Attorney’s fees become a component of damages that parties seek to recover whenever there is a contractual or statutory basis for them to recover their fees. Parties want to be able to recover all or substantially most of the attorney’s fees they incurred in pursuing their claim. (In my experience, recovering all of the fees incurred is very challenging.) But, to be entitled to attorney’s fees, a party has to be deemed the prevailing party. There is the sentiment that as long as you recover a positive net judgment (even if it is for $100 when your claim was for $50,000) then you will be able to recover your attorney’s fees which will likely exceed the amount that was ever in dispute. With this sentiment, certain disputes become solely driven by attorney’s fees. Now, there is a trend for the prevailing party for purposes of attorney’s fees for certain disputes such as construction lien actions and breach of contract actions to be determined by the significant issues test. While recovering a net judgment is important, there are other equitable considerations a court or arbitrator can consider to determine the party that prevailed on the significant issues for purposes of awarding attorney’s fees. This article explains more.
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