Litigation costs are the fees and costs that are spent while pursuing or defending a legal claim or litigation. These costs may be substantial and may also vary based on the complexity of the case and the length of time it takes to resolve the case.
Estimated litigation costs are a substantial factor when determining if a lawsuit will be pursued. If the legal costs would likely surpass the damages award in a case, the lawsuit may not be worth pursuing.
In many cases, a defendant will agree to pay a settlement, or an agreed-upon amount that is less than what the estimated costs would be to defend against the plaintiff’s claims. There are many necessities needed for trial prep as well as the trial itself.
For example, it may be necessary to hire an expert witness as well as to pay the salaries and fees of:
- Other legal staff;
- Specialists; and
- Private investigators.
Other examples of litigation costs may include, but are not limited to:
- Attorney fees;
- Court fees;
- Copy fees;
- Deposition fees;
- Costs related to obtaining medical, government, and school records;
- Accident reconstruction fees; or
- Court reporter fees.
For more information about litigation cost related issues, see the following LegalMatch articles:
How Much Does a Litigation Lawyer Cost?
The cost of a litigation lawyer will vary greatly based on criteria including:
- The lawyer’s practice area;
- The location; and
- The lawyer’s expertise and reputation.
Additional factors that may cause the cost to vary include:
- Practice area: Because of the lawyer’s particular expertise and experience necessary, certain practice areas, for example, patent litigation or securities litigation, may have higher attorney fees;
- Attorney’s fees: Attorney fees may also differ based on the location of the nation where the case is heard;
- Lawyers in cities with greater living expenses may charge more than lawyers in rural regions; and
- Experience and reputation of the lawyer: An attorney who is more experienced and well-known may have a higher fee than a lawyer who is less experienced or less well-known.
A litigation lawyer’s hourly rate may vary greatly. Some lawyers may charge as little as $150 per hour and others may charge as much as $800 per hour or more.
A lawyer may also charge a fixed fee for certain services, such as drafting a document.
Who Pays Court Costs in Civil Cases?
In the United States, the party who pays for court costs is governed by The American Rule. This rule provides that each party bears the cost of their own legal fees.
It is important to note, however, that there are exceptions to The American Rule. For example, some federal statutes may allow the prevailing side to collect attorney’s fees in certain types of cases, such as employment discrimination or civil rights claims.
There are also some jurisdictions that have statutes or court regulations that allow for the recovery of attorney’s fees in some types of cases, such as breach of contract or personal injury. In addition, as a consequence of a court order or as a punishment for breaking the law, an individual may be required to pay the opposing party’s legal costs in certain instances.
In some jurisdictions, if a party to a lawsuit acted in bad faith or filed a frivolous claim, they may be required to pay the opposing party’s attorney’s fees. There are also some contracts or agreements that may include terms that require one party to pay the other party’s attorney’s costs if there is a disagreement.
One party may also opt to pay the opposing party’s attorney’s fees as part of their settlement agreement. This can be done in order to avoid the expense of a trial.
Who Pays Legal Fees in Civil Cases?
As noted above, The American Rule applies in the United States. This requires each party to bear their own legal costs.
Fee-shifting statutes and rules vary by state. They generally require, however, that the individual who does not prevail in a legal claim to pay for the legal fees and costs of the party that did prevail.
Fee-shifting statutes are intended to attract attorneys to handle public interest cases that otherwise may not appear to be worth the investment. As noted above, The American Rule requires each party to be responsible for their own attorneys’ fees in litigation, unless there is an applicable contractual or statutory exception.
The threat of being required to pay the other party’s attorney’s fees may increase the pressure on one party to settle the case quickly.
Why Do Losers of a Trial Have to Pay for the Litigation Costs of the Other Side?
Although The American Rule provides that each party pays their own litigation fees, a court can order the losing side to pay for the prevailing party’s legal costs. In certain jurisdictions, the prevailing party, or winning side, will be awarded costs, separate from attorney’s fees, of the lawsuit in certain cases.
This amount, however, may be capped, meaning that the prevailing party may be required to cover a significant percentage of actual costs, which drives down the amount of their net award. The attorney’s fees are a large part of litigation costs.
However, they are typically viewed separately from the costs that may be recovered by the prevailing party. In some types of lawsuits, a state may allow recovery of attorney’s fees or the court may grant a motion by the prevailing party for reimbursement of these fees.
If none of these apply, each side is typically responsible for their own attorney’s fees.
Can Litigation Costs Be Passed to the Losing Party in the United States Under Any Circumstances?
Yes, there are situations where litigation costs can be passed on to the losing party in the United States. This is because there are several specific exceptions to the American Rule, including:
- Contracts: A contract specifies that the losing party pays litigation costs;
- Common fund doctrine: This is a legal principle commonly used in class-action lawsuits, which provides that attorney’s fees will be paid from a common fund, not directly from the plaintiff’s pockets;
- Statutes: Certain states have enacted fee-shifting provisions that award litigation costs to the prevailing party;
- Bad faith litigation: This exception applies to frivolous lawsuits; and
- Compensatory Contempt: This exception applies when one party asks the judge to hold the other party in contempt.
Litigation costs vary, as do state laws.
Should I Hire a Lawyer?
If you are considering filing a lawsuit, it is important to consult with a civil litigation lawyer to determine the potential costs. Your lawyer can help you determine whether it would be worthwhile to pursue a trial or if it would be best to accept a settlement agreement proposed by the defendant.
There are certain issues for an individual to consider when determining whether or not you need a lawyer to aid with litigation charges and expenditures. Any legal procedure can be complicated and time-consuming.
Your lawyer can help you navigate the legal system and understand your rights and responsibilities. They will also help you prepare and present your case, negotiate a settlement, and represent you in court.
Having a lawyer can also help you avoid being accused of acting in bad faith or filing a frivolous claim, which may require them to pay the other party’s attorney’s fees. Your lawyer can also help you recover costs and expenses if you prevail in your case.
If you are involved in litigation and are concerned about the legal fees and expenditures, you should speak with a LegalMatch lawyer to understand your rights and duties as well as to identify the best course of action for your case.