Lawsuits are expensive. That is not going to change any time soon. In fact, the cost of litigation gets more and more expensive every year. In 2015, the Washington State Bar Association’s Task Force on the Escalating Costs of Civil Litigation issued a report with various recommendations on how to decrease the cost of litigation. Why litigation is so expensive and how to decrease the cost of litigation could be debated at length.
In Washington, the general default rule is that each party in a lawsuit is responsible for its own attorney fees incurred in the lawsuit. This is known as the “American Rule”. In contrast, the “British Rule” provides that the losing party in a lawsuit must pay the winner’s attorney fees.
The rationale behind the American Rule is that the threat of having to pay the other side’s attorney fees has a chilling effect on access to the courts and could dissuade potential litigants from bringing a valid case.
However, there are certain well-recognized exceptions to the American Rule that do allow the winning party to recover attorney fees against the losing party.
In Washington, there are three recognized exceptions to the general rule that each party must pay its own attorney fees. A party to a lawsuit can recover its attorney fees against another party in the following circumstances: (1) if a statute provides for the recovery of attorney fees; (2) if a contractual agreement between the parties provides for the recovery of attorney fees; or (3) some recognized ground of equity.
Whether there is a right to attorney fees at the end of a lawsuit is important to know. And it is important to know this as early as possible. The answer can drive economic decisions in pursuing or not pursuing litigation. If the prevailing party will have a right to recover attorney fees, that could make it more palatable to pursue a lawsuit through to the end, especially for a party that has a strong case. But the flip-side of the coin is if the other side wins it will recover its attorney fees. So, the stakes are increased in attorney fee cases.
Conversely, in cases with no chance of attorney fees being awarded, it could cause the parties to reach a settlement. This is especially true in cases where there is a relatively small amount at stake in which attorney fees incurred to litigate the case would easily exceed the total amount that could be won.
So before getting involved in a lawsuit, or at the outset of a lawsuit, you should determine with your lawyer whether or not attorney fees could be awarded. It could be a game-changer.
Disclaimer: This article and blog are intended to inform the reader of general legal principles applicable to the subject area. They are not intended to provide legal advice regarding specific problems or circumstances. Readers should consult with competent counsel with regard to specific situations.
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