In many injury claims, the losing party is burden with paying the winning party’s legal fees. But this isn’t always the case.
It’s often up to the court’s discretion to award the prevailing party attorney’s fees as part of damages settlement.
Let’s look at some notable cases in which the losing party does — and does not — have to pay attorney’s fees:
General Rule: Each Party Pays Its Own Attorney’s Fees
According to the U.S. Department of Justice’s Civil Resource Manual, the general rule is that each party must pay its own attorney’s fees regardless of who wins.
The U.S. Supreme Court confirmed this principle in Alyeska Pipeline v. Wilderness Society. Unless there is an exception, this rule is the default.
Because of this rule, many personal injury attorneys will work on a contingency fee basis, encouraging skittish plaintiffs that they will not have to pay unless they win.
Legal Fees Statutory Exceptions
Even though the “American Rule” is the default, several states allow shifting the burden of attorney’s fees to the losing party. For example, California allows the prevailing plaintiff to recover court costs and attorney’s fees in certain consumer-protection cases.
Many of these statutes also allow prevailing defendants to recover legal fees if the court finds that the case was exceptional or filed in bad faith.
U.S. Supreme Court recently interpreted a federal patent statute that allows judges to have more discretion on deciding whether to award the attorney’s fees in patent troll cases.
Federal Rule of Civil Procedure 68 and Settlement Offers
FRCP 68 and other similar state rules allow parties that offer a settlement before trial the opportunity to recover the legal fees from the other party. As long as the amount turned down was equal to or more than the final judgment.
Under these rules, the party who offered the rejected settlement proposal can demand the costs and fees incurred after the refusal of a settlement.
Fee-Shifting Clauses in Contracts
A fee-shifting provision may grant the attorney’s fees to the prevailing party if a claim arises out of a contractual relationship between the parties.
However, these provisions are not foolproof, as a judge may allow both parties to “prevail” in a complex case (e.g., a comparative fault).
Depending on your case and the presence of these legal factors, the losing party may only be responsible for its own attorney’s fees. If you have more questions, ask a seasoned Personal Injury Lawyer about how these rules apply in your situation.
