You may have heard, on the news or even in movies or TV shows, about legal cases where the losing party is forced to pay the attorney’s fees of the victorious party (sometimes known as “fee shifting”). If you are about to file a lawsuit, it is understandable that you may be worried about this.
After all, attorney’s fees can run extremely high in a legal case, and it can be terrifying to think that if you lose, you will not only have to pay your attorney, but the other side’s attorney as well. The prospect of this might dissuade some people from pursuing legal action, even if they have a legitimate case with a good chance of winning.
Fortunately, most of what many people think they know about attorney’s fees is incorrect. If you’re concerned about being made to pay high attorney’s fees, then read on.
Do courts regularly award attorney’s fees to the winning side?
As a general rule, no… at least, not in the United States.
This is known in the legal world as the American Rule. It dates back to one of the earliest cases the Supreme Court ever dealt with: Arcambal v. Wiseman, which was decided all the way back in 1796.
Although the American Rule is the standard in America, many other countries follow the English Rule, under which the loser is routinely expected to pay the fees of the winner in a lawsuit.
The American legal system is directly derived from British law, and to this day our nation and the United Kingdom share many legal practices in common. The issue of attorney’s fees is a rare exception to this. So why did America and Great Britain go such different ways on this particular issue?
The answer lies at least partly in the early Americans’ resistance against the British monarchy and their desire for a freer and more egalitarian society, in which everyone had a voice in the legal system. This is, after all, why several amendments in the Bill of Rights deal directly with the court system and the right to a fair trial, both in civil and criminal matters.
Disallowing the recovery of attorney’s fees is meant to further the goal of an open and accessible court system, by removing one of the major barriers to filing lawsuits if you are poorer. This is meant, in theory at least, to make legal participation accessible to all classes of society.
Of course, there are some arguments on the other side as well. (Lawyers like arguing both sides of everything.) Supporters of the English Rule argue that it helps protect the innocent from being harassed by frivolous lawsuits designed to bankrupt the defendant, and gives some recourse to people who were forced to spend significant amounts on a lawsuit.
Both sides of the argument have interesting points, and we at TorkLaw don’t necessarily have a definitive answer to the question of which system is best. However, we are here to tell you how the system works: in most cases, you will not be forced to pay attorney’s fees of the other party if you lose a legal case.
So, if someone tries to bully you out of filing a lawsuit by hinting that they might try to recover attorney’s fees from you, you should not allow yourself to be intimidated.
It is also worth mentioning, however, that with our firm, attorney’s fees will not be an issue in any case.
TorkLaw operates on a contingency fee basis, which means that 0% of our clients lose money when they hire us as their attorneys.
If you secure our firm as your legal representatives, we will cover the costs of the case so that you do not have to pay anything out-of-pocket. If we win, then you will pay us an agreed-upon portion of the final judgment or settlement. If we lose, then we will swallow the costs of the case and you will not incur any out-of-pocket costs.
Given this setup, you have almost nothing to worry about in the way of attorney’s fees, either for your side or the defendant’s side.
Yes, there are. As we mentioned above, the American Rule is applied in most cases but there are various exceptions, and it is possible that you will find that one of these exceptions applies to your case.
One of these involves any situation where there is a pre-existing contractual obligation that the loser in a case between two parties must pay part or all of the winner’s attorney’s fees, or situations where (for whatever reason) your attorney and the other party’s attorney agree to such an arrangement after the case has begun.
In other words, any sort of voluntary contractual obligation you enter into will supersede the American Rule.
There are other exceptions to the American rule, and these generally fall into two categories. Some are written into the law, while in other cases attorney’s fees will be ordered by the court.
One common exception involves bad faith. If you are a plaintiff in an insurance case, this might actually work in your favor, because if you can demonstrate in court that your insurance claim was denied in bad faith, then you may be able to sue for attorney’s fees.
If bad faith occurs during a case (as opposed to a bad faith claim giving rise to a case), then this may also qualify the other party for an award of attorney’s fees.
Similarly, if one party in a lawsuit refuses a reasonable offer for settlement by the other party, then the party which made the offer might eventually be able to collect attorney’s fees, even if they were not included in the original offer.
Attorney’s fees are mandated by law in specific types of cases, typically those which are considered to affect the public interest. Such cases include civil rights and consumer and environmental protection. These are often very sensitive cases, and the goal of mandating attorney’s fees in these situations is to protect the “little guy.”
There is another exception for implied indemnity, which occurs if you are sued as the result of another party’s negligence, and successfully defend yourself. In this case, you can recover your damages from the party who was actually at fault.
Finally, in cases where a plaintiff brought a lawsuit which was clearly frivolous and designed to harass the defendant rather than air a genuine grievance, or if the attorney can be shown to have filed a frivolous complaint or mishandled certain aspects of the case, then they may be compelled to pay attorney’s fees. This usually only occurs in the most egregious cases.
These exceptions will vary broadly according to the precise circumstances of the case. They will also vary between jurisdiction, so if you have any concerns about any of these, it is important to speak to an attorney who can address your specific circumstances.
In most (although not all) cases, you will not have to realistically worry about being made to pay the other side’s attorney’s fees if you lose. On the other hand, you will probably not be able to recover any such fees from the other party if you win, no matter how legitimate your wrong.
There are only a few exceptions to this, and you should discuss these with your attorney if you think any of them may apply to you.
In any case, when you take a case with TorkLaw, you will not lose money on attorney’s fees, and these will only come into play if you win.
So, all in all, don’t let this be something that hangs over your head. Some people might try to imply that you will have a lot to lose in attorney’s fees if you lose your case, but you should not let this prospect dissuade you from seeking the justice you deserve… at least not without getting a real legal opinion first.