Hiring a lawyer to help you if you have a legal problem can be an expensive proposition. If efforts to resolve a situation out-of-court fail, filing a lawsuit adds on additional expenses. So is it possible to have attorney fees reimbursed if a lawsuit is filed?
Each Party Usually Pays Own Attorney Fees
While many other countries make the losing party pay the attorney fees of the winning party, the general rule in the United States is that each party pays his or her own attorney fees. This is the so-called "American Rule." However, there are exceptions to the American Rule.
Court May Award Attorney Fees in Certain Cases
Attorney Fee Statutes: Federal and state laws have been passed that require the losing party to pay the winning parties' attorney fees in certain types of lawsuits. For example, many states have "Lemon Laws" or laws that entitle a person to a replacement vehicle or a full refund if that person's new car or truck has a defect that substantially impairs its use, value or safety. Lemon Laws provide for payment of reasonable attorney fees and costs to a plaintiff (the person suing) who wins in a lawsuit. Also, many civil rights, consumer protection, and environmental laws require the defendant (person being sued) to pay the attorney fees of a winning plaintiff.
Bad Faith: If a party acted in bad faith, the court can order that party to pay the other party's attorney fees. For example, if a party defies a court order and is found in contempt of court, the judge could order that party to pay the other party's attorney fees. Also, if a party commits a fraud on the court, the judge might order that party to pay the attorney fees of the other party. Both the plaintiff and the defendant are eligible for an award of attorney fees under the bad faith exception. An attorney who is guilty of bad faith conduct in the lawsuit can be held personally liable for the attorney fees incurred because of that conduct.
Common Fund: Under the common fund exception, courts may award attorney fees to a plaintiff whose lawsuit creates or preserves a fund of money that will be distributed to others in addition to the plaintiff. The following are examples of lawsuits in which the plaintiff has been awarded attorneys fees under the common fund exception: lawsuits to obtain damage awards for violations of antitrust or securities laws; lawsuits to secure pay increases or other benefits for private or public employees; lawsuits to secure the payment of pension benefits; and lawsuits to recover damages for injuries from defective products or major disasters.