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Leveling the Playing Field of the Attorney’s Fees Contract Provision

June 25, 2024 Steven E. Otto Insight Alert

When negotiating contracts, there can be a disparity in leverage and negotiating strength, or an inability to agree on specific provisions, which may lead the party with more leverage to attempt to negotiate onerous or one-sided provisions into the contract.  While the power to contract typically leaves great discretion to the parties involved, there are times when the law will intervene ­– regardless of the terms and conditions of the contract.

An attorney’s fees provision – or a prevailing party clause – is one example of a contract provision that may be constrained by statute and case law, despite the express terms of the contract.  Typically, parties will negotiate an attorney’s fees provision that provides for the granting of those fees to the “prevailing party” and applies to both parties.  The provision often indicates how the prevailing party will be determined, whether the provision applies to appeals, whether the costs of experts will be included, and other negotiated factors.  However, with an unlevel playing field, any attempts to make the attorney’s fee provision one-sided may be preempted by California Civil Code Section 1717, with respect to contractual claims. 

Our partner Steven Otto recently examined the nuances of California Civil Code Section 1717. The complete articles can be read in The Daily Journal here and The Daily Transcript here (both subscriber only).

Steven Otto is a partner with Crosbie Gliner Schiffman Southard & Swanson LLP (CGS3), a Southern California-based commercial real estate law firm. His legal expertise spans the acquisition, development, licensing, and sale of office, industrial and retail portfolios; power plants (traditional and renewable energy) and mixed-use office/retail projects.