As always, before reading this post, please review my disclaimer by clicking the link above or by clicking on this link. As always, any legal principles discussed apply only to the Commonwealth of Virginia.
Introduction
"It's their fault that I'm in this mess, they should pay your fees, not me." If I had a dime for every time I've heard a client say that or something similar to me I'd... well... probably have a lot of dimes. Attorneys' fees are one of those areas where a particular sense of unfairness hits a lot of clients. If it's not their fault that they need an attorney (maybe they've been wrongfully sued, or wrongfully accused of a crime, or maybe they are enforcing their rights against someone who refuses to do what they are supposed to), it just doesn't seem right that they have to pay their lawyer and can't get the other side to pay.
Well, there are some situations in which your attorneys' fees can, in fact, be ordered to be paid by the other party, but those situations are exceptions, not the rule, and even they are complicated. In this blog post I hope to discuss some of the basics (the details would be far too much for one post) on when you can and cannot require the other party to pay for your lawyer, and how such an arrangement actually works.
American Rule vs. English Rule
Much of the "common law" world (the parts of the world that can trace their legal traditions to Medieval England) follow what is known as the "English Rule" in civil lawsuits. This rule is simple - in a lawsuit, the loser pays the winner's attorney's fees, in addition to his or her own. The United States, however, despite being a common law country, does not follow the English Rule. Rather, we follow the "American Rule," which states that, while there are exceptions, barring the availability of one of those exceptions, each party pays his or her own attorney regardless of who wins and loses.
The merits of this Rule can be debated all you want (and this is not a constitutionally required rule, by the way, meaning the various state legislators could change it any time they wanted to if they wished), but it is the law in all 50 states and the federal court system right now. As a result, you should always enter a legal situation expecting to pay your own attorney.
Now, with that background, it might be worth discussing what the major exceptions are. In Virginia, there are around three major exceptions.
Exception 1 - Statutory Exceptions
Statutory exceptions are situations where Virginia Law expressly provides for attorneys' fees to be awarded in the discretion of the court. Some common situations in which courts have the power to award attorneys' fees to a party of its choosing are Family Law cases (including divorce), estate dispute cases, and all civil lawsuits heard by the Juvenile and Domestic Relations District Courts.
Now, the statutory exceptions themselves will lay out in each specific part how the court makes its determination - and not all statutory exceptions are the same. For example, in a divorce, attorneys' fees are awarded "in light of all the equities of the case" - in other words, the judge is to make an attorney fee ruling he or she considers fair. In J&DR Court cases, however, attorneys' fees are to be awarded based pretty much solely on the relative ability of the parties to pay.
So, as you can see, the statutory exceptions give a great deal of discretion to judges. As a result, if you wish to enforce an attorney fee right which is granted by statute, you must convince a judge that you should be awarded such relief. You cannot simply demand that the other party pay all of your fees.
Exception 2 - Agreement
The next major exception is if the parties have agreed to apply the "English Rule" to their case. Many contracts, for example, will contain provisions that if a lawsuit is filed based on an alleged breach of the contract, the prevailing party will be entitled to his or her attorneys' fees.
With rare exception, when a lawsuit involves a contract and that contract provides for an attorneys' fee award, the judge is largely without discretion. If the agreement provides that the loser pays, then the judge must order the loser to pay. In these cases, it is much more reasonable to demand your fees from the other side at the outset.
Exception 3 - Sanctions
Virtually all court systems have provisions for dealing with lawsuits that are "frivolous." In Virginia, our provision is Virginia Code Section 8.01-271.1. This provision states that the signing of any "pleading" (court document) indicates that the person signing it (be it the attorney or an unrepresented party) has a good faith basis for believing that the pleading is reasonably based on law or fact. If this later turns out to be untrue, and the pleading was filed in bad faith, the lawyer, the lawyer's client, or both can be sanctioned (penalized) by the court. Amongst the penalties the court may impose is an attorneys' fee award.
Much like exception 1, sanctions are largely discretionary. If a judge finds that sanctions are warranted, the judge may not award fees at all, or only award some fees.
How Fee Awards Function
If you find yourself in an exception situation where a fee award might be possible, the first thing you need to understand is that your fees are your responsibility first and foremost. I've had clients say to me "do this, and then send the bill to the other party." No, that's not how it works. You owe the money to your attorney, and it is your responsibility to pay, even when the court has awarded you your attorneys' fees.
If the court awards you fees, it can come in two forms - an order to pay or a judgment. As I've discussed before, an order to pay is a ruling that requires the person to pay under penalty of contempt of court. A judgment, however, only creates the duty to pay on paper, and then you still have to engage in post-judgment collections to get the money.
The easiest way to tell which situation you are in is to see if the judge provided a payment deadline. If they did, then it's probably an order to pay, and if they did not, then it is probably a judgment. More generally, most (but not all) attorneys' fee awards arising out of agreements are judgments, and most (but not all) attorneys' fee awards arising out of sanctions are orders to pay. For statutory exceptions, it generally depends whether the case is "in law" or "in equity" - so divorce attorney fee awards are usually orders to pay, but estate dispute attorney fee awards are usually judgments.
So, the fact that some attorneys' fee awards are just judgments that must be garnished or otherwise collected should tell you right away that you must still pay your attorney first, but then you can try to get that money back. Even orders to pay, however, do not relieve you of your obligation to your attorney, since the other party may still refuse to pay. Most importantly of all, however, almost all attorneys' fees awards (both judgments and orders to pay) are dischargeable in bankruptcy, so if the other party declares bankruptcy, you can't collect the fee award, and you still have to pay your attorney.
In short, there is virtually no situation in which "do this and send the bill to the other party" is actually acceptable.
Conclusion
There are few things more frustrating to a wronged party that realizing that you still have to pay for your own attorney. While there are exceptions, these are frequently hard to understand, and harder still to enforce. If you'd like to discuss whether an attorney fee award is possible in your case, please feel free to call (703)281-0134 or e-mail me at SLeven@thebaldwinlawfirm.com for a consultation. Our initial consultations are free for up to half an hour!
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