It is a common misconception that the losing party has to pay the winning party’s attorney fees. The truth is, the United Stated goes by a general rule called the American Rule which has each party pay only their own attorney’s fees. The rule applies whether you win or lose, which allows anyone to bring cases without worrying about paying excessive costs if they lose.
There are some exceptions to the rule, however. One of the most common exceptions happens when a specific contract or law calls for one party paying the other party’s attorney’s fees. Other times, a court can make a ruling requiring one side to cover the other side’s fees, though the courts usually attempt to adhere to the general rule. Still, there are specific, limited situations where the court will depart from the American Rule.
For instance, there are statutory exceptions. Some states have laws that require the losing side to pay for the winning side’s fees if it is a lawsuit that has to do with government entities or antidiscrimination laws. There are also federal laws in place which require the losing party to pay for the winning party’s fees in cases where the federal law has been violated. An example of a statutory exception is a law in California which allows the winning plaintiff to recover court costs in some consumer-protection cases.
Another example of a statutory provision is a common statute which allows a judge to make the losing party pay the winning party’s fees in a lawsuit which benefitted the public or enforced a right that was relevant to public interest. If in a case a private party won a case which gave benefit to the public, that party could be compensated for attorney’s fees. For instance, a private party in California won a case proving that the city’s plans to develop land near his property would cause environmental harm and flooding to the surrounding land,. The court found his case to be in the public’s interest, and he was awarded $100,000 in attorney’s fees (Monaco V. City of Moreno Valley).
Contractual provisions can also provide an exception to the American Rule. The losing side may be required to pay the winning side’s attorney’s fees is both parties signed a contract beforehand requiring compensation to the winning side by the losing side. This exception is common in business-related cases where the parties specifically included the attorney’s fees in a contract. Still, courts do not have to enforce the contract, if they find it is unfair or feel that one side was coerced into signing the agreement.
Judges can also require the losing party to pay the winning party’s fees as an equitable remedy. An equitable remedy is used to enforce fairness in cases where the judge feels there was misconduct. So, a judge may enforce the equitable remedy of awarding attorney’s fees to the winning party to be paid by the losing party if the courts decide the lawsuit was frivolous, in bad faith, or oppressive to the defendant.