Who Pays for Attorneys Fees in Litigation?
Posted on August 19, 2021 by Julie Pendleton
One of the first questions asked of me by clients when considering litigation is, “Can I make the other side pay for my attorney’s fees?” In Washington State, the answer to that question is generally no. This is referred to as the “American Rule.”
Courts have reiterated their support for the American Rule because (1) litigation is inherently a risky proposition, and a party should not be penalized for merely participating in a lawsuit; (2) those without means would be unduly discouraged from pursuing their legal rights if they feared that losing the case would also cost them their opponents’ legal fees; and (3) the cost of proving the amount of legal fees would pose an undue burden on judicial administration. Blue Sky Advocates v. State, 107 Wn.2d 112, 123, 727 P.2d 644 (1986).
However, there are three exceptions to this rule and Courts can award attorney’s fees where: (1) there is a contractual provision for attorney’s fees, (2) a statute allows for the award of attorney’s fees, and (3) equity allows for attorney’s fees.
Contractual Attorney’s Fees
A litigant can recover attorney fees if the dispute involves a contract that includes a provision that the prevailing party is entitled to recover attorney fees. It is quite common to see an attorney’s fee provision in adhesion contracts. The good news is that in Washington, attorney’s fee provisions have to be applied bilaterally, or in other words, even if the contract only provides attorney’s fees provision if Party A wins, the Courts will apply it equally, so whichever party prevails will be entitled to have their attorney’s fees reimbursed by the other side.
While contractual attorney’s fees are enforced as a matter of course in Washington, they do require a “win” to apply. In some cases where the case ends in a draw or a tie, where both sides lose a little and win a little, the Court may refuse to award fees. In addition, most courts will only award “reasonable” attorney’s fees, so an attorney’s fee provision in the Contract should not be treated as a blank check to direct your attorneys to overwork the case. .
Statutory Attorney’s Fees
In Washington, a party can recover its attorney fees against another party if a law or statute that governs the case provides for the recovery of attorney fees. There are many types of statutes that include these types of provisions. Examples include parties prevailing on: a Consumer Protection Act claim, an unpaid salary or wages claim, or a discrimination claim. However, each statute is different and should be read carefully. Some statutes are mandatory while others allow the court to exercise discretion in deciding whether or not to award fees. Further, some other statutes may only allow a winning plaintiff to recover fees, but not a winning defendant. For example, if an employer is sued for minimum wage act violations and successfully prevails against the employee, while the employee probably requested the court to pay their fees under the minimum wage act, the employer would not be entitled to a reimbursement of fees at this stage.
Many clients are particularly interested in the frivolous lawsuit statute, which provides for fees and costs if a lawsuit is brought and continued for an improper purpose and is not grounded in fact. RCW 4.84.0185. This statute provides attorney’s fees if a litigant is subjected to a lawsuit that is either brought solely to harass or burden the defendant or otherwise is completely fanciful. However, the standard is high to recover these sort of attorney’s fees as the litigant is required to prove that the other side was either solely motivated by malice or another improper purpose or that the lawsuit had no chance of winning under any circumstances. Receiving attorney’s fees under the frivolous lawsuit statute is difficult, and should never be considered a guaranteed method of recovery.
Equitable Attorney’s Fees
In rare cases, a party can recover attorney’s fees from a party who engages in bad faith litigation conduct. There are three types of bad faith litigation conduct: (1) pre-litigation misconduct, where a party engages in bad faith conduct that wastes private and judicial resources and forces a legal action to enforce a clearly valid claim or right; (2) procedural misconduct, where a party engages in bad faith conduct during the course of the lawsuit; (3) substantive bad faith, where a party intentionally brings a frivolous clam, counterclaim or defense for an improper motive such as harassment. While most litigants believe that the other side has engaged in bad faith conduct in some form or another, recovering under this provision is extremely rare.
How does this Impact my Case?
If there is a method to recover attorney’s fees in a case (either by contract or statute), this is vital to discuss early on in the case with an attorney. Not only can attorney’s fees provisions be used to drive early settlement, but they should also be considered when determining whether or not to bring a lawsuit or counterclaims.
If you have questions, or if we can be of assistance, the Business Litigation attorneys at Lasher, Holzapfel, Sperry & Ebberson are available to help.