Anyone who has been involved in business litigation knows it can be a pricey proposition. Business litigators are rarely hired on a contingency fee basis, so most clients must bear the cost of prosecuting or defending their case unless they have obtained litigation financing. Because of the high cost of litigation, anyone thinking about filing a lawsuit—or even defending one—needs to consider the opportunity for recovering attorney’s fees.

In Arizona cases that do not involve contracts, the parties are responsible for paying their own attorney’s fees, no matter which party prevails. For lawsuits “arising out of a contract,” Arizona law allows prevailing parties to recover attorney’s fees (ARS Section 12-341.01). However, determining the prevailing party is not always as simple as it may seem.

For example: a defendant offers to settle a lawsuit for $250,000, but the plaintiff rejects the offer. The plaintiff then wins the case, but the judgment is only for $100,000. In this example, the defendant will probably be considered the prevailing party.

The waters may be further muddied when considering whether the case arises out of a contract. A breach of contract lawsuit certainly fulfills this requirement, but not every case that relates to a contract will necessarily fall within the statute allowing for the recovery of attorney’s fees. In addition, the statute gives full discretion to the judge as to the amount, if any, of attorney’s fees to award.

Another way a party to litigation may recover attorney’s fees is if the contract at issue in the dispute has a provision that allows for an award of attorney’s fees. Parties to a contract may include these provisions and it is at their discretion as to how attorney’s fees may be awarded and how a prevailing party is determined.

Before you proceed with a contract claim, be sure to review any attorney’s fee provision in your contract to determine your rights for recovery as well as your rights under Arizona law with your business litigation attorney.

When you are facing any type of business dispute, you need an experienced Arizona trial attorney to obtain the best possible result. Contact Mestaz Law at (602) 806-2068 to speak with us about your case.