Want your attorneys’ fees back? Put it in writing!
Many business owners are unaware of the rules governing the recovery of attorneys’ fees expended by them to enforce their rights. For the uninitiated, the “American Rule” applies to recovery of attorneys’ fees – it allows for the recovery of fees in only two situations: (1) where there is a statute (state or federal) applicable to your dispute that allows for an award of attorneys’ fees, such as Minnesota Statute Section 322B.38, or (2) where the parties agree in writing that in the event of a dispute the prevailing party shall be entitled to an award of attorneys’ fees from the other party (a “Fees Clause”). Barring sanctions for the way the lawsuit is being handled or prosecuted, that’s it.
What that means is that if you are doing business with someone and you do not have a written contract with them or the written contract you have does not have a Fees Clause, you are likely out of luck with respect to getting your attorneys’ fees reimbursed from the other side, even if you win. That is because many of the disputes that arise in business are based on “common law,” not statutes (e.g., a party breached a contract, they did not violate a statute), and even if a statute was violated, not all statutes allow for an award of attorneys’ fees to the prevailing party. Thus, you could find yourself embroiled in a business dispute, hire a lawyer, and win your case, but not be awarded a reimbursement of your attorneys’ fees because the American Rule does not allow such an award in your particular case. So, even if you won everything in your case and recovered all of your damages, if you may feel like your victory was not complete because your recovery was eroded by what it cost you to get there.
So, what is the solution? Put your agreements in writing! And include a Fees Clause in the contract. While it is not practical (or even possible) to put every agreement you may have in your business in writing, there are people and entities with whom you have important arrangements, or with whom more significant dollars are at stake, that mandate you put the agreement in writing.
Daniels & Wymore, PLLC is here to assist you in identifying which arrangements ought to be in writing and will draft contracts for your needs that not only makes sense, but include provisions that work to protect you in the event something goes wrong. Call Christopher M. Daniels, Esq., at (763) 201-1209 to help you put together a written agreement to accomplish your business objectives.
Finally, a practice pointer – if you are presented with a written contract drafted by the other side, and it does not contain a Fees Clause – proceed with caution! It is a red flag that could indicate that the other side thinks that if anyone is likely to breach a contract, it is them. Thus, they do not want you to be able to sue them for a breach of the contract, and get paid your attorneys’ fees incurred to enforce the contract. While this is not always the case when a Fees Clause is missing, it should make you investigate further. One thing you can do is request that a Fees Clause be added to the contract. If that is refused, you should seriously consider whether you want to get into a business deal with them.