fee-shifting
Definition
Fee-shifting is a legal rule that requires the losing side in a lawsuit to pay the winning side's attorney fees. In the United States, each party normally pays their own lawyer regardless of who wins, so fee-shifting is a notable exception to that default rule. Courts or contracts can trigger fee-shifting, and it can work both for and against you depending on the outcome.
Example
You sue a customer for $5,000 in unpaid invoices, your contract includes a fee-shifting clause, and you win, so the judge orders that customer to reimburse the $8,000 you spent on your attorney. The clause works both ways though, so if you had lost, you would have owed that customer their legal fees too.
Watch Out
Before signing any contract with a fee-shifting clause, make sure you understand that losing a dispute could cost you far more than the original amount at stake.
See which terms appear in your contract?
This definition is for informational purposes only and does not constitute legal advice. Please consult with a licensed attorney for legal guidance.