We got a lot of good follow-up questions last week after our webinar covering cannabis litigation in the current down market. One of them related to the recovery of attorneys’ fees and how likely that is to happen. Potential recovery of attorneys’ fees is an important consideration at the outset of any case, but can especially make an impact on whether to pursue a lawsuit or not when businesses are hurting. It not only impacts a party’s overall ability to litigate (on the hope of recovering the costs later on), but also impacts the entire dynamic of the case because the stakes are higher.
The general “American Rule” for attorneys’ fees
Under the American Rule, which is followed in most states, the default is that each party is responsible for its own fees, regardless of the outcome of the case. The theory behind this default rule is that it would promote access to the courts and avoid situations where a party may essentially financially bully another party by driving up litigation costs and creating the threat that one will foot the entire bill.
Exceptions to the general rule
Of course, there are situations where recovery of attorneys’ fees is granted: