There are very few things that gall a business owner more than being stiffed for the price of goods sold or services rendered.
One of them is paying a lawyer to chase down the missing money. As a result, when a client contacts a lawyer about pursuing this type of claim, the client will often pepper the lawyer with questions about the odds of recovering legal fees, not to mention the 1% or 1 ½% per month interest demanded in the invoices. When the lawyer replies that the odds are “slim to none,” the client is very unhappy.
The fact is, there are only limited circumstances under which a person can obtain attorneys’ fees and interest as part of a judgment in a successful lawsuit in Connecticut. But fortunately, there is a simple way to maximize the odds.
First, a little background. Connecticut, like most states, follows the so-called “American Rule” regarding legal fees. That is, every party to a lawsuit, win or lose, ordinarily must pay her own fees. (This is in contrast to the “English Rule,” under which the losing party is typically required to pay the fees of the prevailing party.)
There are two exceptions to the rule. First, certain laws passed by Congress and our state legislature contain a provision saying that a person who successfully sues under that law is entitled to payment of a reasonable sum for attorney’s fees. (For example, many consumer-protection laws contain a provision of this type.) So if the lawsuit is based on one of these statutes, a successful claimant can demand reimbursement.
But none of these statutes apply to a straightforward breach-of-contract case, which is what most collection matters really are. So the “statutory” exception to the pay-your-own-lawyer rule won’t usually help.
Now for the second exception. Under Connecticut law, a person who successfully sues another for breach of contract can obtain an award of reasonable attorneys’ fees if the contract says so. So if you want to protect yourself in this regard, the key is quite simple: before you provide goods or services to a client, make sure you have a signed, written contract and make sure the contract contains a well-drafted attorneys’ fees clause.
Please note: contract, not invoice. You can’t ship goods or provide services without a firm agreement, then send an invoice after the fact demanding attorneys’ fees and make it stick. A binding contract requires a meeting of the minds. If the only mention of attorneys’ fees comes in an invoice that a client rejects, then you have no agreement and no enforceable claim for your fees.
Similar principles apply to claims for interest. In a simple collection case, a prevailing plaintiff isn’t typically entitled to prejudgment interest, although under some circumstances the court has discretion to award it. If you want interest on your unpaid bills, have your attorney insert a provision to that effect in your contract forms. And again, if you don’t think of interest until after the work is done and you’ve sent out an invoice, it’s probably too late.
Every case is different, and in your next collection matter your attorney just might create a plausible claim for attorneys’ fees and interest even without a written agreement to that effect. But why take a chance? Protect yourself up front.