Guidance

Narrow versus Broad Clauses

An attorneys' fees clause can be drafted narrowly or broadly. A narrow attorneys' fee clause only allows recovery of attorneys' fees in actions directly related to the enforcement of contractual rights. A broad attorneys' fee clause will allow recovery of attorneys' fees not just for actions for the enforcement of contractual rights, but for actions involving any claim arising from the contact, including civil claims or torts.

Maria Giardina of the Sedgwick law firm argues in favor of limiting the basis of the claims. "Keep the subject matter of the attorney's fees clause narrowly tailored to the contract. Clauses that provide for the recovery of attorney's fees in an action to 'enforce the contract' or in the event of 'breach of' or 'default under' the contract will be narrowly construed to avoid recovery in tort. Avoid phrases such as 'arising out of' or 'related to' the agreement, which will broaden the fee clause and make it applicable to noncontract claims." Draft Clause Carefully to Avoid Recovery of Attorney's Fees in Tort, Fall 2008.

That said, it is up to the parties to decide what claims they want covered by their attorneys' fees clause. If they want it to cover noncontract claims, they can draft a broad clause. However, they should only do this if they are comfortable with the attorneys' fee clause applying to any claim related to their relationship, as using a broad clause does give courts considerable discretion to interpret when to apply the clause. 

Elements

The attorney fee clause contains two or three elements: (a) the condition, (b) the benefactor, and, potentially, (c) the scope.

In the event of any action to enforce rights under this Agreement, the prevailing party shall be entitled its recoverits costs and expenses, including reasonable attorneys fees, incurred in connection with such action.

(a) Condition. What actions give rise to the right to recover attorneys' fees? In other words, is this a narrow or broad attorneys' fee clause? 

A narrow clause will use a condition like: "If a party brings legal action to enforce rights under this Agreement..." A narrow attorneys' fee clause means that the right to recover attorneys' fees will be limited to suits involving breach of contract. An action related to the contract or relationship between the parties, such as a tort or other civil suit, will not be covered by a narrow clause, and attorneys' fees will not be recoverable.

A broad clause will use a condition like: "If a party brings legal action to enforce rights related to this Agreement..." A broad attorneys' fee clause means that not only can a party recovery attorneys' fees from a suit involving breach of contract, a party could also recover fees related to others actions related to the agreement, not only limited to breach of contract actions. 

So You Want To Recover Attorneys’ Fees?, Ken Adams.

(b) Benefactor. The typical attorneys' fee clause allows whichever party prevails to recover attorneys' fees. However, the clause can limit that right so that only one of the parties, if he or she is the prevailing party, would be able to recover attorneys' fees. If the parties intend for only one of them to be able to recover, if he or she does prevail, they make it explcit in the agreement, by naming the party that would be allowed to take advantage of the attorneys' fee clause. 

Recovering Attorney’s Fees, Brian Rogers.

(c) Scope. The scope of the attorneys' fee clause simply states what are recoverable under the clause, that is, attorneys' fees, often phrase as "reasonable attorneys' fees." This is simple, but should still be explicit, especially if there is not a separate attorneys' fees clause, but just a general fees clause. 

For example, many agreements have a generic fees clause that allows for the "...recovery of costs and expenses, including reasonable attorneys' fees." In this example, it is explicit that "costs and expenses" includes attorneys' fees, which is important because some jurisdictions do not include attorneys' fees in thier definition of "costs and expenses. 

Want to Make Sure You Recover Attorneys’ Fees in Missouri? Make Sure You Use The Magic Words, Jill Johnson, Thompson Coburn LLC.  

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  • Updated: 01/22/2018
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Overview

The Attorneys' Fees clause defines which party pays for lawyer fees and other costs arising out of a dispute. When included, the clause typically provides that the prevailing party has the right to recover fees and costs. The prevailing party is the party that is awarded the greater relief in the resolution of a dispute.

In the absence of an attorney fees clause, the general rule applies that litigation costs are borne by the party incurring the expense, even if they prevail in the dispute.

Attorneys' fees can be housed in its own contract clause, but is often found as a subclause within a larger Fees clause.