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Attorney fee-shifting

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Attorney fee-shifting is a payment arrangement provision whereby the losing party of a lawsuit pays attorney fees for the prevailing party.

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Contents

Overview

Rule 68 of the Federal Rules of Civil Procedure[1] (FRCP) provides for attorney fee-shifting in certain conditions. A prevailing party may be able to collect attorneys' fees from the opposing party according to FRCP Rule 68 if:

  1. the defendant serves a settlement offer on the plaintiff more than 10 days before trial;
  2. the plaintiff does not accept the offer within 10 days of service; and
  3. the judgment ultimately received is less favorable to the plaintiff than the offer.

If these conditions are met, according to Rule 68, the plaintiff must pay attorney fees of the opposing party.[2]

Attorney fee-shifting arrangements often appear in business contracts.

Attorney Fee-Shifting Provisions in Contracts

Contracts, such as business contracts, often contain attorney fee-shifting provisions. Including such a provision does not guarantee that the provision will be upheld in court.

A fee-shifting provision in a contract often includes language such as the following: "In the event of any controversy, claim or action between the parties, arising from or related to this agreement, the prevailing party will be entitled to receive from the other party its reasonable attorneys' fees and costs."[3]

Enforcement of attorney fee-shifting can prove challenging. This is primarily because judges and juries may find merits to both sides of a case such that it may be difficult to pinpoint a "prevailing" party in an action.

References

  1. http://www.law.cornell.edu/rules/frcp/Rule68.htm
  2. http://theattorneyfeerecoveryblog.blogspot.com/2010_02_01_archive.html
  3. http://www.bizjournals.com/denver/stories/2003/09/22/smallb3.html

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