Contracts 101: Attorney Fees Clauses

Contracts 101: Attorney Fees Clauses

If you ever read a contract, you will note that there is usually language referencing the payment of “attorney fees.” This clause typically states that if there is ever a dispute related to the contract, the winning party would get paid back their attorney fees back from the losing party. This is a great

If you ever read a contract, you will note that there is usually language referencing the payment of “attorney fees” This clause typically states that if there is ever a dispute related to the contract, the winning party would get paid back their attorney fees back from the losing party. This is a great clause if you are the one suing and you win. On the other hand, it can backfire on you.

Imagine if you are the party that breaches the contract. The other party sues you and you become potentially liable for attorney fees. The suing party may be motivated to hire an attorney. In some cases, the attorney will help sue you since he or she knows that he or she will recover their attorney fees. What started out a simple dispute could escalate into a situation where the amount of attorney fees is higher than the amount in dispute.

Attorney fees clauses are helpful to protect a party who was damaged from losing more money in trying to sue the other party. Although they are helpful, you should take care to ensure that this legal clause makes sense for the contract you are drafting and that it protects you rather than hurt you.

If you have questions about contract law or drafting a contract, reach out to us at info@brunogroupinc.com or (818)539-2245. We would love to hear from you.