Liam owns a landscaping company and was hired by a homeowner to design and build a garden for $20k. He completed the project, but the client only paid $5k.
Liam took the client to court and won a judgment for the remaining $15k. However, he ended up paying $10k in legal fees to his lawyer to win the case. Winning still felt like a let-down.
Liam had a written contract, but it didn't have a crucial provision that could have helped him avoid this problem. The provision is called the attorney’s fees provision, which allows the winning party to recover their legal expenses.
This clause helps to prevent frivolous lawsuits because the party initiating the lawsuit risks paying the legal fees of the other party if they lose.
If Liam had this provision in his contract, he could have recovered the $15k he was owed and the $10k he paid in legal fees. This clause is essential in making legal action to recover unpaid dues more cost-effective.
If you’re ever on the receiving end of a clause like this, be sure to limit it to “reasonable” fees. If you agree to pay all costs and fees, the other party could choose the lawyer with the highest rates on earth, and you’d have to pay them.