ATTORNEYS FEES CLAUSES IN CONTRACTS?
Not every contract should have an attorneys fees clause in it. An attorneys fees clause is a provision in a written contract allocating each party's obligation to pay legal bills in the event of legal action taken against each other or by a third party.
Whether to include one depends upon the nature of the contract and relative strengths of the parties to the contract. Here in California, if a written agreement contains an attorneys fees clause in favor of one party, the prevailing party in the action will be entitled to attorneys fees. This is true even if that prevailing party is not even a party to the agreement!
In order to determine whether to include such a clause, you should first decide who benefits from the clause. What are the different motivations and bargaining positions of the parties to the contract? The person entitled to money under the contract usually wants it included. It is also beneficial when a smaller company contracts with a much larger company. On the other hand, a larger company that can afford its own attorneys fees would not include such a clause because the omission of the clause could act as an added deterrent to the smaller company filing suit. Without an attorneys' fees clause, pursuing a lawsuit may cost the small company more money in attorneys' fees than any judgment it may obtain. And should it file suit, it will be under greater pressure to accept a low settlement offer as its attorneys' fees continue to mount.