When Can You Recover Attorney’s Fees in Washington?

A very common question people ask when considering a lawsuit is: “If I win, does the other side have to pay my attorney’s fees?”

In Washington, the answer is often no. As a general rule, each party must pay its own attorney, regardless of who wins the lawsuit. However, there are a number of exceptions where the prevailing party may be entitled to recover some or all of its attorney’s fees from the losing party.

Understanding whether attorney’s fees are available is vital as it can dramatically affect the economics, strategy, and settlement value of a case.

Fee-Shifting and the “American Rule”

When one party is required to pay another party’s attorney’s fees, the term often used is “fee-shifting.”

Washington follows what is known as the American Rule, which provides that attorney’s fees are generally not recoverable unless authorized by contract, statute, or a recognized equitable doctrine. Bowers v. Transamerica Title Ins. Co., 100 Wn.2d 581, 597, 675 P.2d 193 (1983).

As a result, winning a lawsuit does not automatically mean the losing party must reimburse the prevailing party for its legal expenses. Instead, there must be an independent legal basis for fee-shifting to allow a court to award attorney’s fees.

Contractual Attorney’s Fee Provisions

The most common basis for recovering attorney’s fees is a contract. Many contracts contain provisions stating that the prevailing party, in a dispute relating to the agreement, is entitled to recover its reasonable attorney’s fees and costs. These provisions are frequently found in commercial leases, construction contracts, real estate purchase and sale agreements, promissory notes, loan agreements, and business contracts.

For example, if a commercial landlord sues a tenant for unpaid rent and the lease contains an attorney’s fee provision, the landlord may be entitled to recover not only the unpaid rent but also its reasonable attorney’s fees incurred in enforcing the lease.

Fee-shifting provisions are also common in homeowner association governing documents. Declarations, CC&Rs, and bylaws often provide that the prevailing party in disputes concerning the enforcement of the association’s covenants or rules is entitled to recover attorney’s fees and costs.

Before filing or defending a lawsuit related to any type of contract, it is important to review the agreement carefully to determine whether attorney’s fees may be at stake.

Statutory Attorney’s Fees

In some cases, Washington statutes authorize fee-shifting, regardless of the existence of a contractual attorney’s fee provision. Examples include lawsuits involving the Consumer Protection Act, certain labor and employment laws under Title 49, certain provisions under the Residential Landlord Tenant Act, and some actions under the Business Corporation Act. There are many more littered throughout the Revised Code of Washington.

One notable fee-shifting statute is RCW 4.84.185, which allows a court to award attorney’s fees against a party who brings or maintains a frivolous lawsuit. To obtain fees under this statute, the prevailing party must demonstrate that the claim had no rational legal or factual basis. However, courts are often reluctant to label lawsuits as frivolous, and fee awards under RCW 4.84.185 are typically reserved for particularly egregious cases. Nevertheless, the statute serves as an important deterrent against baseless litigation.

Another interesting fee-shifting statute is RCW 4.84.250-300, which can allow the prevailing party to recover attorney’s fees and costs in lawsuits where the amount being asked for is $10,000 or less. These laws generally require a settlement offer, and a party’s ability to recover fees often turns on whether the final judgment is more or less favorable than that offer. The purpose is to encourage settlement of more modest claims and make small stakes litigation economically viable.

Equitable Grounds for Attorney’s Fees 

Washington courts also recognize several “equitable” exceptions to the American Rule. In other words, these exceptions are based on case law and rooted in notions of justice.

Washington courts have identified four principal equitable grounds for awarding attorney’s fees. City of Seattle v. McCready, 131 Wn.2d 266, 274, 931 P.2d 156 (1997). These are:

1. The common fund doctrine, which can require a person or entity who benefits from a recovery to pay a proportional share of attorney’s fees.
2. Litigation caused by a third party’s wrongful conduct.
3. Bad faith or misconduct during litigation.
4. Wrongfully issued temporary restraining orders or injunctions.

Application of these exceptions is much more rare than contract or statutory fee-shifting provisions, but they can provide an important basis for recovery in appropriate cases.

Who Is the “Prevailing Party”? 

Many contracts and statutes award fees to the prevailing party, but determining who actually prevailed is not always straightforward.

Generally speaking, a prevailing party is the party that obtains affirmative relief in its favor. Marassi v. Lau, 71 Wn. App. 912, 915, 859 P.2d 605 (1993).

When neither side completely wins, courts often look to which party “substantially prevailed.” If both sides prevail on major issues, a court may conclude that neither party is entitled to attorney’s fees even when there is a statute or contract that allows recovery of fees.

The issue of who is the “prevailing party” becomes particularly important in cases involving multiple claims, counterclaims, or mixed results.

Fee-Shifting Often Goes Both Directions 

Under Washington law, if one side would be entitled to recover attorney’s fees under a contract, the opposing party is generally entitled to recover fees if it prevails instead. RCW 4.84.330.

For example, a lease provision stating that only the landlord may recover attorney’s fees is generally treated as applying equally to both landlord and tenant. In effect, Washington law makes unilateral attorney’s fee provisions reciprocal.

This means that any attorney’s fee provision can create risk for both sides. A plaintiff may recover substantial fees if successful, but may also be required to pay the opposing party’s attorney’s fees if the lawsuit is unsuccessful.

Why Attorney’s Fee Provisions Drive Settlement 

Attorney’s fee provisions often have a significant impact on settlement negotiations because they dramatically increase the stakes of litigation.

Consider a dispute involving a $20,000 breach of contract claim. On its face, that may appear to be a relatively modest lawsuit. However, if the contract contains a fee-shifting provision, both sides must evaluate more than just the amount being claimed. A case that proceeds through discovery, summary judgment, and trial can easily generate attorney’s fees that are far greater than the amount in dispute.

Because of this risk, fee-shifting provisions frequently encourage early resolution and create leverage that would not otherwise exist. In some cases, the potential attorney’s fee exposure becomes a more significant factor than the underlying claim itself.

Quick Note on Attorney’s Fees vs. Cost

Attorney’s fees are distinct from litigation costs. Even when a party cannot recover attorney’s fees, a prevailing party under certain circumstances may still be entitled to recover certain costs, such as filing fees, service of process expenses, deposition costs, and other litigation expenses. Recovery of costs depends on the nature of the case, and whether there is a statute or court rule authorizing it.

Summary 

Whether attorney’s fees can be recovered is often one of the most important questions in a lawsuit. While Washington generally requires each side to pay its own attorney, contractual provisions, statutes, and equitable doctrines may shift those fees to the losing party.

For that reason, evaluating the availability of attorney’s fees should be one of the first steps taken before filing a lawsuit or deciding how to respond to one. A fee-shifting provision can significantly alter the risks, costs, and settlement value of a case, and may ultimately prove almost as important as the merits of the underlying dispute.