In Pennsylvania, the rule is generally that each party involved in litigation pays its own attorney’s fees. See 42 Pa. C.S. A. §1726(a)(1). This rule is the same throughout the United States, and is known as the “American rule.” The American rule is in contrast with the English rule, under which the losing party pays the winner’s fees. According to the U.S. Supreme Court, there are at least three justifications supporting the American rule:
- Because the outcome of litigation is uncertain at best, it is unfair to penalize a party simply for prosecuting or defending a lawsuit, should that party be unsuccessful;
- If the penalty for losing a lawsuit were to include paying opposing counsel’s fees, poorer parties might be unjustly discouraged from filing actions to vindicate important rights; and
- The time, expense, and general difficulty of litigating what constitutes reasonable attorney’s fees in every case would pose substantial burdens for judicial administration. Fleischmann Distilling Corp. v. Maier Brewing Co., 386 U.S. 714 (1967).
Exceptions to the American rule
There are exceptions to the general rule regarding attorney’s fees. First, parties can contract to pay another’s counsel fees, for example, as part of a settlement agreement. Many contracts, particularly in a business context, specify that a party who breaches the contract must pay attorney’s fees for a party who sues to enforce it. Pennsylvania courts will typically only permit the payment of “reasonable” fees, and not the full total of the actual fees if that amount is unreasonable. See McMullen v. Kutz, 925 A.2d 832 (Pa. Super. 2007).
The other exception to the rule is via statute. Pennsylvania has multiple statutes that permit or require an award of attorney’s fees to the prevailing party in particular cases. Statutes permitting recovery of attorney’s fees reflect a public policy decision by the state legislature to encourage plaintiffs to bring suit to protect certain important rights, or to deter defendants from wrongdoing that violates those rights. Krassnoski v. Rosey, 454 Pa. Super. Ct. 78 (1996).
Some of Pennsylvania’s statutes requiring one party to pay another’s attorney’s fees include:
- The Unfair Trade Practices and Consumer Protection Act 73 Pa. C.S. §§201.1 – 201-9.3 which allows consumers to recover their attorney’s fees in a successful action against a business for unfair trade practices.
- The Pennsylvania Uniform Trade Secrets Act (12 Pa. C.S. §5305), which gives the court discretion to award attorney’s fees in an action for misappropriation of trade secrets when:
- A claim of misappropriation is made in bad faith;
- A motion to terminate an injunction is made or resisted in bad faith; or
- There has been willful and malicious misappropriation.
- The Pennsylvania Trademark Act (54 Pa. C.S. §1125), under which the court may award attorney’s fees to the prevailing party in a trademark infringement case when it finds that the other party committed wrongful acts with knowledge or in bad faith.
- The Pennsylvania Judicial Code’s chapter on representation of litigants (42 Pa. C.S. §2503), which allows for the prevailing party to recover attorney’s fees in particular types of cases, including any participant in a legal proceeding who is entitled to receive fees as a result of the other party’s “dilatory, obdurate, or vexatious conduct” during the case.
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