If I Win My Lawsuit Can I Recover My Legal Fees From The Other Side?

legal feesWhether you are bringing a lawsuit to recover damages you suffered or are defending a lawsuit that has been brought against you, the legal fees incurred by your attorney for which you are responsible are likely to mount quickly. These fees can become very substantial and the question naturally arises, can you recover some or all of these legal fees from the other side if you win your lawsuit.

The “American Rule”

In many countries around the globe the answer is, yes, if you are victorious in the lawsuit, you can generally expect to recover some of the legal fees you incurred. But in the United States the general rule is the opposite; even if you win the case there is no absolute right to recover your legal fees from the other side. Rather, each side is responsible for paying their own attorney’s fees. This is referred to as the “American Rule,” and although under the rule there are some exceptions, they are few in number. In fact, there are only two main exceptions to the rule that your legal fees are not recoverable: (i) statutes and local rules which expressly provide for the recovery of legal fees and, (ii) contracts which provide for such recovery.

When Can Legal Fees Be Recovered

Statutes and other laws are the legislative enactments of federal, state and local governments. Some statutes specifically allow for the recovery of attorney’s fees, however, others do not. Examples of some federal statutes that provide for the recovery of attorney’s fees are the Freedom of Information Act, the Unfair Competition Act, the Lanham (Trademark) Act, and the Fair Debt Collection Practices Act, among many others.

Another example of statutes that provide for the recovery of legal fees are those that authorize a court to award such fees as a sanction for the other side’s improper conduct. In federal court, even in the absence of a statute that allows for attorney’s fees to be recovered by the winner, the court has inherent authority to award such fees. The specific conduct warranting the imposition of sanctions by the court in the form of attorney’s fees is typically decided on a case-by-case basis and is something you should raise with your attorney, particularly if you feel the adversary has acted in bad faith or vexatiously, wantonly or for oppressive reason.

Contracts – the other main exception to the American Rule – because they are private arrangements between two or more parties, can specify the circumstances in which a court or arbitrator may award the recovery of legal fees. When determining whether to file a lawsuit or settle even before a legal proceeding has commenced, the assessment of your ability to recover your attorney’s fees or, the possibility that you may have to pay the other side’s fees, is an important consideration that needs to be explored with your lawyer. Similarly, when entering into a business relationship and negotiating and drafting a contract, it is important to consider whether the inclusion of an attorney’s fees provision makes sense for you. Experienced legal counsel can assist in determining whether or not including an attorney’s fees provision in your contract is best for you.

Can I Recover My Legal Fees If I Settle The Dispute?

Even in the absence of a statute or contract that allows for attorney’s fees to be recovered by the winner, there are other situations in which you may recover some or all of your legal fees. For example, when negotiating a settlement of a legal dispute (whether already the subject of legal proceedings or prior to any such proceedings having commenced) you may have sufficient leverage to make reimbursement of some or even all of the legal fees you have expended part of any negotiated settlement. And if there is a statute or contract that is implicated by your dispute and allows for attorney’s fees to be recovered, then you may have enhanced leverage in arguing for such fees to be part of any voluntary resolution. An experienced litigation lawyer can assist you in crafting a strategy aimed at recovering your legal fees.

Do I Get All Of The Legal Fees I Have Incurred?

When a court awards legal fees to one of the parties it typically will review the attorney’s fees sought to ensure that they are reasonable. Courts generally review the hourly rate charged by the attorney, how the time was spent, as well as other factors in determining what is “reasonable.” Sometimes, the court will determine that the hourly rate is too high and reduce it and, on occasion, significantly reduce it.

In addition, a court may decide that the time spent was excessive, or that the outcome does not justify the amount sought. As a result, it is not uncommon for a court to award fees in an amount less than that sought. Moreover, the question of the amount of attorney’s fees you can recover from the other side is often the subject of fierce motion practice, resulting in yet additional legal fees. These additional fees, referred to as “fees on fees,” may or may not be recoverable by you depending on various factors including the language in your contract and/or the jurisdiction you are in.

Consult An Experienced Legal Team

Whether you are negotiating or drafting a contract, considering whether or not to commence a lawsuit, or contemplating resolving a dispute either before litigation has commenced or after it has already begun, you should address the issue of your ability to recover your attorney’s fees with your lawyer. The experienced attorneys at Kravet & Vogel can help you craft a strategy that maximizes your ability to recover your legal fees.