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Attorney Fees: Does the Losing Side Have to Pay?

The winning side usually has to pay its own attorney's fees.

The losing side does not ordinarily have to pay the winning side's attorney's fees, contrary to popularly held belief. In the United States, the general rule (called the “American Rule”) is that each party pays only their own attorney's fees, regardless of whether they win or lose. This allows people to bring cases and lawsuits without the fear of incurring excessive costs if they lose the case. In contrast, in England and other countries, the losing side is often required to pay the other side's attorney's fees after losing a trial.

Exceptions to the American Rule

There are several exceptions to the "American Rule," however, which depend on the type of case you are involved with and the state you live in. The most common exception to the rule occurs when a contract or statute (law) specifically allows for the payment of attorneys' fees by the other side. In addition, a court can sometimes act in the interest of justice and fairness to require one side to pay the attorneys' fees. U.S. courts do have significant discretion when it comes to the awarding of attorneys' fees, and while judges do not generally like departing from the American Rule, they may require a losing side to pay the other's attorneys' fees in certain limited situations.

If you're concerned or hopeful that the losing side would have to pay attorneys' fees in your case, it's generally a good idea to check (or ask your lawyer to check) if any exceptions apply to your particular case. Here are the most common exceptions to the American rule.

Contractual Provisions

One of the more common situations where a losing side is required to pay the other side's attorneys' fees occurs when the two sides signed a contract that requires the losing side in a legal dispute to pay the winning side's attorneys' fees. This usually occurs in a business context where the parties have specifically included an attorney fee requirement in a contract. However, a requirement like this is not always enforced even when parties have signed a contract including it. Courts are allowed to judge contracts for fairness and to change their terms if they decide that doing so is the more fair solution. If a judge decides that it would be unfair to enforce a requirement that one side pay the other's attorneys' fees or that one of the parties was forced into signing the agreement, the judge could cancel the requirement or change the amount of fees to be paid. But if a judge decides that a requirement to pay attorneys' fees is reasonable and that it was negotiated by two parties with equal bargaining power, then the judge will likely allow the fee provision to remain.

Statutory Provisions

Many states have specific laws that require the losing side to pay the winning side's legal fees in certain situations. For instance, some states have laws requiring the losing side to pay attorneys' fees in lawsuits involving government entities or antidiscrimination laws. In addition, some federal laws call for the losing side to pay attorneys' fees when the federal law is violated.

One type of attorney fee statute that's common in many states allows a judge to require attorneys' fees to be paid to the winning party in a lawsuit that benefited the public or was brought to enforce a right that significantly affected the public interest. In other words, if the public received a significant benefit from a case brought and won by a private party, the private party could be awarded attorneys' fees. For example, when a private citizen in Moreno Valley, California went to court and proved that the city's plans to develop land near his property would have the harmful impact of causing flooding and environmental damage to the surrounding area, the court found the prevention of this damage to be in the public interest and granted the citizen $100,000 in attorney's fees (Monaco v. City of Moreno Valley).

Another common state law allows for attorneys' fees to be paid by the losing side if an attorney for the losing side filed a lawsuit knowing there was no reason, or "grounds," for the lawsuit. For example, California has statutes providing the loser should pay the winner's attorneys' fees in cases that proved to be a waste of court resources (such as bringing an unwarranted appeals or filing a case in the wrong venue). And a Wisconsin law calls for the losing side to pay attorneys' fees if their attorney files an appeal only to delay court proceedings. Other state statutes allow for a judge to require the loser to pay attorneys' fees if the loser's attorney made a procedural error during the case. For example, Illinois has a statute that allows for attorneys' fees to be granted to the winning side where discovery was not conducted properly.

Equitable Remedies

Judges can use an “equitable remedy” to require the losing side to pay attorneys' fees if they believe it would be unfair not to do so. (In law, equity generally means "fairness," and an equitable remedy is a fair solution that a judge develops because doing otherwise would lead to unfairness.) This type of equitable remedy granting attorneys' fees to the winning side is often used when the losing side brought a lawsuit that was frivolous, in bad faith, or to oppress the defendant, and the defendant wins.

In addition, once in a while a judge will grant attorneys' fees in cases of extreme attorney misconduct, to warn the offending attorney.

For More Information

To look up current attorney fee statutes in your state, go to Nolo's Legal Research Center, And for more information on attorney fees in general, see Nolo's article Attorneys' Fees: The Basics.To learn more about working with a lawyer, see Nolo's The Lawsuit Survival Guide: A Client's Companion to Litigation, by Joseph Matthews or go to Nolo's Lawyer Directory.