Jan. 29, 2024

This paid piece is sponsored by Woods, Fuller, Schultz & Smith PC.

By Jake Schneider, Woods Fuller associate attorney

One of the most common questions I am asked by people seeking to hire a litigation attorney is: “If I win, the other side has to pay for my attorney’s fees, right?”

While many people assume this to be true, it is normally not the case in real life. Instead, the United States abides by what is aptly called the “American rule.”  The American rule is a default rule which provides that each party bears the burden of the party’s own attorneys’ fees.

In other words, regardless of whether you “win” or “lose” a lawsuit, you typically are responsible for paying your lawyer’s fees.

Like many default rules, however, the American rule has its exceptions.

There are two exceptions, both of which are recognized in South Dakota. The first exception is where the parties have entered into an agreement that contains a provision entitling the prevailing party to an award of attorneys’ fees. These provisions sometimes are seen in employment agreements and asset purchase agreements.

The second exception to the American rule is when an award of attorneys’ fees is expressly authorized by statute. For example, attorneys’ fees may be available in mechanic’s lien foreclosure cases. South Dakota Codified Law 44-9-42 provides that “(t)he court shall have authority in its discretion to allow such attorney’s fees and receiver’s fees and other expenses as to it may seem warranted and necessary according to the circumstances of each case, and except as otherwise specifically provided in this chapter.”

SDCL 44-9-42 is illustrative for two reasons. First, a statute must clearly provide that an award of attorneys’ fees is authorized because courts will not find an implied right to attorneys’ fees. Second, even where a statute authorizes an award of attorneys’ fees, there is no guarantee that the court will award them because most statutes that authorize an award of attorneys’ fees use permissive language rather than mandatory language.

In other words, most statutes, like 44-9-42, provide that attorneys’ fees may be awarded but are not required to be awarded.  If attorneys’ fees are authorized, the prevailing attorney will have to file a request with the court asking for fees and explaining the basis for such an award.

So while it is possible to have a court order the opposing party to pay your attorneys’ fees, it is relatively uncommon. Because it is an unlikely outcome, it is best to assume that you will be responsible for your own attorneys’ fees.

The litigation team of attorneys at Woods Fuller is committed to making sure you understand the legal process. If you have questions or need legal assistance, reach out.