Can Companies Recover Attorneys' Fees, Costs In Lawsuit In New York State Court?

Can Companies Recover Attorneys' Fees, Costs In Lawsuit In New York State Court?

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 the lawsuit.

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.  

Please click here to read the entire post.

Visit the New York Business Litigation and Employment Attorneys Blog for commentary regarding business litigation, employment, and securities related legal issues.

For more information about LexisNexis products and solutions connect with us through our corporate site.