In the United States, each party in a lawsuit generally pays their own lawyer. This is known as the “American Rule,” and it might surprise many Americans to learn that in many other countries the losing party pays. However, there are two main situations in which a court may order the losing party to pay the winner’s legal fees. This is referred to as “fee shifting.”
1) Statute – Congress has passed many laws which allow for fee shifting in certain situations. These usually involve cases concerning issues of public policy, and are designed to help level the playing field between private plaintiffs and corporate or government defendants. As a result, fee shifting is most often found in the following types of legal disputes:
2) Court Order – Courts have the authority to award attorneys’ fees. While they do not do this very often, one situation where this occurs is when the court feels that one party was acting in bad faith. This bad faith behavior can either be actions during the lawsuit, or conduct that gave rise to the suit. In these instances, the court can order that party to pay the other party’s legal fees.
While fee shifting is not common, it does happen from time to time. There have been some efforts to adopt fee shifting more generally in the U.S., but this is unlikely to happen any time soon.
If you have been involved in or are considering filing a lawsuit, you should consider speaking with your attorney about the potential for fee shifting in your case.