Whether you win or lose in a specific “legal battle”, legal fees are likely to be your biggest expense.
For many smaller cases, it’s not even worth your time and energy to have your lawyer file a lawsuit, unless you (a) Have a good case which you believe you are likely to win; (b) Have a right to be reimbursed for legal fees if you win; (c) Are willing to take the risk that if you lose, you could then be compelled to pay the other party’s legal fees; and (d) Have a well-founded belief that the other party can afford to pay, if you win, rather than filing for bankruptcy.
So, what’s the law say about this? Can you or can’t you be awarded legal fees (or at least the right to try to collect them from the other fellow), if you prevail in your lawsuit?
Answer: in a contract dispute, unless there is a statute which explicitly provides for reimbursement of legal fees if you prevail in the matter at issue, the “English Rule” is that “loser pays”, regarding attorney fees. But in the USA, there is no right to be reimbursed for legal fees unless your contract explicitly provides for that. That’s the good ol’ American Rule.
Even better: if one party inserts a clause in the contract that effectively says: “If I win, then you have to pay my legal fee”, then automatically you are entitled to be reimbursed for your legal fees if you win. Ain’t that nice!
Why should you care about all this?
Because often it is a matter of choice as to whether there is an “attorney fees clause” in a contract. Be sure to discuss with your lawyer the factors which might affect which is better for you: insist on such a clause, or just “overlook it”, or at least object to it if the other party wants to include such a provision in the contract you are about to enter.
And if you unfortunately are being sued, or are contemplating a lawsuit in order to vindicate your rights in some business matter, be sure to have an early discussion with your attorney about whether the game is worth playing. If there is no contractual clause providing for “attorney fees to the prevailing party”, the better course of action may be to cut your losses and move on.
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