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Who
Wins Their Attorney Fees in a Legal Dispute?
(Copyright 1999, Julie I.
Fershtman, Attorney at Law and reprinted with permission)
By Julie I.
Fershtman, Attorney at Law
and Author of "Equine Law & Horse Sense"
"I'll see you in court!" These were the emphatic words of Bill, a disgruntled horse buyer. Bill recently spent $1,200 to buy a horse, only to discover shortly after he brought the horse home that it was lame. There was no written contract. The seller refused to take the horse back or give a refund, claiming that the horse was perfectly sound before Bill hauled it home.
Bill the buyer knows he has a case. His lawyers agree. Why, then, have the lawyers been so reluctant to handle Bill's case? Bill even told the lawyers: "When I win this case, the other party will pay your legal fees."
Is Bill the buyer correct? Will the losing party always be commanded to pay the winning party's attorney fees? This article generally explores when and how attorney fees are recoverable in a legal dispute.
The "American
Rule"
England has a "loser pays" rule. In the United States, by comparison,
each party bears the cost of his or her own legal fees, with only a few
exceptions.
The Four Settings in
Which Courts Can (But Not Always) Award Attorney Fees
There are typically only four settings in which a court will order one party in
a legal dispute to pay the other's legal fees:
1. The Parties Had a Written Contract That Awards Attorney Fees
A contract can make all the difference. If the parties had a written contract with language that clearly specified a party's entitlement to recover legal fees in the event that the contract was breached, courts may be inclined to enforce it. In the scenario above, however, Bill the buyer had no written contract.2. A Statute or Court Rule Provides for Attorney Fees
Under certain state and federal laws, the winning party is entitled to recover legal fees from the loser in a legal dispute. Some of these laws include, but are not limited to: deceptive trade practice laws, consumer protection laws, civil rights law, antitrust laws, and fair debt collection practice laws. Depending on the language of the law, the entitlement to recover legal fees can be automatic - all it takes is winning the case and proving that the law was violated. In other cases, the court must first make a specific finding that the losing party violated the law in a "willful" or intentional way.3. A Court Rule Provides for Attorney Fees
Every court system has rules, called court rules, that govern procedures for lawsuits. Court rules often give judges discretion to order one party to pay some or all of the other's legal fees and expenses when certain situations occur, such as a party has disobeyed a valid order of the court.4. The Court Specifically Found that the Other Party Asserted a "Frivolous" Claim or Defense in a Lawsuit
Sometimes, when a judge is convinced that a party in a case has asserted a frivolous case or defense, or has somehow acted in "bad faith" in the course of a legal proceeding, the judge has the power to punish the wrongdoer. As examples of this punishment, the court can command him or her to pay the other party's legal expenses and costs. This author, in her 13 years as a lawyer, has found that courts are very reluctant to do this.
Conclusion
In conclusion, please keep these ideas in mind.
1. Where small amounts of money are involved, the legal fees can vastly exceed the amount at stake. To avoid this, people like Bill the buyer can handle their legal disputes without a lawyer. As this author has explained in past articles and in her book, Equine Law & Horse Sense, small claims courts throughout the country exist to prevent this problem. There, individuals like Bill the buyer still have their day in court but are spared the legal fees.
2. Sometimes it makes good economic sense to bypass the legal system altogether, especially where the amount at stake is small. Parties to a dispute can consider alternatives to the legal system, such as arbitration or community-based dispute resolution centers.
3. People involved in equine transactions have every incentive to plan ahead with good contracts. An important detail in a contract is a clause that addresses who will pay the legal fees if a legal dispute arises. Or, the parties can agree up front in the contract to submit their disputes to binding arbitration or mediation. Waiting until a dispute arises is usually pointless -- parties embroiled in a legal dispute seldom agree on anything, much less agree to save time and money by submitting certain disputes to mediation, facilitation, or arbitration.
4. Possibly, the legal expenses can be negotiated. Nowadays lawyers are more willing to consider creative compensation arrangements. For example, lawyers might accept matters or cases on a flat fee or "contingency fee" basis. Under a contingency fee arrangement, the lawyer's fee is derived from a percentage of the amount that the client wins. Lawyers are more inclined to accept a contingency fee where large amounts are at stake.
5. Even if a court commands one party to pay the other's legal fee, certain factors can complicate the actual recovery of money. As one example, the other party simply may have no money to pay the fee. Or, the court might only award reimbursement of some of the legal fees and not all. An appeal of a court's ruling could hold up the matter, and payment, for years.
This article does not constitute legal advice. When questions arise based on specific situations, direct them to a knowledgeable attorney.
About the Author
Julie I. Fershtman is an attorney serving the horse industry for several years. She is rated "AV" [highest rating] in the Martindale Hubbell Law Directory, and her biography is published in Who's Who in American Law. She can be reached at (248) 644-8645.
Ms. Fershtman is the author of Equine Law & Horse Sense, the nationally-acclaimed book, which sells for $17.95 +$3 shipping and handling (Michigan residents add 6% sales tax). Contact Horses & The Law Publishing at (800) 662-2210 or send check or money order to Horses & The Law Publishing, P. O. Box 250696 Franklin, MI 48025-0696.
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