Jihee Ahn
We obtained lots of good follow-up questions final week after our webinar covering cannabis litigation in the current down market. Certainly one of them associated to the restoration of attorneys’ charges and the way possible that’s to occur. Potential restoration of attorneys’ charges is a crucial consideration on the outset of any case, however can particularly make an influence on whether or not to pursue a lawsuit or not when companies are hurting. It not solely impacts a celebration’s general capacity to litigate (on the hope of recovering the prices in a while), but additionally impacts all the dynamic of the case as a result of the stakes are greater.
The overall “American Rule” for attorneys’ charges
Below the American Rule, which is adopted in most states, the default is that every occasion is answerable for its personal charges, whatever the final result of the case. The speculation behind this default rule is that it might promote entry to the courts and keep away from conditions the place a celebration might primarily financially bully one other occasion by driving up litigation prices and creating the menace that one will foot all the invoice.
Exceptions to the final rule
In fact, there are conditions the place restoration of attorneys’ charges is granted:
- Contractual agreements. Events might embrace attorneys’ charges clauses of their agreements that enable for the restoration of attorneys’ charges by the prevailing occasion in any dispute regarding these agreements. We’ve seen the gambit of those provisions – some are good and a few are actually dangerous. If that is the intention by each side, it’s essential to ensure these sorts of provisions are absolutely negotiated and clear.
- Arbitration agreements and guidelines. In the same vein, whether or not restoration of attorneys’ charges within the arbitration setting is feasible depends upon the arbitration settlement and perhaps the foundations of the arbitration discussion board. For instance, the American Arbitration Affiliation (AAA) has its personal set of tips on attorneys’ charges and particular procedures for in search of them.
- Statutes. Typically, statutes enable for awards of attorneys’ charges to the prevailing occasion. For instance, shopper safety legal guidelines or mental property infringement legal guidelines enable for them as a matter of regulation.
- “Equitable” doctrines. Typically, sure conditions in litigation can present for restoration of attorneys’ charges associated to a selected procedural dispute. For instance, if a celebration isn’t complying with their discovery obligations, a movement to compel is commonly accompanied by a request for attorneys’ charges in making ready that movement. That is to discourage dangerous religion conduct by events in energetic litigation.
Court docket/Arbitrator concerns for attorneys’ charges requests
Most conditions name for an award of attorneys’ charges to the “prevailing occasion.” Sadly, what constitutes a prevailing occasion usually isn’t clear, and a few of it may well change relying in your decisionmaker. The prevailing occasion is mostly the occasion who succeeds on a good portion of its claims or defenses. However the place there are a number of claims and a number of damages quantities, this will get amorphous.
And, even the place charges are deemed recoverable, the decide or arbitrator will usually train their discretion to find out whether or not the charges requested are affordable. Elements we all know to be thought of embrace: the complexity of the case, the expertise of the attorneys, and whether or not the period of time spent was affordable. It’s not unusual for decisionmakers to determine to chop some period of time billed, or scale back the hourly fee of an lawyer to lower the payment award. So, whereas some restoration is in fact higher than no restoration, it’s essential to be ready for that.
Conclusion
Understanding the foundations and exceptions governing the restoration of attorneys’ charges is essential for any lawsuit. Events getting into into hashish litigation or arbitration ought to seek the advice of with skilled authorized counsel to make sure they’re clear on whether or not restoration of their attorneys’ charges is feasible, with the intention to make knowledgeable choices down the street.