Attorney fees clause: a prevailing party sample

Sample clause

Written for commercial lease between a fictional San Francisco landlord and Presidio Frames, a fictional picture framing shop.

Attorney Fees. (a) In any action or proceeding to enforce or interpret this Lease, the prevailing party is entitled to recover its reasonable attorney fees, expert fees and costs from the other party, in addition to any other relief. (b) The prevailing party is the party that obtains a judgment or award substantially in its favor on the main issues in dispute, as determined by the court or arbitrator. A party that dismisses its claim without prejudice is not a prevailing party. (c) If a dispute is resolved by settlement, each party bears its own fees and costs unless the settlement provides otherwise. (d) This clause applies to fees incurred in any appeal and in collecting a judgment.

Sample wording, not legal advice.

Variants

What to negotiate

• Define prevailing party

  Mixed results are common: a party wins some claims and loses others. Without a definition, courts decide who prevailed, often by looking at the main issues and the net result. A clause can define it, leave it to the court, or provide that neither side recovers fees on a split result.

• One way clauses

  A clause that only lets the drafter recover fees can be a trap for the drafter in states with reciprocity statutes. California Civil Code section 1717 and Florida Statutes section 57.105(7) make a one way contractual fee provision apply to both parties. A landlord or lender in those states should draft a mutual clause it is comfortable with.

• Scope and settlement

  Decide whether the clause covers only contract claims or all disputes arising out of the relationship, including tort claims, and whether it covers arbitration, appeals and collection. Many clauses say fees are not recoverable if the case settles, which encourages settlement.

The risk of leaving it out

Without an attorney fees clause, a party with a small but valid claim may find it costs more to sue than to absorb the loss, because it cannot recover its legal fees even if it wins. That gives the other side leverage to ignore obligations. With a clause, a weak defense carries the risk of paying the other side's fees.

The American rule and its exceptions

Under the American rule, each party to litigation pays its own attorney fees unless a statute or a contract provides otherwise. Many statutes shift fees in particular areas, such as civil rights claims under 42 USC 1988, which lets a court award a reasonable fee to the prevailing party. A contractual attorney fees clause is the private equivalent for disputes under the contract. Law checked on 21 October 2026. This page explains how the law works and is not legal advice.

States that make one sided clauses mutual

California Civil Code section 1717 provides that where a contract gives one party attorney fees for enforcing it, the prevailing party, whichever side, is entitled to them. Florida Statutes section 57.105(7) does the same, making a one way fee clause reciprocal. Several other states have similar reciprocity statutes or case law. The drafter of a form contract in those states should assume any fee clause works both ways.

Who is the prevailing party

Courts generally treat the prevailing party as the one that succeeds on a significant issue and achieves some of the benefit it sought, and in California the party recovering greater relief on the contract. A defendant can prevail by defeating the claim. A voluntary dismissal or a settlement often leaves no prevailing party under section 1717. Defining the term in the clause, as the sample does, narrows the room for argument.

Where the clause sits in a generated document

Leases, service agreements and loan agreements carry this clause among the boilerplate near the dispute and governing law clauses. When asking the AI document generator for a US contract, say whether fees are mutual, how prevailing party is defined, whether settlement and appeals are covered, and any cap.

Documents that carry this clause

Commercial lease agreement template with outgoings and fit out termsA retail lease is decided by three numbers and two clauses: the rent, the review, the outgoings, the fit out contribution and the make good. This 12 page Victorian lease sets all five out in the open, including the outgoings the landlord is not allowed to recover at all.Service agreement template with scope, service levels and an exitA service agreement template has to say what is supplied, how well, for what fee, who is liable for what, and how either side gets out. This one is filled in for Beacon Systems supporting Harlow Freight's IT for an initial 24 months from 1 October 2026 at $8,400 a month plus GST, with 40 hours included and $220 an hour beyond them. Twelve numbered clauses cover the services, a four level severity table, client duties, fees with a CPI adjustment, confidentiality, privacy, IP, a liability cap, termination and a three step dispute ladder under Victorian law.

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