In the United States, the default rule on attorney fees is that each party to a lawsuit pays their own. This is often referred to as the American rule on attorney fees (in many other countries, including England, the losing party pays the winning party’s attorney fees).
There are some exceptions, however. A specific statute which applies to the case may state another rule regarding attorney fees. Or, if the parties to the lawsuit previously entered into a contract which specified another rule for payment of attorney fees, the contract will prevail.
Sometimes, parties sign contracts which allow for the shifting of attorney fees under whatever circumstances the parties agree to. If such a contract is signed, and suit is later filed, the contract will rule as to how attorney fees will be paid.
Both federal and state statutes may override the default American rule. Generally, these statutes are designed to further the interests of justice when it comes to attorney fees. For example, plaintiffs can often recover their attorney fees in malpractice cases.
If the plaintiff is successful in their malpractice claim against, say, their doctor, it may be deemed to be in the interests of justice that they not have to pay for their own attorney, and, essentially, have to pay to get justice for having been the victim of medical malpractice.
As another example, consumers who file suit over products under warranty may get their attorney’s fees paid by the defendant.
In class action suits, there is an understanding that plaintiffs’ attorney fees will come out of any monetary award to the class.
Courts in many states have broad discretion to shift attorney fees, and may do so if one party to a lawsuit acts in bad faith or refuses to comply with court orders.
One of the most common areas of the law in which states have statutes diverging from the American rule is family law. In cases of divorce, custody, alimony, child support and marital property, there may be statutes that apply to shift attorney fees.
The two major factors that apply in such a case are:
- The financial stability of each party to the suit
- The reasonableness of each party throughout the proceedings, including the reasonableness of bringing a lawsuit in the first place
In some cases, there may not be a contractual or statutory exception allowing for fee shifting, but the behavior of the defendant to the lawsuit may be egregious enough to merit their paying for the plaintiff’s attorney’s fees. This generally occurs when the defendant:
- Acted with actual malice
- Acted with gross negligence
- Committed actual fraud
Punitive damages are designed to punish the defendant for this type of behavior. In cases where punitive damages are appropriate, attorney fees may be awarded to the plaintiff.
If you are about to become party to a lawsuit, you should consult with a business attorney near you. They will be familiar with the statutes that apply to your case, and can advise you regarding attorney’s fees.