Have you ever looked at a contract and wondered why it includes a section on “attorney’s fees?” If so, you are not alone. Whether drafting or signing a contract, you may benefit from knowing the purpose of an attorney’s fees provision.
Attorney’s fees might sound like something that only lawyers need to worry about, but the reality is that an attorney’s fees provision can help to ensure that you are legally covered and can even deter others from filing frivolous lawsuits against you.
The Civil Rights Attorney’s Fees Award Act of 1976 is a law established by the United States government that allows a Federal court to award reasonable attorney’s fees to a prevailing party in certain civil rights cases. (United States codified in 42 U.S.C. § 1988(b)). In most cases, this also applies for State courts.
What then do attorney’s fees mean for you? The type of contract you sign will determine how the attorney’s fees provision will impact you. If someone tries to bring a claim against you, a contract could waive your responsibility for all attorney’s fees, make payment of fees the responsibility of the winning party, or obligate you to pay all attorney’s fees regardless of the outcome. Since contracts can include different wording to include legal costs, you will want to make sure you know exactly what the contract obligates you to before you sign.
While many contracts directly state “attorney’s fees,” you might also see phrases, such as “expenses associated with a breach,” or “collection costs.” These phrases may affect how both parties execute the contract.
An attorney’s fees provision in a contract can work for you, against you, or be mutually beneficial to both parties. However, this will depend on how the contract is drafted. We have the experience and expertise needed to draft and revise your business’ contracts. From operating agreements to construction management, we will help clarify what an attorney’s fees provision can do for you. We are happy to help you and your business be thoroughly protected in business dealings.
