Attorney's Fees: What Happens if They're Not Mentioned in the Contract?

When drafting a contract, parties usually consider various terms and conditions to ensure that their interests are protected. One of these provisions is the attorney's fees clause. An attorney's fees clause typically requires the losing party in a dispute to pay the attorney's fees of the prevailing party. However, what happens if the contract does not include an attorney's fees provision?

In such a case, the default rule is that each party bears its own attorney's fees, regardless of the outcome of the dispute. This means that even if one party prevails, they cannot recover their attorney's fees from the other party, unless a specific law or court rule allows it.

There are some exceptions to this default rule. For example, in some states, there are laws that allow for the recovery of attorney's fees in certain types of cases, such as consumer protection or employment discrimination cases. Similarly, in federal court, there are rules that allow for the recovery of attorney's fees in cases involving civil rights, patent infringement, or other specific types of claims.

Another way that attorney's fees can be recovered is through a doctrine known as the "American Rule." Under this rule, each party generally bears its own attorney's fees unless a statute, contract, or other legal authority provides otherwise. The American Rule is followed in most states, including those that do not have specific laws governing the recovery of attorney's fees.

It is important to note that even if the contract does not include an attorney's fees provision, parties may still negotiate one after a dispute arises. If both parties agree to include such a provision, they can enter into a separate agreement that specifies the terms and conditions under which attorney's fees can be recovered.

In conclusion, when drafting a contract, parties should carefully consider whether to include an attorney's fees provision. If such a provision is not included, the default rule is that each party bears its own attorney's fees, unless a specific law or court rule allows for recovery. Parties should also be aware that they may still negotiate an attorney's fees provision after a dispute arises.