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Does the Losing Party Always Have to Pay Attorney's Fees?

By Brett Snider, Esq. | Last updated on

In many injury cases, the losing party is often saddled with paying the winning party's attorney's fees. But this isn't always the case.

In fact, it's often up to the court's discretion as to whether to award the prevailing party attorney's fees as part of his or her damages.

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 for American courts 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, and 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.

Statutory Exceptions

Although the "American Rule" is the default, there are various state and federal laws which allow the burden of attorney's fees to be shifted 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 attorney's fees if the court finds that the case was exceptional or filed in bad faith. The U.S. Supreme Court recently interpreted a federal patent statute to allow judges to have more discretion in deciding whether to award defendants' attorney's fees in patent troll cases.

FRCP 68 and Settlement Offers

Federal Rule of Civil Procedure 68 (FRCP 68) and similar state rules allow parties who offer to settle before trial the opportunity to recover attorney's 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 settlement was refused.

Fee-Shifting Clauses in Contracts

If a lawsuit arises out of a contractual relationship between the parties, a fee-shifting provision may grant attorney's fees to the prevailing party. However, these provisions are not foolproof, as a judge may allow both parties to "prevail" in a complex case (e.g., where comparative fault is involved).

Depending on your case, and the presence of these legal factors, the losing party may only be responsible for his or her own attorney's fees. If you have more questions, ask your personal injury lawyer about how these rules apply in your situation.

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