Recovering Attorneys’ Fees
The general rule regarding attorneys’ fees, sometimes referred to as the ‘American Rule,’ is that, absent a statute or contract, the prevailing litigant is ordinarily not entitled to collect attorney’s fees from the losers. There are several statutes that permit the award of attorneys’ fees in certain types of cases. But in all other cases, and in the absence of a contract, attorneys’ fees are recoverable for only limited circumstances. Arizona has recognized, to one degree or another, four separate common law or equitable doctrines that, where the conditions for invoking them are satisfied, permit the Court to award the prevailing party its attorneys’ fees even though no statute, rule or contract calls for that. Those are: (1) the “common fund” doctrine; (2) the “private attorney general” doctrine; (3) the “tort of another” doctrine; and, (4) the “bad faith” exception.
The “common fund” doctrine is an equitable exception to the general rule that, absent a statute or contract, each side in a litigated case must bear its own attorneys’ fees. The doctrine allows a court to award attorneys’ fees to counsel for the prevailing side whose efforts create or preserve a common fund from which others who have undertaken no risk or cost will nevertheless benefit. It serves the twofold purpose of compensating counsel for producing benefits for a class and preventing the unjust enrichment of the class members who receive them. The award is from the common fund created, and is not against the opposing party.
Under the “private attorney general” doctrine, the criteria for application of the doctrine is as follows: (1) the resolution of the litigation benefitted a large number of people in the state, (2) the vindication of the right asserted was of societal importance, and (3) vindication of the right asserted required a legal challenge to a statute adopted by the state legislature and thus could only have been privately enforced. In Arnold v. Arizona Dept. of Health Services, private parties had successfully prosecuted a class action on behalf of approximately 4,500 chronically mentally ill indigents who claimed that state and county governmental agencies had breached a statutory duty to provide them, and others similarly situated, with adequate mental health care. The trial court had awarded plaintiffs their attorneys’ fees against the State based on statute, and then held that the county defendants should be responsible for one-third of the fees awarded on the basis of the “private attorney general” doctrine.
The “tort of another” doctrine was first recognized by the Supreme Court in a 1951 case, where the Court explained: “It is generally held that where the wrongful act of the defendant has involved the plaintiff in litigation with others or placed him in such relation with others as makes it necessary to incur expenses to protect his interest, such costs and expenses, including attorneys’ fees, should be treated as the legal consequences of the original wrongful act and may be recovered as damages.” In order to recover attorneys’ fees under this exception, the plaintiff must show that: (1) the plaintiff became involved in a legal dispute because of the defendant’s tortious conduct; (2) the dispute was with a third party; (3) the plaintiff incurred attorneys’ fees in connection with that dispute; (4) the expenditure of attorneys’ fees was a foreseeable or necessary result of the defendant’s tortious conduct; and, (5) the claimed fees were reasonable.
Finally, a court can award attorneys’ fees in matters where attorneys or parties act in bad faith. This rule permits the award of attorneys’ fees where the action or defense is groundless or not made in good faith.
These are very limited exceptions. Thus, if your case is one where there is no statute allowing for the recovery of attorneys’ fees or does not involve a contract that provides for the recovery of such fees, more than likely you will not be able to recover the money you paid your lawyer, even if you win your case.