Can You Recover Your Attorney's Fees In Litigation?

The single most frequent question our clients ask, whether they are suing or being sued, is whether they can recover their attorney's fees. The honest answer is that it depends entirely on where the case comes from, and most people are surprised by how the rule works.

The default rule: everyone pays their own

California follows what is known as the American Rule. Absent a contract or a statute providing otherwise, each side pays its own attorney's fees regardless of who wins. You can be completely vindicated at trial and still absorb every dollar of your own legal cost.

This is codified in Code of Civil Procedure section 1021, and it is the backdrop against which every fee question is answered. Fee recovery is the exception, not the norm, and it has to come from somewhere specific.

The two doors to fee recovery

In practice there are two routes.

A contract that says so. If the parties signed an agreement containing an attorney's fees provision, the prevailing party can generally recover. California adds an important protection here: Civil Code section 1717 makes one sided fee clauses reciprocal in contract actions. If a lease or note says only the landlord or only the lender can recover fees, the statute converts it, so the other party recovers too if they prevail. Drafters who write one sided clauses often do not realize they have handed the other side a weapon.

A statute that says so. California has many fee shifting statutes scattered across the codes. Common examples in our practice include mechanics lien and prompt payment provisions in construction, the financial elder abuse statutes in trust and elder cases, certain provisions in the Probate Code, and various consumer protection statutes. If your claim arises under one of these, fees may be recoverable even with no contract at all.

If neither door is open, fees generally are not recoverable, no matter how badly the other side behaved or how clearly you win.

Why this shapes strategy from day one

The fee question is not something to sort out after trial. It determines how a case should be run.

When fees are recoverable, the economics change on both sides. A modest damages claim becomes worth pursuing because the fee exposure dwarfs the principal. Defendants face the risk of paying twice: their own lawyers and their opponent's. That reality drives settlements far more than the merits do in smaller cases.

When fees are not recoverable, the calculation is colder. A $60,000 dispute that will cost $80,000 to try is a business problem, not a legal one, and clients deserve to hear that framed honestly at the outset rather than discovered at the end.

The first thing to do in any new matter is therefore to find the fee clause, or confirm there is not one. It belongs in the analysis before the complaint is drafted.

Cross-complaints, and the trap inside them

Clients who have been sued frequently want to file a cross-complaint, and often they should. But where fees are in play, a cross-complaint deserves careful thought.

Filing one expands the case. It adds claims, discovery, motions, and trial time, and every hour of that is potentially recoverable by whoever prevails. A cross-complaint that succeeds can convert a defensive posture into a fee award in your favor. A cross-complaint that fails can enlarge the fees you end up owing the other side.

There is also the question of who counts as the prevailing party when both sides win something, which is a determination the court makes in its discretion by comparing the relief each side actually obtained. Mixed results produce genuinely unpredictable fee rulings, and that unpredictability is itself a reason for caution.

Other things that move fees

Two mechanisms deserve mention because they can change the fee picture even where the underlying claim carries no fee provision.

Statutory settlement offers. A properly served offer to compromise under Code of Civil Procedure section 998 can shift certain costs, and where a fee provision exists it can affect fees as well, when the party who rejected the offer fails to beat it at trial. Rejecting a reasonable offer carries real consequences.

Discovery sanctions. California awards fees as sanctions for discovery abuse independently of who ultimately wins the case. A party that stonewalls legitimate discovery can be ordered to pay the fees incurred in forcing compliance, which is discussed further in our article on motions to compel and attorney's fees.

The practical takeaway

Before you sue, and before you answer, read your contract. The presence or absence of a single paragraph frequently matters more to the economics of a dispute than the underlying facts do. And if you are drafting agreements now, decide deliberately whether you want a fee clause at all, because California will make it cut both ways.

Talk to a Los Angeles business litigation attorney

The Darvish Firm's Los Angeles business litigation attorneys evaluate fee exposure at the outset of every matter, because it drives strategy. If you are weighing whether to bring or defend a claim and want a clear picture of what it may cost and what may be recoverable, call (310) 677-3512 or request a consultation. Our breach of contract page covers contract disputes in more depth.

This article is general information about California law, not legal advice, and reading it does not create an attorney-client relationship. Every case depends on its facts. Consult an attorney about your specific situation.