Can I Get My Attorney's Fees?
“Can I get my attorney fees from the other side?” Most clients caught in a legal fight want to know the answer to this question as soon as they meet their lawyer. Everyone would like to recover their attorney fees from the other party. I am asked this question frequently, and in Minnesota and most jurisdictions, the answer is usually, “No.” There are only two exceptions: where there is a statute that provides for the recovery of attorney fees; or, the parties have a written contract that provides that the prevailing party (the winner) is entitled to recover their legal fees from the other side. This is the general rule in most states. Whether it should continue to be the rule is a good public policy question.
Parties to written contracts usually have a choice to make if they want to add a contract provision for legal fees. If the fees are only recoverable by the prevailing party (the prevailing party is usually - but not always - easy to identify) each party must believe that: a) the parties will never have a dispute that requires lawyers to get involved, or b) they will prevail. Attorney fee provisions in contracts are fully enforceable, just like any other provision in a contract. The, “I didn’t read it,” defense is not going to be a winning argument in any action to enforce.
Many form contracts provide that an out-of-state seller is entitled to recover their attorney fees, and by the way, you agree that they can sue you in some distant jurisdiction. People rarely read these form contracts before they sign them, and they are surprised when they get sued in New Jersey or Texas, or anyplace other than their home state, because the contract they signed said any action will be brought in the distant land. These out of state actions usually result in default judgments that include attorney fees.
If the dispute is between parties that have no written contract, or no attorney fee provision, the only way to recover attorney fees is when there is a statute that allows the recovery of the fees. There are very few statutes that provide for shifting the burden of fees. (There are some very rare exceptions to this rule, but the general rule is as I stated it above.)
If you want to have the right to recover attorney fees when the other party breaches your contract, put it in the contract. But the risk is that you might not win the case, if there is one, and you end up paying the other parties fees.
Only a few states have laws that shift attorney fees. (Usually know as the "English Rule.") Around the world the US is one of the hold outs in instituting a fee shifting system. There is an interesting discussion of this topic here.
One advantage to a fee shifting contract clause is that it usually encourages the parties to settle to avoid the risk of losing not only the case, but having to pay the other party’s lawyer fees. But, like many things in life, this is not always the case and some parties will continue a case hoping they will win both the case and also recover their fees.
If you are going to enter into a contractual relationship with another party, and need to write a contract, consult a lawyer. Good examples of contracts where the parties might want to consider an attorney fee provision are home remodeling contracts, construction contracts, contracts for the purchase of a business, or agreements to form a partnership or create a business entity. All of these types of agreements should be in writing, and you might even want to consider a "loser pays" attorney fee provision.
I always check the contracts of client to see if there is any fee shifting language. For both the plaintiff and the defendant, the "loser pays" attorney fees provision adds risk.
