Clients are naturally curious as to whether they can recoup their attorneys’ fees if they prevail in litigation. The short (and disappointing) answer is: typically not. Under the antiquated (and arguably more logical) “English Rule,” the losing party was forced to pay both its own attorneys’ fees and the prevailing party’s. Unfortunately for successful litigants, this rule has given way to the “American Rule,” whereby each party pays its own fees regardless of who prevails.
North Carolina adheres to a modified version of the American Rule. The general rule in North Carolina is that each party pays its own fees, with a few narrow exceptions. Those exceptions arise when the General Assembly enacts a statute specifically authorizing the recovery of attorney’s fees in particular cases. Even so, these narrow exceptions apply only to claims arising under North Carolina law. As such, state statutes will not allow recovery of attorneys’ fees in federal lawsuits unless there is a specific federal directive on point.
Here are a few examples of claims for which a statute provides for recovery of attorney’s fees:
- Misappropriation of trade secrets;
- Unfair and deceptive trade practices;
- Claims arising from a breach of a business contract that contains a reciprocal attorneys’ fees provision, meaning each party has the opportunity to recover attorneys’ fees under the contract;
- Retaliatory employment discrimination practices and wage and hour disputes;
- Claims arising out of a promissory note, conditional sale contract, or other “evidence of indebtedness” (including leases);
- Claims involving liens against real property;
- Injury and property damage claims involving an insurance company in which the total recovery is less than $20,000;
- Claims brought by an opposing party that prove altogether unsupported by law or fact;
- Claims involving domestic or family issues such as post-separation support, alimony, or child support; and
- Claims involving estate disputes, including will caveats.
Note: This is not an exhaustive list and each category above has additional limitations.
Even if your claim falls into one of these categories, however, there is a risk that you will not recoup your attorneys’ fees. Judges have discretion to deny or reduce the recovery of fees even if a statute allows it. It is critical to keep this in mind before entering into expensive and protracted litigation, particularly if the amount in controversy is relatively small.
An experienced attorney can advise you of the risks and rewards of entering into litigation given the likelihood that you will not recover your fees. At Miller Monroe, our goal is to offer you efficient, aggressive, and cost-effective representation, and we will help you make the best strategic and financial decision in resolving your legal dispute.