Are You Entitled To An Award of Attorney’s Fees in Business Litigation?

Justice isn’t cheap and even the most basic lawsuits in the United States can cost you thousands of dollars. When we discuss business litigation with our clients, they are often concerned about the fees of their attorney which can prove to be a significant expense for them. While there isn’t much you can do to reduce the attorney’s fees, there is a way you can have the court direct the other party to pay your attorney’s fees.

In this post we’ll show how an attorney’s fees can be recovered in business litigation.

Attorney’s Fee Awards

Attorney’s fee award is the order of payment of attorney fees of the prevailing party by the losing party. In the United States of America, each party is typically required to pay their own attorney fees. In some countries, all legal fees in the case must be paid by the losing party. However, even in the U.S., the court may order the losing side to pay the attorney’s fees of the wining party.

Attorney’s fee awards aren’t contingent upon the status of the court in which the underlying case is tried. For instance, an attorney’s fees may be awarded by the state court for a case that involves federal statutes or laws. The practice of the court ordering the losing party to pay the winning side’s attorney’s fee is also called ‘fee shifting’.

General Rule

Most states follow the general rule called the “American Rule”. Under this rule, everyone must pay fees of their attorney on their own even if they win at a trial. Imagine your business gets sued by a customer and you hire an attorney to defend yourself at the court. You win the lawsuit, but you have to pay the attorneys’ fees. The attorneys’ fee would be something that you would want to recover. Sometimes the fees may surpass the amount that’s at stake. Fortunately, you can recover the attorneys’ fees in some cases.

Contractual Exception

The American Rule can be avoided and you can recover your attorneys’ fees from the defendant if your contract with the defending party provides that you are entitled to fees in case of a lawsuit. Including this provision is easy and if you’re concerned about recovering your attorneys’ fees, you should always include it.

Some parties try minimizing the risk of them losing the attorneys’ fees by including a provision in the contract that allows only them to recover attorneys’ fees if they win. These one-sided provisions don’t work because there are reciprocity laws in many states that allow either winning party to be entitled to an award of attorney’s fees if there is a contractual agreement.

Statutory Exception

Certain federal statutes and state statutes provide for recovery of attorneys fees by the prevailing party in case of the violation of a statute. Depending on the language of the statute, an award of the attorneys’ fees might be discretionary or mandatory to the successful plaintiff. Or a defending may possibly recover expenses they incurred in defending themselves successfully. Where provisions for payment of the attorney fees are there in a statue, there is usually an underlying public policy that must be advanced. Employment and labor statues, consumer protection statues, civil rights statues and statues that concern intellectual property usually provide for award of attorneys fees.

The Amount of an Award of Attorney’s Fees

The amount that is awarded may not be equal to the amount that is paid by the prevailing party. In many courts, lodestar billing method is used which multiples the responsible expected billable time in hours by an hourly rate. The skill and experience of the attorney will be considered by the court and it will determine what another attorney with similar experience might charge in a community where the court sits.

Once entitlement to an award of attorney’s fees is established, the winning part must show the reasonableness and amount of the fees. In some cases, the amount of the attorney’s fees award depends on contractual language. For example, a contract may call for reimbursement of an attorney’s fees. In this case, the winning party may only be able to recover the amount they actually paid their attorney. In contrast, if the fee-shifting doesn’t call for reimbursement of an attorney’s fees or contain any similar limiting language, then the prevailing party might not be limited to the amount paid by them. If there is a fee arrangement between two parties, it will be determined by the court whether the arrangement was reasonable.

It could be very important consideration for both defendant and plaintiffs if there is a contract or statute at issue in their business litigation that provides for the entitlement to an award of attorney’s fees.

Speak To An Attorney Today

If you know that you are entitled to an award of attorney’s fees in business litigation, don’t hesitate to seek an attorney’s help in your case. If you win the case, then the other party may be ordered to pay your attorney’s fees. If you want our help in knowing whether you are entitled to an award of attorney’s fees in your business related case, feel free to schedule a free consultation.

Call Shiner Law Group at (855) 462-6878 to schedule a free consultation of your business case. We’ll help you figure out if there is a statue or a contractual agreement that entitles you to an award of attorney’s fees.