Attorney Fees and the American Rule

At the outset of a lawsuit, one of the most frequent questions clients ask us is “If we win, the other side has to pay our attorneys’ fees, right?”

Most of the time, we have to disappoint those clients. That’s because in most cases, both winners and losers in litigation are responsible for their own attorney fees. This is known as the “American Rule” of attorney fees. That is in contrast to the “English Rule,” under which the losing party in litigation is generally expected to pay the winner’s attorney fees. For most of American history, U.S. courts have rejected the English Rule approach. The most common explanation is that people should not be discouraged from filing or defending lawsuits by the threat that they’ll have to pay the other side’s fees if – despite their valid, good-faith arguments – they lose.

As with most rules, of course, the American Rule has exceptions. Under some circumstances, courts have the option (and maybe even the obligation) to order the losing party to pay the winner’s fees. Some examples include:

• Cases in which a contract requires a party to pay the other’s fees. This possibility is a reason you should make sure contracts are carefully reviewed before you sign them – sometimes the language is one-sided, and it might not be your side.
Copyright cases, in which federal law (17 U.S.C. § 505) allows – but does not require – courts to award attorney fees to the prevailing party under certain circumstances.
• Trademark cases – but courts are authorized to award attorney fees to the prevailing party only in “exceptional cases.” (15 U.S.C. § 1117(a)).
• Cases in which an employer violates statutes governing payment of wages. (Minn. Stat. § 181.171)
• Cases involving certain consumer protection statutes under state and federal law – although the Minnesota Supreme Court has set limits on when attorney fees are available under some of Minnesota’s consumer protection statutes.
• Civil rights cases, including cases under the Americans with Disabilities Act.
In the great majority of cases, though, parties will be responsible for their attorney fees. That is a factor to take into account when you decide whether to take a case to court, and how to manage a case once it’s begun.

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