Prevailing Party Attorney’s Fees

A revolution in Colorado law may soon occur. This columnist and his readers should be aware of and speak their minds on the issue. It involves a pending Bill before the Colorado legislature designated as Senate Bill 258.

The Bill provides that prevailing (winning) parties in lawsuits are to be awarded their attorney’s fees. This would be a radical departure from the present Colorado law as well as the law in most other states. Presently, the so-called “American rule which applies in Colorado and most other states provides that each party to a lawsuit must pay his own attorney’s fees unless otherwise provided by contract between the parties involved or some special statute.

Colorado now has a minor variation to that rule by statute which allows recovery of attorney’s fees to a prevailing party when the trail judge determines that the other party’s claims or defenses were frivolous, groundless or prosecuted in bad faith.

There are valid arguments on both sides of the issue. The American rule is premised upon the theory that if parties involved in disputes must risk not only their own attorney’s fees but the possibility of being required to pay counsel fees for the other party, the right to that party’s “day in court” would be impaired.

Certainly, many honest legal and factual disputes will never reach the courthouse if the prevailing party attorney’s fee law passes. Should the parties thus be deprived of the opportunity to a fair and impartial judicial determination of their disputes?

On the other hand, court dockets in Colorado and other jurisdictions are congested. Arguably, many of the lawsuits filed involve phony claims or phony defenses to valid claims. These tainted cases are presently afforded the same attention as honest disputes. The innocent parties to those actions unjustifiably suffer and are forced to bear their own attorney’s fees.

This columnist is marginally in favor of retaining the American rule, and therefore against the proposed Senate Bill. Access to the courts for resolution of legitimate disputes outweighs the rights of all prevailing parties to recover their attorney’s fees. Important legal issues prompted by changing social, economic and political conditions should be argued in the courts without the chilling effect of added expense burdens in the event of failure. Otherwise, certain areas of the law would remain stagnant and perhaps not change with the times.

A middle ground between the two positions would be a statute, such as that already in effect in Colorado, which would permit courts to award attorney’s fees to prevailing parties when the claim or defense asserted by the other party was groundless, frivolous or prosecuted in bad faith. Perhaps more teeth to that particular Colorado statute and more extensive use of its provisions by judges would be the best solution.

Readers are urged to contact members of the Colorado legislature expressing their particular opinions on this very critical matter. Since litigation falls heavily upon those involved in construction, that industry should be particularly concerned and members should express their opinions about the proposed Bill promptly before it either passes or fails without sufficient public input.

Update Note: The Colorado legislature did not pass the law.

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