are exceptions to this rule.
The prevailing party may be awarded attorney fees in two situations:
(1) based on a written contract provision,
(2) based on an applicable statute.
These exceptions may hold the losing party responsible for paying the prevailing party’s attorney fees.
Recovering Attorney Fees Based on Contract
Signing a contract? Look out! There may be a clause in the contract you are about to sign, which provides the prevailing party in litigation to be awarded with most, if not all, of its reasonable attorney fees. Generally, a contract that includes such provision is enforceable.
A contract that entitles recovery of attorney fees addresses the rights of the prevailing party to collect not only attorney fees, but also its reasonable costs incurred before and during litigation. Such costs include, but are not limited to, court filing fees, expert witness fees, preparation for deposition, pre-trial interviews, serving complaints, paying court reporters, photocopying, and travel expenses.
On the other hand, reasonable attorney fees are the compensation for the legal services an attorney performs. While attorney fees and the legal costs are different, contract provisions may entitle the prevailing party to recover for both expenses.
Recovering Attorney Fees Based on a Statute
Additionally, if an applicable statute authorizes, the prevailing party in litigation can seek to recover attorney fees. Some California statutes are discretionary; such that the court “may” award attorney fees to the prevailing party, whereas other statutes provide mandatory language and “shall” award the prevailing party with its attorney fees. Some statues that allow the prevailing party to recover is when the losing party files a lawsuit based on no grounds, such that there was no reason to bring forth the lawsuit; instead, it was a waste of court’s time and resources. Other statues allow recovery of attorney fees from a case that substantially benefits or influences the public.
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