Get Specific! You Must Mention “FEES” in Your Attorney Fee Provisions

business lawyer Memphis, TN

Tennessee Requirements for Attorney Fee Provisions

As the business lawyer Memphis TN  trusts when it comes to contract negotiation and drafting, one piece of simple legal advice we frequently give our small business clients is to always include attorney fee provisions in your contracts and routine business forms. Why? Because if you don’t have such a provision and you end up in litigation, you’re on the hook for your own attorney fees and legal expenses even if the breach of contract, or the resulting litigation, isn’t your fault.

It has always been the case that a contractual provision allowing for the recovery of attorney fees must be specific. However, just last month, in Nyrstar Tennessee Mines-Strawberry Plains, LLC v. Claiborne Hauling, LLC, the Tennessee Court of Appeals went further to reinforce this principle by making clear that attorney fee provisions must specifically invoke the magic words “attorney fees.”   The Court held that it is not enough simply to provide recovery of “costs,” “expenses” or even “legal expenses” – all of which the Court held was simply not specific enough to permit recovery of attorney’s fees.

 In Nyrstar, the plaintiff won at trial on its breach of contract action against the defendant and the judge awarded the plaintiff $116,073.43 in damages. After winning the case, the plaintiff then sought attorney’s fees of $106,779.50 and expenses of $2,982.12 pursuant to the attorney fee provision in the applicable contract. The specific language of the contract in Nyrstar was as follows:

The Customer must pay Nyrstar all costs and expenses incurred by Nyrstar in connection with enforcing its rights against the Customer under an Agreement including legal expenses and other costs incurred in recovering monies owed by the Customer to Nyrstar.

The trial court awarded the plaintiff its expenses, but refused to award the plaintiff its attorney’s fees, despite the contract language providing for the recovery of “legal expenses.” The trial court stated:

[t]he plaintiff Nyrstar’s language does not use the term “fees.” It uses “expenses,” which has been found to be inadequate. Merely providing for the “recovery of ‘costs and expenses’” is insufficient to reach a contractual right to recover attorney’s fees.

(Emphasis added). The Tennessee Court of Appeals upheld this decision. The Nyrstar case means that you should pull out your contracts and regular business forms, and then call us today to make sure that the language you are using in your attorney fee provisions is correct. After all, what is the point of having an attorney fee provision in your contracts and forms if it’s not going to hold up in court?

Bottom Line

Your attorney fee provision MUST specifically provide for the recovery of “attorney’s fees,” and not merely “costs” or “expenses.”

Even if a provision provides for the recovery of “legal expenses” or “costs and expenses of any suit or proceeding,” the right to recover attorney’s fees is not created because the provision does not specifically implicate “fees” as part of the recovery.

If you’d like the small business lawyer Memphis TN  trusts to review your small business contracts and routine business forms to make sure your language complies with the requirements in Tennessee for attorney fee provisions, call us today at (901) 372-5003.

Small Business Tip: Include Provision in Your Contracts to Recover Attorneys’ Fees

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Reason to Add an Attorney Fee Provision

You’re running a small business. You have a form, purchase order, or other short contract you always use.  Take a moment to look at your forms and contracts. Do they include an attorney fee provision?  If not, we recommend that you add one.

If someone fails to pay you, you might need to file a lawsuit to recover what you are owed. Going to court is expensive.  In Tennessee, each party is responsible for paying their own attorney fees. That’s right–even if you win in court, you generally can’t make the other side pay your attorney fees unless you have an attorney fee provision in your contract.  For more information on attorney fees, read this blog post.

Sample Attorney Fee Provision

If any party institutes any action or proceeding to enforce any provision of this contract by reason of any alleged breach of any provision herein, the prevailing party shall be entitled to receive from the losing party all legal fees and costs incurred in connection with any such proceeding.

We are Small Business Lawyers.

Check out our team at Wiseman Bray PLLC.  If you need help with your small business contracts, agreements, or forms, or if you have a question about business litigation or the recovery of attorney fees in a lawsuit, please call us at 901-372-5003 or email us here. We have offices in Memphis and Nashville TN.

 

 

Top 8 Ways to Save Money on Attorney Fees

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Let’s talk about attorney fees. When confronted with a legal claim or issue, some people simply want to “turn it over to the lawyer and be done with it.” Others prefer a more hands-on approach, and they prefer to work closely with legal counsel.  Some clients want to resolve a matter as quickly and cost-efficiently as possible, while others desire vindication and want nothing short of a judicial ruling or jury verdict. However, there is one thing that all clients probably agree on.  The lower the attorney fees, the better. 

How do you keep legal fees in check?

Make sure your goals and legal strategy are clear. Lawyers work for clients, and attorney fees are based on the amount of work the lawyer performs for the client.  Clear communication and responsiveness from both the lawyer and the client is critical.  Above all, you must make sure you communicate clear goals, and then to listen and understand what actions your lawyer is suggesting.

What can I do to save money on attorney fees?

There are also a few things you can do to reduce attorney fees, legal costs, and expenses:

(1)  Come prepared.  Each time you meet with your lawyer, anticipate questions and come prepared with information. Bring a timeline, notes, a list of witnesses and contact information, and relevant documents.  Don’t make your lawyer beg for the information he or she will need in order to best represent you.

(2)  Obtain, review and organize your documents.  The overwhelming majority of cases can be boiled down to a few key documents. You don’t want to pay your lawyer to obtain documents you could get yourself. Nor do you want to pay a lawyer to “find a needle in a haystack” or to review unorganized or unnecessary documents searching for one relevant piece of information.

(3)  Promptly do what your lawyer asks you to do.  Respond quickly to information and discovery requests from your attorney.  Failure to do so drives up costs immeasurably.  It can lead to unnecessary communications between opposing lawyers, and between clients and lawyers, and often leads to unnecessary motions being filed by opposing counsel.

(4)  Stay on top of your case. Keep copies of all papers, letters, and pleadings.  Take notes when you talk to your attorney.  Keep yourself informed about your case.  You’d be shocked at how often clients call and/or ask for meetings to re-review things they should already know, or to get copies of papers they already have.

(5)  Be an “information gatherer.”  This one is especially true for companies and small businesses. You know your business, employees, and contacts better than your lawyer. Utilize your knowledge and relationships. You can often obtain information and documents much more easily and cost efficiently than your lawyer can.

(6)  Utilize your lawyer’s assistant.  Many of your questions and phone calls can be directed to your lawyer’s assistant, most of which is not recorded as billable time.  For example, questions about scheduling, getting copies of documents, or coordinating meetings and events can easily be handled by a legal assistant much more cheaply than talking to the lawyer every time.

(7)  Understand the difference between legal advice and counseling.  It is obviously critical that you communicate effectively with your lawyer, but keep communications to the point. Oftentimes clients complain or vent about the opposing party, the unfairness of the situation and/or the legal process, or the tactics of the other lawyer.  It’s perfectly okay if you want to pay your attorney to be a sympathetic ear for you, but understand that you pay for your attorney’s time, and that you can very likely get a sympathetic ear elsewhere for free.

(8)  Compromise. Litigation is expensive. Realize that “wins” come in varying shapes and sizes, and that negotiating from a position of strength borne out of effective and thorough preparation can lead to the best long-term outcome.  Indeed, a lengthy lawsuit may not be the best long-term strategy even though you think might have a slam dunk case at trial two years from now.  Winning the battle isn’t worth losing the war.  Smart and tactical compromise can be a virtue, particularly when taking into account both the direct and indirect costs of litigation.

Wiseman Bray has offices in Memphis and Nashville, Tennessee.  Call us today at 901-372-5003.