On the issue of attorney’s fees, Virginia and many other
states subscribe to what is known as the “American Rule.” The “rule”
states that all parties to a lawsuit will be responsible for their own
attorney’s fees regardless of who “wins” unless a contractual
provision or statute provides otherwise.
Even so, it is often surprising how many contracts fail to
include any terms regarding the
ability to recover reasonable attorney’s fees in the event that a party needs
to sue for breach of the contract. When negotiating
terms, parties routinely fail to consider the costs associated with initiating
or defending a lawsuit arising from the contract. These costs, including but not limited to
attorney’s fees, are significant. In
some cases, these costs can even exceed the actual damages incurred as a result
of the breach. In that instance, the
wronged party can never be “made whole” because he or she has had to absorb the
costs of the lawsuit. This result can
easily be avoided if the contract provides for the ability of a prevailing
party in a suit for breach to collect attorney’s fees.
Attorney’s
fees provisions can also benefit the parties by discouraging litigation in some
circumstances, or reducing the time before settlement of litigation in
others. The provision should deter a
party from filing any lawsuit that is not a) necessary and b) well-founded, due
to the risk that he or she will be ordered to cover the opposing party’s fees
if the suit is not successful. The same
risk encourages parties to enter into negotiations and reach a resolution before incurring substantial fees. Although an attorney’s fee provision is a
necessary and far reaching provision, it terms are relatively straight forward
and simple. When entering into
negotiations regarding the language and terms of a contract, or before drafting
even the simplest agreement of your own, it is always in your best interest to
consult an attorney to ensure that the ability to recover reasonable attorney’s
fees is provided clearly and in
accordance with the law of the jurisdiction that will be used to interpret the
contract in the case of an alleged breach.
While many people believe that they only need an attorney once a problem
arises, it is only by consulting an attorney prior to the execution of the contract that you can ensure you are
protected before it’s too late. RRBMDK
attorneys are experienced in drafting and reviewing contracts/agreements
arising in various areas of law – from Real Estate to Family Law, Employment to
Corporate Organization, and want to urge anyone considering entering into a
written contract to call upon us for a thorough document review, and to answer
any questions related to that ever-present “fine print.”
