You’ve no doubt seen an attorney fee clause in contracts that have been presented to you. But sometimes its missing or differently worded. This post aims to clarify these provisions as applied to providers of creative services.
An attorneys’ fee clause, usually appearing toward the end of the agreement, typically provides something such as:
The prevailing party in any dispute with respect to this Agreement is entitled to recover reasonable attorneys’ fees, costs, and expenses incurred with respect to such dispute and in any appeal.
The meaning is pretty straightforward – the loser in a dispute pays the winner’s attorney fees. If this clause is missing, then each party pays their own attorneys’ fees (at least in the US). The purpose of the provision is to discourage frivolous lawsuits since the loser risks paying the winner’s fees. But let’s take a look at this provision in the context of the creative service provider:
- As a general rule, you should probably want your contract to have an attorneys’ fee clause. In the unlikely event of a dispute, it can make a big difference if you have to sue to recover.
- You’ll sometimes see a one-sided attorneys’ fee clause – that only your client collects in a dispute. This is onerous and overreaching. If you see a clause like this, be sure to edit make it benefit both parties. If the other side won’t edit the provision, enter the relationship with caution. (Note: some states automatically treat any attorneys’ fee clause as mutual, but not every state!)
- When you are doing work in your wheelhouse, its generally more likely than not that you’ll be the one having to file suit (to collect payment). So, yes, this should be in the contract (or you should add it if you are presented with a draft where it is missing).
- Note that in some cases, attorneys’ fees can be collected by statute, regardless of what the contract says. Some state small dispute statutes allow for collection of attorney fees. Similarly, enforcing a registered copyright allows for collection of attorney fees.
Learn about more common provisions in our (ongoing) series, Anatomy of a Services Agreement.