Can I recover attorney fees if I win a contract case in California?

Attorney fees can be the largest cost in a contract dispute, sometimes larger than the amount in dispute. Whether the winner can make the loser pay them often decides whether a case is worth bringing, defending or settling. This page explains California's rules on fee clauses, how courts decide who prevailed, how fees interact with settlement offers, and the deadline to ask for them. For a broader look at disputes we handle, see our civil litigation page.

How does a fee claim work, step by step?

1. Start with the default rule. Code of Civil Procedure section 1021 says that, except where a statute specifically provides for attorney's fees, how lawyers are paid is left to the parties' agreement. Without a fee clause or a fee statute, each side usually pays its own lawyer, although the prevailing party still recovers court costs under section 1032.
2. Find the clause. Look in the contract, and in any document it incorporates, for language saying fees go to a named party or to the "prevailing party." Note what it covers: enforcing the contract, or anything "arising out of" it.
3. Apply section 1717. In an action on a contract with a clause awarding fees incurred to enforce it, Civil Code section 1717(a) gives reasonable fees to the party who prevails on the contract, whether or not that party is the one named in the clause. A one-sided clause works both ways.
4. Check for a fee statute. Some statutes award fees on their own. For example, Civil Code section 1946.2(h) allows a court, in its discretion, to award reasonable fees to a tenant when an owner tries to recover a unit in material violation of the Tenant Protection Act.
5. Litigate, and keep records. Fees are fixed by the court as reasonable, so detailed time records matter. Under section 1033.5(c)(5)(A), a fee claim not based on the court's schedule for contract actions carries the burden of proof.
6. Ask the court to decide who prevailed. On notice and motion, the court determines the party prevailing on the contract, which is generally the party who recovered greater relief on the contract claims; it may also find that no one prevailed (section 1717(b)(1)).
7. File the fee motion in time. Under California Rules of Court, rule 3.1702(b), a motion for fees through judgment must be served and filed within the time to file a notice of appeal. In an unlimited civil case, rule 8.104 sets that at the earliest of 60 days after service of notice of entry of judgment or 180 days after entry. In a limited civil case, rule 8.822 sets 30 days after notice of entry or 90 days after entry.

When does a fee clause lead to a fee award?

What changes the answer?

Whether the claim is "on the contract"

Section 1717 applies "in any action on a contract." Many lawsuits mix contract claims with others, such as fraud or negligence. Section 1717(c) addresses that case: if the party who prevails on the contract owes damages on other claims, the fee award is offset against those damages. Whether a fee clause reaches the non-contract claims depends on its wording, because section 1021 leaves that to the parties' agreement. A clause covering any dispute "arising out of" the contract can reach further than one limited to enforcing it.

How the clause was negotiated

Section 1717(a) reads a fee clause as applying to the whole contract unless each party was represented by counsel in negotiating and signing it and the contract says so. If your contract does not contain that statement, the clause is read as covering the entire agreement. Our article on protecting your business with strong contracts covers drafting choices like this one.

How the case ends

A trial judgment usually makes the prevailing party easy to identify, but section 1717(b)(1) lets the court decide the question "whether or not the suit proceeds to final judgment." A voluntary dismissal or a dismissal under a settlement leaves no prevailing party for section 1717 (subdivision (b)(2)), although section 1032(a)(4) still treats a defendant in whose favor a dismissal is entered as the prevailing party for ordinary costs. If you settle, address fees expressly in the settlement agreement.

Settlement offers

Section 1033.5(a)(10) makes attorney's fees authorized by contract, statute or law an item of costs, and section 1033.5(c)(5)(B) confirms that fees awarded under section 1717 are allowable costs. That brings fees into the cost-shifting rules of section 998. Our page on what happens if you turn down a 998 offer explains how a rejected offer can change who pays.

Whether the deal was put in writing

Section 1717 applies where the contract "specifically provides" for fees. If the deal was never written down, proving that the parties agreed to a fee clause is harder, and an oral agreement also has a shorter filing deadline under section 339. See whether a verbal business agreement is enforceable in California for the other issues oral deals raise.

The size of the case

If a plaintiff in a limited civil case recovers less than the small claims limit, section 1033(b) can limit costs, and in some cases allows fees only when otherwise allowed by law and the plaintiff gave written notice before suing. Under section 116.530, lawyers generally may not take part in a small claims case for a party, so compare small claims court and hiring a lawyer in Los Angeles County before deciding where to file.

A worked example

For example, imagine a hypothetical small business in Glendale that leases a storefront on the landlord's form lease. The lease says that if the landlord has to sue to enforce it, the tenant will pay the landlord's attorney fees. When the business moves out, the landlord sues for $40,000 in claimed repair costs. The tenant defends, arguing the damage was there before the lease began.

Suppose the tenant wins at trial. Although the clause names only the landlord, section 1717(a) treats the tenant as the party prevailing on the contract, entitled to ask for reasonable fees as an element of costs. As an illustration of the timing only: if notice of entry of judgment is served on a given date in this unlimited civil case, rule 3.1702 and rule 8.104 give the tenant 60 days from that service to serve and file the fee motion, unless the parties stipulate to more time before it runs out or the judge extends it for good cause. The memorandum of ordinary costs is due much sooner, within 15 days under rule 3.1700.

Change one fact: if the landlord had dismissed the case voluntarily on the eve of trial, section 1717(b)(2) says there would be no prevailing party for contract fees, although the tenant could still claim ordinary costs under section 1032. The example shows how the rules apply, not how any court would rule on these facts.

Common mistakes with fee clauses

• Assuming a one-sided clause protects only the drafter. Section 1717 makes it reciprocal in an action on the contract.
• Missing the fee motion deadline. Rule 3.1702 ties the deadline to the time to appeal. A stipulation to extend must be filed before the time runs out.
• Overlooking the dismissal rule. A voluntary dismissal ends any section 1717 fee claim, which matters to both sides when deciding how a case should end.
• Settling without addressing fees. A dismissal under a settlement leaves no prevailing party, so the agreement itself should say who pays.
• Keeping thin time records. The court fixes a reasonable amount, and a request without detailed support is harder to prove.
• Writing a fee waiver into a contract. A provision waiving fees under section 1717 is void.

What to do this week

1. Find the signed contract and every document it refers to, and mark any clause on attorney fees, costs, arbitration or the place of suit.
2. Write down who the clause names, what disputes it covers, and whether it says each side had a lawyer.
3. Check whether a statute in your type of dispute awards fees on its own, such as the Tenant Protection Act in an eviction; our page on how an eviction case moves in Los Angeles County covers that process.
4. Confirm the filing deadline for each claim on our page about deadlines to sue for breach of contract or property damage.
5. If you have been sued on a contract with a fee clause, calendar your response date first; see how long you have to respond to a lawsuit in California.
6. Ask your lawyer how the fee clause changes the value of any settlement offer, including a 998 offer.

Frequently asked questions

Do I get attorney fees if my contract has no fee clause?

Generally not, unless a statute provides for them. Section 1021 leaves attorney compensation to the parties' agreement except where a statute specifically provides for fees, though the prevailing party still recovers allowable costs under section 1032.

Are attorney fees part of the damages or part of the costs?

Under section 1717(a), reasonable fees are fixed by the court and are "an element of the costs of suit." Section 1033.5(a)(10) also lists fees authorized by contract, statute or law as allowable costs.

The other side dropped the case. Can I get my fees?

Not under section 1717 if the case was voluntarily dismissed or dismissed under a settlement, because subdivision (b)(2) says there is then no prevailing party. You may still recover ordinary costs, since section 1032 treats a defendant in whose favor a dismissal is entered as a prevailing party.

Can the deadline to ask for fees be extended?

Yes, in two ways. Under rule 3.1702(b)(2), the parties may stipulate before the deadline passes to extend it, up to 60 days after the appeal deadline in an unlimited case or 30 days in a limited case, and under rule 3.1702(d) the judge may extend it for good cause.

Can a business partner's operating agreement shift fees in a buyout fight?

If the agreement has a fee clause and the dispute is an action on that agreement, section 1717 can apply. Our page on what happens when a business partner wants out covers the other questions a co-owner dispute raises.

Do fee rules work the same way in employment cases?

Employment claims are covered on a separate page. See who pays the lawyer in a California employment case for the rules that apply to workers.

How can Glendale Law help?

We review fee clauses before a dispute starts, advise on how they change settlement value, and bring and oppose fee motions after judgment for individuals and businesses in Glendale and Los Angeles County. Call (818) 244-9000 or request a consultation, and bring the contract.