Attorney’s Fees Recovery Clause

Attorney’s Fees Recovery Clause

An Attorney’s Fees Recovery Clause is a provision often included in contracts that specifies which party is entitled to recover attorney fees and legal costs in the event of a dispute or legal action arising from the contract. This clause can serve as a deterrent against frivolous lawsuits and provides a clear understanding of the financial implications of legal action for both parties.

The clause typically outlines the conditions under which attorney fees can be recovered, such as:

1. Prevailing Party: It generally designates that the "prevailing party" in a legal dispute—meaning the party that wins the case—can recover reasonable attorney fees from the other party.

2. Scope of Fees: The clause may define what constitutes recoverable fees, including reasonable attorney fees, costs of legal representation, and potentially other related expenses.

3. Limitations: Sometimes, the clause will include limitations on the amount recoverable or specify that fees must be reasonable and necessary to the litigation.

For example, in a real estate transaction, if a buyer and seller enter into a purchase agreement with an Attorney’s Fees Recovery Clause and a dispute arises over a breach of contract, the party that successfully litigates the dispute may be entitled to recover their attorney fees from the other party, should the clause be invoked.

Incorporating an Attorney’s Fees Recovery Clause in contracts is a strategic choice that can influence the behavior of parties during negotiations and disputes, as it emphasizes the potential financial consequences of legal actions.