A corporate or individual litigant is usually
responsible for the payment of its own attorneys' fees and costs in a lawsuit
in the New York state courts. New York follows the
so-called "American Rule" that a litigant is "not . . . allow[ed] . .
. to recover damages for the amounts expended in the successful prosecution or
defense of its rights." Mighty Midgets, Inc. v. Centennial, 47
N.Y.2d 12, 21-22, 389 N.E.2d 1080, 416 N.Y.S.2d 559 (N.Y. 1979); see also
Alyeska Pipeline Serv. Co. v. Wilderness Soc'y, 421 U.S. 240,
247 (1975) ("In the United States, the prevailing litigant is ordinarily
not entitled to collect a reasonable attorneys' fee from the loser.").
In New York, the right to recover attorneys' fees "must
be statutory or contractual." Greco v. GSL Enters., Inc., 137
Misc.2d 714, 715, 521 N.Y.S.2d 994 (N.Y. City Civ. Ct. 1987); see also
Hooper Assocs., Ltd. v. AGS Computers, Inc., 74 N.Y.2d 487, 491 (N.Y. 1989)
("an award of attorneys' fees to the prevailing party in a litigation must
be "authorized by agreement between the parties, statute or court rule").
An example of a contractual provision affording the
right to recover attorneys' fees is a prevailing party or fee-shifting
clause. Such a provision states that if a party to the
contract successfully prosecutes, or successfully defends against, a lawsuit
arising under the contract, that party is to be reimbursed by the losing
party for its (reasonable) counsel fees and costs incurred in
Various New York statutes and court
rules either (1) authorize a prevailing litigant to recover,
from its defeated adversary, the attorneys' fees and costs it incurred in
the court proceeding or (2) authorize a litigant to recover, from an adversary
which engaged in frivolous conduct, its counsel fees and
costs. Some of these fee-shifting statutes in New York are the
New York General Business Law § 349: Section 349(a) of
the New York General Business Law renders unlawful "[d]eceptive acts and
practices in the conduct of any business, trade or commerce or in the
furnishing of any service in this state." To make out a prima facie
case under that statute, a plaintiff must show that the defendant's acts
are directed to consumers, that the defendant is engaging in an act or practice
that is deceptive or misleading in a material way, and that the plaintiff has
been injured by reason thereof. Under N.Y. Gen. Bus. Law §
349(h), the court may award reasonable attorneys' fees to a prevailing plaintiff.
New York State False Claims Act, N.Y. State Finance Law
§§ 187-194: Section 189 of the State False Claims Act, N.Y. State Fin. Law §
189, prohibits anyone from either knowingly presenting to the state or
a local government, for payment or approval, a false or fraudulent claim,
or from knowingly making or using a false record or statement to get a false or
fraudulent claim paid or approved by the state or a local government. The
State False Claims Act authorizes any entity or individual to bring a
civil action, on behalf of New York State or a local government, for a
violation of section 189 of the State False Claims Act. In such a civil
action under the State False Claims Act, a prevailing plaintiff is entitled to
recover the attorneys' fees and costs it incurred in the action. For
further discussion of the State False Claims Act, see here.
N.Y. C.P.L.R. 8303-a: Section 8303-a of the New York
Civil Practice Law and Rules empowers a court to award costs and
reasonable attorneys' fees not exceeding $10,000 against any litigant
found to have interposed a frivolous claim or defense either (1) in a lawsuit
to recover damages for personal injury, property damage, or wrongful death or
(2) in a lawsuit brought by the individual who committed a crime against the
victim of a crime.
22 N.Y.C.R.R. § 130-1.1: Rule 130-1.1 of Title 22 of
the New York Codes, Rules and Regulations authorizes, in any civil action or proceeding, monetary punishment for
frivolous conduct. Among other categories of pecuniary punishment,
Rule 130-1.1 authorizes a court, in its discretion, to award costs and
reasonable attorneys' fees that reimburse actual expenses incurred by a
litigant because of an adversary's frivolous conduct. The court, as
appropriate, may make such an assessment against either a party to
the lawsuit, the party's attorney, or both.
If neither an agreement between the litigants nor an
applicable statute or court rule creates an exception to the
pay-your-own-way "American Rule," then a corporate or individual litigant
must bear its own counsel fees and costs in a lawsuit in the New York
If your company wants to bring, or needs a lawyer to
defend it in, business litigation and you are located in the New York
City area, call Attorney David S. Rich at (212) 209-3972.
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