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Litigation and the Recovery of Attorney’s Fees: What to Reasonably Expect

The general rule in Texas is that each party to a lawsuit pays their own attorney’s fees, win or lose.  There are, however, numerous exceptions.  For instance, in lawsuits involving a breach of contract, rendered services, or (because this is Texas) killed or injured livestock, the law says that if you win, you are entitled to recover the fees paid to your attorney.  Further, most modern commercial contracts include a “loser pays” attorney’s fees provision, meaning that the losing party to a lawsuit arising out of the contract must pay the winner’s attorney’s fees in addition to any award of money damages.

However, even if the lawsuit involves a claim where the recovery of attorney’s fees is allowed, recovery of the full amount of your attorney’s fees is not guaranteed.  Instead, the law requires that the attorney’s fees are “reasonable.”  This has understandably caused some confusion.  One judge may see a $50,000 legal bill and find it to be a bargain.  Another judge may look at the same bill and find it far too high.  While the Texas Supreme Court has attempted to clear things up by providing factors and formulas to guide judges in determining what is “reasonable,” there are few hard and fast rules.

As such, it is impossible to predict with any degree of certainty not only whether attorney’s fees will ultimately be recoverable but also what amount the judge will find is “reasonable.”  At the beginning of any lawsuit, you should carefully consider whether litigation makes economic sense given the amount in controversy, the estimated amount of attorney’s fees, and the likelihood that you may be entitled to recover your attorney’s fees (or possibly be forced to pay the opposing party’s attorney’s fees). However, the ultimate decision to pursue litigation should never be driven by whether you may have the right to recover attorney’s fees.  Instead, the question you should ask yourself is “does this lawsuit make good business sense even if I ultimately foot the bill for all of my own attorney’s fees?”

 

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