This e-newsletter is the second in a two-part series. The first addressed how cases are valued. This addresses when attorneys' fees are recoverable. The answer in
A. By statute
There are a handful of situations in which counsel fees are called for by statute. For instance, statutes authorize the winning party to collect attorneys' fees in a number of contexts involving discrimination claims. Title VII calls for legal fees to be paid in certain gender discrimination matters. The Americans with Disabilities Act provides for attorneys' fees to be paid for discrimination against individuals with disabilities, and the Age Discrimination Act provides for attorneys' fees to be paid in cases involving age discrimination. Contractors and subcontractors who go unpaid may collect counsel fees under the Contractor and Subcontractor Payment Act, and legal fees may be called for in Workers' Compensation cases under the Workers' Compensation Act.
B. By law
Case law recognizes that judges have the discretion to award attorneys' fees. Where a party has proceeded in bad faith or merely to harass its opponent, for instance, it may be ordered to pay the other side for the abuse. Judges rarely exercise the authority to impose counsel fees, however. They usually do so only in the most egregious cases.
C. By contract
Courts generally uphold contracts that call for the winning party to be awarded counsel fees. Exorbitant fees do not have to be paid. Fees are recoverable by contract to the extent they are reasonable, and so long as the contract is not too one sided.
In conclusion, attorneys' fees are rarely recoverable, but contracts can properly be drafted to call for counsel fees. The drafter has to be careful to not make the contract too one sided. A good rule of thumb is to have your attorney include a provision that in a dispute, the prevailing party is entitled to the collection of reasonable attorneys' fees. Such provisions have been upheld as not too one sided; courts reason that either side could prevail. Also, choose the right attorney. You want to find someone who will write an agreement that accomplishes what you want, but be fair enough to pass muster.