“Can I Get My Lawyer’s Fees Back?”

June 5th, 2019

It’s probably the most commonly asked question during initial discussions with anyone considering filing, or having to defend against, a lawsuit:  “Once I pay my lawyer, can I get that money back from the other side?”

The answer is often a surprising “no.”

The legal system in many countries, including England, operates on the principle of “loser pays,” meaning that at the end of a case, the losing side must pay the reasonable fees of the prevailing side’s lawyers.  But while the American legal system was originally founded upon the practices and precedents of the English courts, on this point we are very different.  Under “the American rule,” as it’s known, each side pays its own legal bills without hope of reimbursement from the other, unless the case qualifies under one of a very limited number of exceptions.

The most salient exceptions are:

  • If the claim is based upon a written contract that explicitly provides for recovery of fees and legal expenses;
  • If the claim is brought under a statute that includes fee recovery rights (including many civil rights and consumer protection laws, among others);
  • If the claim is for willful fraud; or
  • If the judge finds that the opposition has engaged in baseless, frivolous or harassing litigation.

The key point to understand is that these are exceptions to the general rule.  For the majority of cases, there is never any hope of recovering legal fees incurred.  For this reason, clients must always work carefully with their lawyers to manage the fees being incurred.

The debate over whether this should remain the law, or whether the law should be changed, often begins from the argument that it is simply unfair to permit one side to diminish the net benefit of compensation awarded to an innocent, injured party by forcing things into court.  In many cases, a truly wronged party can even find himself unable to vindicate his rights simply because the expense of pursuing the matter in court may far exceed the amount he could ever hope to recover.  (Many of the statutory exceptions to the American rule were adopted in response to such scenarios.)

In practice, though, attorney’s fees claims often add layers of complications to an already contentious dispute.  It is often more difficult than expected to discern who “won” in a case, since many cases often end with both sides winning some issues while losing others.  Cases can also drag on after one side has “won,” as the parties turn their attention to the amount of fees being claimed and whether all or only part of them should be awarded.  Indeed, once that question has been answered, the prevailing party often then asks for recovery of the fees incurred in the course of pursuing the original fees claim!

Obviously, the parties to any court case will focus on how the system is treating them.  The court system, however, has its own institutional concerns.  Chief among these is the need to bring cases to an end – and if you ask any judges, their opinion will be, the sooner the better.  Anyone who has ever has to deal with a court case quickly discovers that the prospect of seeing legal billings mount is often a powerful incentive – for both sides – to compromise even the most fractious case.  Courts like to see cases settle, because it brings peace to the parties and lessens the burdens on the courts and their staff.  And in nearly every situation, an early resolution with a certain outcome is the best thing a lawyer can hope to deliver for his or her clients.

For all its seeming appeal, the English, “loser pays” rule undermines the financial incentives to settle cases.  This leads to cases lasting longer, bills mounting higher, and more cases going all the way to trial and beyond.  This is perhaps the leading reason why legislatures in America continue to reject “loser pays” as a general rule, preferring instead to consider only the instances in which exceptions should be granted.

At Marrs & Henry, we have earned the reputation of not shying away from trying a case that truly should be tried.  We have pursued and won many cases on appeal as well.  But we never lose sight of the fact that, for nearly all clients, settlement would offer hope for a better outcome, viewed on the whole.  Trials and appeals are available as a last resort, when the opposition stubbornly refuses to come to the table.  But they should always be considered exactly that – the last resort.