As a litigator, one of the most common questions I receive from clients is whether or not the opposing party in the lawsuit will have to pay for our attorney fees. Most clients are surprised to hear that Iowa state and federal courts follow the American Rule, which simply means that absent a contractual or statutory provision that provides for the prevailing party to recover attorney fees from the losing party, each party pays for their own attorney fees. There are, however, a few rarely applicable exceptions to the American Rule. For example, both the Iowa and federal rules of civil procedure provide for courts to award attorney fees as a sanction for lawsuits not reasonably grounded in law or fact. Also, under Iowa common law, attorney fees are recoverable where it can be shown that the opposing party acted in bad faith, vexatiously, wantonly or for oppressive reasons. This standard is very hard to prove, as Iowa courts have recognized that it is an even higher standard than that required to recover punitive damages. Finally, certain legal causes of action include the recovery of attorney fees, such as bad faith insurance claims and claims for abuse of process.
Importantly, even in situations where attorney fees are recoverable, the court is only allowed to issue a “reasonable” attorney fee award. That reasonability determination is left up to the discretion of the court and is based upon several factors, including the complexity of the factual and legal issues involved, the experience and expertise of the lawyer whose fees are at issue, and the customary hourly rate and billing practices in the locale. Courts will also often consider what portion of the lawsuit was spent discovering, preparing for and presenting the specific claims under which attorney fees are recoverable. Even in situations where attorney fees are recoverable by the prevailing party, it is not uncommon for a court to reduce, sometimes greatly, the requested attorney fee award.
In summary, the vast majority of litigants will be forced to pay their own attorney fees. To avoid such a result, we recommend having your contracts and other business documents reviewed by your attorney. Oftentimes attorney fee and other litigation related provisions, such as choice of law, venue and jurisdiction provisions, can be added to reduce the time and expense associated with any resulting litigation.
Brant Kahler is a Member of BrownWinick and Co-Chairman of the Litigation Practice Group. He can be reached with any questions at (515) 242-2430 or kahler@brownwinick.com.
