In addition to being a special contributor to MMAmania.com, Jeff Meyer is a California attorney and CEO of MMA Incorporated, a full-service management and marketing firm representing pro MMA fighters including Urijah Faber, Chael Sonnen, Scott Smith, and Mark Munoz.
In the wake of Ken Shamrock being ordered to pay a reported $175,000 in attorney's fees to the UFC, many people have asked me about how legal fees are awarded in such cases.
While I am not privy to the underlying facts and circumstances surrounding the civil action between Shamrock and the UFC, this article will explain how attorney's fees are typically awarded.
Generally, there is no common law right to recover attorney's fees in a civil action. The parties to a lawsuit usually pay their own costs and expenses associated with the case. However, the law provides some exceptions to the general rule.
Statutory Attorney's Fees: Some state and federal statutes specifically provide that the prevailing party in certain types of actions may recover their attorney's fees. In the case of fraud, for example, most jurisdictions have statutes providing that the defrauded party may recover his attorney's fees.
Contractual Agreement: The parties to a contract are free to negotiate their own terms and conditions with regard to the recovery of attorney's fees. The contract will typically state that should a legal dispute arise among the parties related to the contract, the prevailing party will be entitled to recover its reasonable attorney's fees and costs.
Attorney's fees provisions are very common in business contracts. In fact, it is rare to find a business contract that does not contain an attorney's fees provision.
At signing, each party knows (or should know) what to expect in the event of a legal dispute. Attorney's fees provisions often help to avoid litigation because the parties do not want to chance being ordered to pay the other side's fees.
This encourages parties to work out their disputes prior to filing a lawsuit. Likewise, attorney's fees provisions often help foster settlement of pending lawsuits as one side may offer to waive its accrued fees in exchange for a final settlement.
If the parties cannot settle their case prior to trial or motion for summary judgment (a trial on paper), then each side accepts the risk of having to pay the other side's attorney's fees. Like a decision in MMA, the parties have chosen to "leave it in the hands of the judges." As with every decision, someone is going to be disappointed. However, that is the risk the losing party accepted by continuing with the lawsuit.
I have read criticism that an award of attorney's fees "adds insult to injury." I do not agree with this sentiment as it implies that an award of attorney's fees is unexpected by the losing party. This would be analogous to a fighter wondering why his arm is broken after refusing to tap while caught in an arm bar.
In every lawsuit involving an attorney's fees provision, both sides threaten to seek their fees and costs from the outset. The threats are typically contained in every letter between the parties, the pleadings, and the various briefs. This goes on for months, if not years. Both sides are well aware of the fact that they will likely be obligated to pay the other side's fees if they lose the case.
It is also inaccurate to believe that an award of attorney's fees constitutes some sort of punishment against the loser or a windfall to the prevailing party. The award represents actual expenses incurred by the prevailing party in bringing or defending the action.
The award must be "proved up," meaning that the party seeking the award must provide documentation showing it actually incurred such expenses. This documentation is reviewed by the judge and the other party has the opportunity to oppose the claim. The judge makes the final determination as to the amount of the fees.
In any legal dispute, the parties must seriously consider their likelihood of success before squaring off in court. When an attorney's fees provision is involved, the parties must consider the potential of paying their opponent's legal fees (in addition to their own) in the event the case does not go their way.
In short, the parties must choose their fight wisely.