As a general rule in California, whether you prevail at trial or otherwise, all parties to litigation are responsible for their own attorneys’ fees. Considering that ultimate financial sum at stake, whether you are the plaintiff or defending yourself against a frivolous lawsuit, the costs of attorney’s fees must be taken into consideration as they are often the driving force in making litigation decisions.
In a traditional civil suit, attorney’s fees are not recoverable against the opposing party unless they are provided for by statute or by contract.
Often, the prevailing party can seek to recover attorney fees by right, or sometimes at the discretion of the court. Although outside the scope of this article, such matters are often in the interest of public policy. Numerous statutes provide for attorney’s fees such as Trespass, Racial Discrimination by an Employer, Violations of the Consumer Legal Remedies Act, Insurer Bad Faith, Free Speech, and the Enforcement of a Judgment to name a few.
In addition, the court reverses the right upon a motion to protect an important right affecting the public interest if: “(a) a significant benefit, whether pecuniary or nonpecuniary, has been conferred on the general public or a large class of persons, (b) the necessity and financial burden of private enforcement, or of enforcement by one public entity against another public entity, are such as to make the award appropriate, and (c) such fees should not in the interest of justice be paid out of the recovery, if any.”
As per the Code of Civil Procedure, “Except as attorney’s fees are specifically provided for by statute, the measure and mode of compensation of attorneys and counselors at law is left to the agreement, express or implied, of the parties; but parties to actions or proceedings are entitled to their costs, as hereinafter provided.”
However, just including language into a contract that sets forth that the prevailing party is entitled to attorney’s fees is not, by itself, sufficient. Such contractual provisions must be reciprocal and specific to be enforceable.
California Civil Code §1717:
“In any action on a contract, where the contract specifically provides that attorney’s fees and costs, which are incurred to enforce that contract, shall be awarded either to one of the parties or to the prevailing party, then the party who is determined to be the party prevailing on the contract, whether he or she is the party specified in the contract or not, shall be entitled to reasonable attorney’s fees in addition to other costs.
Where a contract provides for attorney’s fees, as set forth above, that provision shall be construed as applying to the entire contract, unless each party was represented by counsel in the negotiation and execution of the contract, and the fact of that representation is specified in the contract.”
As stated by the courts, “One purpose of section 1717 is to avoid uncertainty and clarify the issue of [attorney] fees, so both sides can make rational evaluations about the case, including prospects of settlement and so forth.” ( International Billing Services, Inc. v. Emigh, supra, 84 Cal.App.4th at pp. 1186-1187.) If a clause “does not put the principals to [an agreement] on notice that it is an attorney fees clause,” section 1717 does not give all parties a right to recover attorney fees. (Campbell v. Scripps Bank (2000) 78 Cal.App.4th 1328, 1337
Reasonable Attorney’s Fees:
As part of California Civil Code §1717, “Reasonable attorney’s fees shall be fixed by the court, and shall be an element of the costs of suit.”
Determining whether or not attorney fees are reasonable is a matter for the court to determine with the burden of proof on the party seeking to recover the fees and often based on the amount of time spent on the matter before the court. Generally, the court may not consider the fee arrangement with their client as a determining factor of the fees to be paid by the losing party. Rather the court will consider the number of hours reasonably expended multiplied by the reasonable hourly rate with adjustments to be made based on the novelty and difficulty of the litigation, skill of the attorney, and the nature of the award.
In particular, a court may look to the attorney as to the request being made when such submissions are vague, inflated, or include noncompensable hours. The evidence should allow the court to consider whether the case was overstaffed, how much time the attorneys spent on particular claims, and whether the hours were reasonably expended. The reasonableness of an attorney’s hourly rate may be substantiated by counsel’s declaration that the rate was in line with those prevailing in the community for similar services by lawyers of reasonably comparable skill, experience, and reputation.
In a breach of contract, attorneys’ fees will always be key to your decision-making process. Make sure that you know whether your contract includes an attorneys’ fees provision and whether it is clear enough to be enforceable.
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Disclaimer: Every situation is different and particular facts may vary thereby changing or altering a possible course of action or conclusion. The information contained herein is intended to be general in nature as laws vary between federal, state, counties, and municipalities and therefore may not apply to any given matter. This information is not intended to be legal advice or relied upon as a legal opinion, course of action, accounting, tax, or other professional services. You should consult the proper legal or professional advisor knowledgeable in the area that pertains to your particular situation.