Legal services are expensive. Whether you pay hourly or, if you’re in the plaintiff position, give the attorney a substantial percentage of any recovery, having to pay legal fees is often a wound on top of the unhappy event that lands you in the justice system.
Thus, clients constantly ask me whether our legal plan might include forcing the other side to pay their attorney fees.
The stock answer is no. The “American rule” is based on the idea that no one will be punished for utilizing the legal system, even if they do so unsuccessfully. (This is opposed to the “English rule,” which forces the loser to pay both sides’ legal fees and thus dramatically cuts down on lawsuits.) However, there are exceptions to every rule, and this one is no different. The following are situations in which you may be able to force your adversary to pay your attorney fees:
1. Contractual Right. Some contracts include provisions that allow the party enforcing the agreement to have their attorney fees paid. These are generally enforceable, and as an attorney litigating about a contract I always love to see an attorney fee provision. However, realize that courts do not enforce attorney fee clauses by requiring the other side to pay your attorney fees at the beginning of the case; you only get “reasonable” attorney fees reimbursed after establishing your claim or successfully defending your position.
2. Sanctions. It is always worth looking at whether the claim is so frivolous that it merits an award of sanctions along with an order dismissing the case. Meeting this standard is extremely difficult, but in very egregious cases judges will award attorney fees to defendants forced to contend with frivolous, unsupported claims.
3. Statutory Right. Some statutes, such as civil rights claims and patent and other intellectual property protections, allow for attorney fees to be added to any damages award. Like contractual attorney fee provisions, these are enforced by the court adding reimbursement of reasonable attorney fees to the final award, not by requiring the other side to pay your attorney fees throughout the case.
4. Cost-shifting rule such as case evaluation sanctions. Michigan state courts have a process designed to encourage settlement called “case evaluation” whereby neutral evaluators determine what they think the case is worth, and if the parties reject settling for that amount and then don’t do better than the case evaluation award at trial, they will be forced to pay a portion of the other side’s attorney fees.
5. Settlement. Never discount the value of negotiating payment of attorney fees in connection with a settlement. Most cases do not go all the way to trial, and if settlement is discussed, reimbursement for attorney fees may be something the parties agree on as part of a broader settlement.
Always explore with your attorney whether your case might merit an attorney fee award, but realize that generous attorney fee awards are rare in business cases.