In the usual course of a lawsuit, you have a number of expenses. These include court fees, fees for experts, fees to those who serve notice, administrative expenses, and last but not least, attorney fees. And in most cases, attorney fees represent the single largest expense for a client possibly occupying 50-80% of the cost of litigation. More importantly, California follows the general rule that each party bears their own costs of litigation….including attorney fees. Because of this rule, it is critical that business owners position themselves to deal with this situation.
So How Do You Do This?
There are two general ways a winner can obtain attorney fees in California. First, there is a statute that says that based on the type of dispute, the winner can recover fees. These situations are rare. More common is where the contract from which the dispute arose included an attorney fees provision. If you don’t have an attorney fees clause in your contracts, you are unnecessarily shifting the cost of litigation to you instead of the other person. A solid attorney fees provision is easy to include.
What Does It Look Like?
There is no special language. You must only make clear that you intend the winner to recover attorney fees. Here’s my recommendation.
In any litigation, arbitration, or other proceeding by which one party either seeks to enforce its rights under this Agreement (whether in contract, tort, or both) or seeks a declaration of any rights or obligations under this Agreement, the prevailing party will be awarded reasonable attorney fees, together with any costs and expenses, to resolve the dispute and to enforce the final judgment.
That Seems Too Easy!
It is easy to protect yourself. However, you must know that an award of attorney fees is ultimately up to the judge who can deny in whole or in part any request for the winner to obtain fees. This is NOT a reason to not include in your contracts. If you don’t already include, make sure you update your contracts to include an attorney fees provision.
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