Litigation Costs: Getting the Other Side to Pay

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What Are Litigation Costs?

Litigation costs are of chief concern in the settlement, determination, and outcome of a lawsuit.  It is a reality in the legal world that if a judgment will not cover the legal costs, then a lawsuit is not worth it, and it will seldom be pursued.  Defendants are likely to settle if the settlement is less than the predicted costs of defending the suit.

Litigation costs include hiring expert witnesses; the costs of a study, report, analysis, or other project ordered by the court; attorney hourly fees; court fees; copy fees; deposition fees; computer legal research services; secretarial and paralegal fees; external, consultant, and specialist fees; private investigation fees; costs in obtaining medical, school, and government records; accident reconstruction fees, and so on.  The list is potentially endless.

Why Do Losers Of a Trial Have To Pay For the Litigation Costs of the Other Side?

In general, U.S. law does not force the loser to pay the winner’s litigation costs.  The theory is that this allows all those with a grievance to have it heard in a court of law.  However, opponents say that this system causes too many frivolous lawsuits, and forces defendants to pay out-of-pocket for any random case that is filed against them.

England still adheres to its old system of making the loser pay for litigation costs.  Viewed simply, it seems like this would fairly inhibit frivolous litigation.  However, complications arise when suits are appealed and judgments reversed, or with multiple defendants.  Also, England’s system may only discourage the middle class from suing, acting as another burden on the middle class.  Also, it may be a popular misconception that there are a high number of “frivolous” lawsuits in the U.S.

Can Litigation Costs Be Passed To the Losing Party In The United States Under Any Circumstances?

Despite the general rule, litigation costs can be awarded in two cases: when parties agree to it by contract, and when a statute (a law drafted by the legislature) specifically allows a judge to do so. Contracts may contain clauses which state that a loser in litigation must pay the winner’s legal fees. Most of these clauses are mutual: the clause applies to both parties in the event of a trial. There are some contracts, however, which may try to sneak in attorney fees clauses which only apply to one party. Judges still have the power to annual such clauses if the court deems the provision grossly unfair. This is most likely to occur if the contract was made under duress or with unequal bargaining power between the parties.  

In the areas of family law, civil rights/anti-discrimination law, copyright law, environmental law, and others, there are statutes in place allowing for the recovery of litigation costs.  In such areas, parties are apt to commit willful, malicious wrongs against the public good, which are punishable through the payment of the other sides’ litigation costs. In some states, like California, litigation costs may also be covered if the court finds that the case was “frivolous”, that there were no legal grounds for it and thus had very little chance of success to begin with, and the court may require the party instigating the lawsuit to cover the defendant’s costs. Requiring the plaintiff to pay for the defendant’s legal fees can serve as a penalty against a party who tries to use the legal system to harass others rather than actually seeking justice.

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Last Modified: 01-31-2017 02:52 AM PST

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