What is the “American Rule” on Attorney Fees?
In the U.S. justice system, it has long been a national policy that everyone deserves their day in court. Under what has become known as the American Rule, each side to a legal matter must pay his/her own attorney fees, regardless of who wins the case. In England, the loser pays, and that concept is known as the English Rule. If you run the risk of paying not only your attorney’s fees but also those of your opponent, should you lose, you will likely be discouraged from filing a claim unless you are extremely sure of the outcome.
The rationale behind the American Rule is that a Plaintiff should not be deterred from filing a case or entering litigation due to a fear of prohibitive costs. It spreads the risk and helps to level the playing field. The American Rule surprises some people who find themselves immersed in a legal battle, as they assume that the losing party should have to pay the attorney for the prevailing party. In reality that doesn’t often happen.
Exceptions to the American Rule
It is important to note that there are some exceptions to the American Rule and times when one side is required to pay the other side’s attorney fees, but only when it is provided by contract or statute (law). For example, if you and the party that you are entrenched in litigation with entered into a contract that specifies the payment of attorney fees to the prevailing party, or from one party to the other, as specified, then you would be entitled to seek fees.
Written Contracts
There have likely been times in your life when you have signed this type of agreement spelling out attorney fee nuances without even realizing that you did. Some examples of this would be signing the application for a credit card, car insurance, or homeowner’s insurance. This type of language is often contained in fine print in contracts drafted on behalf of a large company and signed by the person for which services or goods will be provided. If you’ve ever borrowed money from a bank, you’ve signed a promissory note that obligated you to pay the bank’s attorney’s fees if you default. The bank knows (because it has attorneys who know the rules) that an attorney’s fee provision must be included in the note. Otherwise, it could not make you pay its attorney’s fees.
Statutes
A statute is a written law enacted by a legislative body. Statutes can be at the state level or federal level. In Indiana, the state’s statutes are found in the “Indiana Code” or I.C. These statutes are codified with numbers and set out all laws currently in effect, which are sometimes revised or repealed (revoked or annulled). They often contain specific elements which must be met in order to satisfy a claim made pursuant to the statute, or they may specify the types of damages that may be sought in a particular matter. If a statute says that you are entitled to attorney fees, then you can make a claim for them in your lawsuit. A common example of this would be the Offenses Against Property Act, that allows you to recover up to treble (triple) damages, plus attorney’s fees, if someone violated certain criminal statutes when interfering with your property rights.
How it Works
If a written contract exists between you and the other party involved, but there is no contractual language or statute (law) that allows for attorney fees for the type of legal matter that you have, then you will be paying your own attorney fees, even if you win. If no contract exists between you and the other party involved and there is no statute (law) that allows for attorney fees for the type of legal matter that you have, then you will be paying your own attorney fees, even if you win. That’s just the way it works in America.
To find out whether you are eligible to seek attorney fees for your legal matter, call The Nice Law Firm at (317) 269-3500 to discuss the specifics of your case. We know the law. We understand the nuances involved. We take pride in what we do – which is helping you.
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