Does the Loser Pay Attorney's Fees in a Pennsylvania Lawsuit?

When advising clients about potential litigation, we often spending time helping dispel a widely held belief that lawsuit winners get their attorneys fees paid by the losers.  That’s a myth. In Pennsylvania, the default rule is that the losing party does not have to pay the winner's attorney fees. This principle, known as the "American Rule," dictates that each party is responsible for their own legal costs, win or lose. This contrasts with the "English Rule," where the losing party typically covers the winning party's legal fees. The American Rule is deeply ingrained in Pennsylvania jurisprudence.

When Can Attorney's Fees Be Recovered in Pennsylvania?

There are exceptions to the American Rule where attorney's fees can be shifted to the losing party in Pennsylvania. These exceptions are narrowly construed and typically arise from statutory authorization, contractual agreements, or instances of bad faith conduct. According to 42 Pa.C.S. §2503, a participant can be awarded counsel fees in certain circumstances.

Are Attorney's Fees Recoverable by Statute?

Yes, certain Pennsylvania statutes permit the recovery of attorney's fees. For instance, the Pennsylvania Wage Payment and Collection Law (43 P.S. § 260.1 et seq.) allows employees to recover attorney's fees in successful wage claims. Similarly, some environmental statutes provide for fee-shifting to encourage citizen suits against polluters. In addition, Pennsylvania's Contractor and Subcontractor Payment Act ("CASPA"), 73 P.S. § 501 et seq., authorizes an award of reasonable attorney's fees and penalties to a substantially prevailing party in certain construction payment disputes, providing an express statutory fee-shifting mechanism in that context.  These statutory provisions are exceptions to the general rule and are typically explicitly stated within the legislation.

Can Attorney's Fees Be Recovered Based on a Contract?

Yes, contractual agreements can override the American Rule and allow for the recovery of attorney's fees. Many contracts include clauses stating that the prevailing party in any dispute arising from the contract is entitled to recover their attorney's fees. These clauses are generally enforceable in Pennsylvania, provided the language is clear and unambiguous. Courts in Pennsylvania will interpret such clauses according to their plain meaning, ensuring the parties' intentions are honored.

What Constitutes Bad Faith Conduct Justifying Fee Shifting?

Bad faith conduct, as an exception to the American Rule, involves egregious behavior during litigation. Pennsylvania courts have the inherent power to award attorney's fees when a party has acted vexatiously, wantonly, or in bad faith. This might include filing frivolous claims, engaging in obstructionist discovery tactics, or making false statements to the court. The burden of proving bad faith is high, and the conduct must be clearly egregious to warrant fee shifting.

What are Examples of Cases Where Attorney's Fees Were Awarded?

Pennsylvania case law provides examples of situations where attorney's fees were awarded despite the American Rule. These cases often involve statutory exceptions, contractual provisions, or findings of bad faith conduct. Here are some examples:

Wage Payment and Collection Law

In Gagliardo v. Connaught Labs., Inc., 311 Pa. Super. 366, 457 A.2d 878 (1983), an employee successfully recovered attorney's fees in a wage claim under the Pennsylvania Wage Payment and Collection Law.

Contractual Agreement

In O'Neill v. Brown, 616 A.2d 1 (Pa. Super. 1992), the Superior Court upheld an award of attorney's fees based on a contractual provision allowing for such recovery.

Bad Faith

In In re Estate of Liscio, 532 Pa. 281, 615 A.2d 699 (1992), the Pennsylvania Supreme Court affirmed an award of attorney's fees due to the egregious bad faith conduct of a party during estate litigation.

Construction Payment Disputes (CASPA)

Courts have awarded reasonable attorney's fees to substantially prevailing parties under the Contractor and Subcontractor Payment Act (CASPA), which provides an express fee-shifting mechanism in qualifying construction payment disputes.

How Does Pennsylvania Law Define "Prevailing Party" for Fee-Shifting Purposes?

In Pennsylvania, the definition of "prevailing party" can significantly impact the ability to recover attorney's fees under a contract or statute. Generally, a prevailing party is one who has successfully prosecuted their claim or defense and obtained a favorable judgment. However, the specific definition can vary depending on the context of the case and the language of the applicable contract or statute.

What if There is a Settlement?

When a case settles, determining the prevailing party for fee-shifting purposes can be more complex. Pennsylvania courts typically look at the totality of the circumstances, including the terms of the settlement agreement and the relative success of each party. If the settlement agreement explicitly addresses attorney's fees, that provision will generally control. However, if the agreement is silent on the issue, the court may need to determine which party achieved a more favorable outcome.

What if Both Parties Win on Different Claims?

In situations where both parties prevail on different claims, the determination of a prevailing party for attorney's fees can be challenging. Pennsylvania courts may consider factors such as the relative importance of the claims on which each party prevailed, the amount of damages awarded, and the overall outcome of the litigation. In some cases, a court may find that neither party is a prevailing party, or it may apportion attorney's fees based on the relative success of each party.

FAQ

1. Does small claims court allow for attorney's fees?

Generally, no. Small claims court is designed to be a simplified and cost-effective forum, and attorney's fees are typically not recoverable unless specifically authorized by statute or contract.

2. What if the other side is clearly wrong; will I get my attorney's fees back then?

Not necessarily. Even if the other side's case is weak, the American Rule still applies unless there is a specific basis for fee-shifting, such as bad faith conduct or a contractual provision.

3. Are there exceptions for frivolous lawsuits?

Yes, Pennsylvania Rule of Civil Procedure 1023.1 allows for sanctions, including attorney's fees, against parties who file frivolous lawsuits or pleadings. However, such sanctions are only imposed in egregious cases.

4. If I win on appeal, does that mean I get attorney's fees?

Not automatically. Winning on appeal simply means the lower court's decision was reversed. The right to recover attorney's fees depends on the underlying basis of the claim and whether any fee-shifting provisions apply.

5. What if the judge "feels bad" for me; can they award attorney's fees then?

No. Pennsylvania judges must base their decisions on the law, not on personal feelings. Attorney's fees can only be awarded if there is a legal basis for doing so, such as a statute, contract, or finding of bad faith.

Our Experienced Civil Litigation Attorneys

If you are involved in a legal dispute in Pennsylvania and have questions about attorney's fees, it is essential to seek legal advice from an experienced attorney. Contact Fiffik Law Group today for a consultation in Pittsburgh, Radnor, Philadelphia or Allison Park, PA.