Fee Shifting: Charging the Adversary for One's Own Legal Fees

 by David McCarthy

The most frequently asked question of all is whether one's legal expenses (and attorney's fees in particular) can be charged to an opponent. In general, the answer is no, each party bears its own litigation fees and costs. This is called the American Rule. 

There are exceptions when fee-shifting is called for by a relevant contract (e.g., an apartment lease) or a statute (e.g., the Illinois Wage Payment and Collection Act). (Typically, the client will pay its own attorney and then, if the client is also the "prevailing party," invoke the contract or the statute in support of an application for an order obligating the opponent for the fees.)

   When preparing or vetting contracts for clients, we put a lot of energy and attention on fee-shifting clauses. And we get push back from the other side all the time. A lot of advantage and disadvantage rides on the existence and content of a fee-shifting clause in a contract.

   As for statutes that permit or require fee shifting, they are as a rule available only to plaintiffs as applied even though many of them are neutral on their face (employing the term "prevailing party"). Make no mistake: They are game changers that alter the balance of power in favor of plaintiffs. We know it, and we have leveraged them to the great advantage of our clients.

   The rough equivalent for defendants is a motion for sanctions for frivolous pleadings on the part of a plaintiff. They are rarer than cases with fee-shifting potential because the conduct necessary to support an award of sanctions must be beyond the pale. (We have made three motions for sanctions, defended one, and have not lost yet.)