By Attorney Edward Jesson
One of the questions we frequently get asked when we are advising clients about their options when contemplating entering into a lawsuit is: Can I make the other side pay for my attorney’s fee? The answer to this question is very fact dependent, but the general answer is “no”.
It is a common misconception that you are able to claim the money you pay your attorney to pursue a case in court as damages on top of the damages that you have actually suffered. While in many other countries it is commonplace to have a “loser pays” system, wherein the loser of the lawsuit is responsible for paying the other side’s legal fees, that is not the case in the United States. In fact, the general principal that each opposing party must pay their own legal fees regardless of who wins the lawsuit is known as the “American Rule.” For example, if you sue someone for $100,000.00 it costs you $20,000.00 in legal fees to win that lawsuit—at the end of the day under the American Rule, you are only entitled to $100,000.00, not $120,000.00. So in reality, after paying your attorney that $20,000.00, you are only netting $80,000.00.
However, the American Rule is just a general rule and, under North Carolina law, there are certainly exceptions to that rule. Generally speaking, in order for there to be an exception to the American Rule in North Carolina, there has to be a statute authorizing the award of attorney’s fees to the winning party in the lawsuit (usually referred to as the prevailing party in North Carolina’s General Statutes). For example, the winning party in a lawsuit brought under North Carolina’s Unfair and Deceptive Trade Practices Act, or North Carolina’s Wage and Hour Act, will generally be entitled to an award of reasonable attorney’s fees.
Another instance where questions regarding an award of attorney’s fees frequently arises is when there is a contractual provision stating that one party or the other is entitled to attorney’s fees should a lawsuit be brought based on a breach of the contract. In order for an attorney’s fee provision in a contract to be enforceable: (1) the contract must be a “business contract”, i.e. a contract entered into primary for business or commercial purposes and not a consumer nor employment contract; and, (2) the attorney’s fee provision must be reciprocal, meaning no matter who loses, the loser pays.
There are many other statutes in North Carolina that allow for the award of attorney’s fees. If you are considering litigation, the potential for an award (or lack thereof) of attorney’s fees can often be an important consideration. The attorneys at Jesson & Rains can help you evaluate your options in order to make the most informed decision possible.
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Kelly Rains Jesson