What Are Legal Fees?
In the context of a lawsuit, legal fees are costs related to representing your interests, plus the costs of doing business in the legal world. The bulk of legal fees consist of attorney fees. Attorney fees are what you pay your lawyer to represent you. Attorney fees are typically calculated by the hour – so for example if your lawyer is billing $250/hour and he or she spends five hours on your case, you’ll owe $1,250 for legal fees. Sometimes lawyers charge flat fees – one lump sum for a particular type of case no matter how much work the case turns out to be. A skilled attorney can tell you exactly what kinds of fees and costs you can expect for your case.
Court costs are also considered legal fees. These are the fees court charges for things like filing certain documents with the court and copying documents. Your lawyer should be able to give you a good sense of what to expect in court costs for your case.
There are also costs involved in the case even if you’re not working with an attorney. The biggest cost is typically the filing fee. For example , Pennsylvania charges $112 to file a Praecipe of Writ of Summons (the first step in most civil lawsuits) and $155 to file a Complaint (the document that specifically says what the other person did wrong and seeks some form of legal remedy). If your case goes to trial, there will be additional costs such as jury fees and witness fees. The latter is especially important if you’re suing someone for damages and plan to have medical experts testify to your injuries.
When Can You Sue for Legal Fees?
When can you sue for legal fees?
In most civil litigation cases, the prevailing party is not able to recover their attorney’s fees from the opposing party. However, a successful plaintiff in a breach of contract lawsuit may be able to recover his or her attorney’s fees from the losing defendants. See, Cal. Civil Code § 1717. For example, if you sue someone for breach of a written contract, and the contract provides that any party who wins at court shall be entitled to recovery of attorney’s fees, both you and the losing defendant will be able to recover your attorneys’ fees through the court, if you prevail.(Sometimes, even if you lose the case, you will be entitled to fees if you prevail on a separate claim for breach of contract).
But what if the losing party has no contract right to recovery of fees and no bad faith throughout the litigation where he or she filed "frivolous" motions for the sole purpose of annoy and vex the other side, i.e. had no "reasonable ground for bringing" those motions? See, Cal. Code Civ. Proc. § 128.7. In such cases, the prevailing party may obtain an award of attorneys’ fees under the statute governing "frivolous, frivolous tactics, and misusing the legal procedures." See, Cal. Code Civ. Proc. § 128.5. Or what about when a party is sued for a statutory violation which permits recovery of attorney’s fees under its express provisions? For example, if a corporation refuses to reveal its true identity and the names of its owners, in violation of Cal. Corp. Code § 713, and a member of the public successfully sues the corporation pursuant to Cal. Corp. Code § 713, that person may obtain an award of his or her attorneys’ fees from the corporation. See, Cal. Corp. Code § 713(b). There are many other statutes, both state and federal, which authorize an award of attorneys’ fees to the winner of the litigation, but a reviewing court must determine whether such award is appropriate based on the facts and circumstances of the case.
Common Grounds to Claim for Legal Fees
When it comes to recovering attorney’s fees, the playing field can shift dramatically depending upon the nature of the dispute and specific written contracts involved. A common legal basis for seeking reimbursement of attorney’s fees is the presence of a prevailing party clause in a contract (e.g., buy/sell agreements, partnership agreements, leases, bank documents). In these situations, a judge or jury will hear evidence and determine the prevailing party, who will be awarded attorney’s fees.
Another instance where attorney’s fees may be recovered is in a bad faith litigation. For example, certain statutes permit recovery of attorney’s fees incurred in an action to recover unpaid wages when the defendant either denied the claim without reasonable cause or engaged in bad faith conduct in relation to the litigation.
Statutory fee shifting is yet another well-established mechanism for recovering attorney’s fees from the opposing party. Laws addressing successor liability for wage claims, unlawful detainers, Unruh Act and Disabled Persons Act violations, antitrust private actions, private attorney general actions and securities violations (among others) all contain provisions for prevailing parties to recover attorney’s fees from the party who incurs liability under the statute.
How to Add Legal Fees to Your Claim
As with any element of a lawsuit, when you want to include a claim for legal fees as part of your case it should be identified in your complaint or counterclaim. But it can also come up mid-course or at the close of a lawsuit, as the parties file motions or document their remaining claims. Generally speaking, though, you need to have included the request for attorney fees as somewhere as a part of the case.
Having said that, there are definitely tactics and procedural moves that you can employ to increase the likelihood that your claim for attorney fees will be successful. In some cases, including it in the lawsuit may never come up until after everything is finished.
In California, for example, the statute at Civil Code 1717 provides that parties who prevail under fee-shifting contracts can get those fees granted to them even if they did not include the request for fees in their lawsuit in the first place. But, on the other hand, the award for attorney fees must be limited to what is reasonable based on the time, difficulty, and skill needed to handle the legal representation in that matter.
Timing of the Request for Attorney Fees
Once you know that you want to get attorney fees from the other party, you have to decide if you want to include it in the lawsuit right off the bat (which, as noted above, you should do if you are able), or if you anticipate shouldering the attorney fees yourself while your case crawls through the litigation process. If that’s the case, then obviously you’re going to ask for the attorney fees to be paid by the other side much later in the case.
For the most part, not including it at the beginning isn’t a huge problem because there are plenty of after-the-fact mechanisms that allow you to claim the fees you have already shelled out for your lawyer. You’d just have to submit that to the court at the end of the case when all the legal work is done, usually as part of the final resolution of the lawsuit or shortly thereafter. And that would likely include putting together what the attorney fee agreement was, how many hours were involved, the hourly rates, etc.
Common Problems When Requesting Attorney Fee Reimbursement
There are some pitfalls commonly associated with seeking reimbursement of attorney fees from the other party. These include the scope of the request, the reasonableness of the fee, and sometimes even the failure to put in the evidence that justifies the reimbursement. Also be on the lookout for related claims in other lawsuits, cross-claims, etc.
Sometimes, you won’t be able to get all of the attorney fees you requested, but you’ll receive a portion of fees from the other party in a situation where they are responsible for your legal expenses. The decisions on how much you can get, and if you can get it to begin with, totally depends on the exact facts of your case.
Difficulties in Pursuing Legal Fees
If the suing party can overcome the threshold issue of being able to successfully sue for attorney’s fees, the next challenge then becomes overcoming the hurdle of also being able to prove up the entitlement amounts. In other words, attorney’s fees are not just given out like candy. The suing party is required to prove that the opposing party is entitled to the fees being sought. For example, in her declarations, the suing party can set forth the work that was done on the case, as well as the amounts charged and paid. However, sometimes the attorney who performed the legal work may no longer work for the suing party, in which case attesting to the time spent may become more difficult .
The attorney’s billing records would then be needed to effectively document the fee expenditures to the court’s satisfaction, since the billing records should help detail the amount of time spent. Even if no specific attorney handles most of the work in a legal malpractice or litigation dispute, the billing records should still go into detail as to the hours spent on the particular task, so that the court can approve the reasonableness of the hours spent.
Finally, there is no uniform standard applicable in every state as to the entitlement or net recovery amount for prevailing on an award of attorney’s fees or costs. There can be differences and distinctions made depending on the language used in the contract at issue, whether the fees or costs winners were incurred by the suing party, and the purpose or goal of the attorney’s fees award.
Sample Cases and Case Law
Many cases address the issue of whether a party may recover attorney’s fees, and often these cases involve a contractual right to recover from the opposing party. Always consider whether the theory of liability stated by another party could entitle you to an award of attorney’s fees if the opposing party loses the case, as opposed to prevailing.
For example, in a decision reported at Longo v. Pugh, 135 N.C. App. 646 (1999) the Court of Appeals awarded attorney’s fees based on a contractual provision where the opposing party had argued unsuccessfully that the plaintiff could not recover any damages on a breach of contract claim because the contract provided that any recovery for breach would be limited to the amount paid under the contract. The Court held that the language of the contract clearly provided that the party alleged to have breached the contract not only agreed that the other party would be entitled to some recovery but also agreed that it would pay the other party’s legal fees "to enforce" its rights under the contract.
Similarly, in a case that involved the North Carolina Consumer Finance Act, a federal court applying North Carolina law awarded attorney’s fees even though the statute expressly prohibited recovery of such fees by a consumer when a consumer finance company won a suit based on the loan agreement. Meyer v. Beneficial Management Corp. of America and Beneficial Loan and Thrift, Inc., 19 F.Supp.2d 320 (E.D.N.C. 1998). The Court found that the North Carolina court would likely award attorney’s fees to a consumer where the consumer was forced to bring procedurally disallowed counterclaims that were raised in the defense of a suit by the consumer finance company. The Trial Court reasoned: The reason for the exception created by the GAPC is clear. "To permit [a party raising a ‘good faith,’ ‘bona fide dispute’ [to] avoid attorney fees and costs by making an elaborate record in which the objective merits of the case are finally determined would entirely defeat the Legislature’s intent with regard to its ‘sham transaction’ statutes." 9302 Production Co. v. K-Mart Corp., 108 F.R.D. 295, 301 (S.D.N.Y. 1985).
Based on this reasoning, the Court found that the exception applies to the circumstances presented before it and that the consumer finance company’s actions in forcing the consumer to litigate these claims entitles the consumer to an award of attorney’s fees under the GAPC.
These cases illustrate that, while it may initially seem that there is no way to recover attorney’s fees from the opposing party, a good case analysis might identify legal theories that could lead to a recovery.
Legal Support and Advice
When contemplating the prospect of suing for legal fees, it is always beneficial to get assistance and advice from an attorney. Given the intricacies surrounding a breach of contract claim or the inherent difficulties in proving a claim of quantum meruit (as discussed above), speaking with an experienced attorney will help to determine if your case is worth the time and investment. A lawyer also can assist with drafting clear retainer agreements or outlined bills to make a subsequent legal action more viable in the first place.
Alternative Options to Suing for Legal Fees
While suing to collect owed legal fees is an option, it is generally not the most beneficial approach. It is often difficult to prove a lawyer/client relationship existed and even harder to prove to a judge or jury that a specific amount of money is owed, rather than a fantasy debt thought up by a litigating client. And even if you win, in many states (including California) there are no prejudgment interests on collectable debts, so you will not be paid back for pre-suit costs and the delay in recovery.
But there are other ways to ensure you get paid for your services, even if you and a client do not get along. Putting a fee clauses in your retainer agreements can help avoid the issue of suing for fees altogether. For example, you can include in your retainer agreement that you may add an additional fee onto the balance owed if you are forced to sue for the unpaid amount. This is a good way to ensure you are not penalized for having to continue to litigate a case while you are trying to recover your fees.
You can also give clients the option of mediation or arbitration to resolve the case. If the client is amenable, you can use a mutually agreeable third party to evaluate the strengths and weaknesses of the opposing party’s case and make an informed decision about what makes sense financially and legally. Sometimes simply informing a client that you are going to use mediation or arbitration rather than pleadings , motions and discovery can help bring a resolution to a case, even if the client does not ultimately agree to submit their case to mediation or arbitration.
California Code of Civil Procedure section 2982(f) provides another alternative to lawsuits for collection of legal fees. This section governs attorney’s fees clauses in contracts as follows: "If a contract contains an attorney’s fees clause, a provision of a general nature addressing attorney’s fees in the event of litigation upon the underlying contract, and there is an arbitration provision that requires arbitration of a dispute arising out of the contract, the clause shall apply to the arbitration." (C.C.P. § 2982(f).) This provision allows the attorney’s fees clause to be applied to arbitrations regarding the legality of the contract. Of course, you still have to pay the arbitration costs yourself, but that is only a small fraction of the fees of litigating in court and sometimes worth doing to recover owed fees.
Or you can set out clear terms of representation and billing agreements with the client before entering into any formal contracts. Then at least you have their acceptance of the fees and terms, even if they are uncollectable, and a lawsuit does not look so unlikely to succeed.
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