Have you ever worried about what would happen if someone broke their contract with you?

Yes, you could sue them — but let’s be honest: lawsuits aren’t just time-consuming, they’re also expensive because of the attorney’s fees you have to pay.

That’s where an attorneys’ fees clause comes in, and it might be one of the most important parts of a contract — one that you’ve never thought about.

Learn more about this critical clause and why your contracts need them below.

What’s an Attorneys’ Fees Clause?

An attorneys’ fees clause is a part of your contract that says if you have to sue someone to enforce the contract, and you win, they have to pay for your lawyer. Without this clause, you’d typically have to pay your own legal fees, even if you win the case.

How an Attorneys’ Fees Clause Can Protect Your Business

To see how this clause can help you, let’s illustrate with an example. Imagine that someone owes you $50,000 for work you did, but they refuse to pay.

You know you’re in the right, but a lawyer tells you it might cost $20,000 in legal fees to sue them. Without an attorneys’ fees clause, you’d only collect $30,000 after paying your lawyer if you win.

With an attorney’s fees clause, however, you could recover both the $50,000 AND the $20,000 you spent on legal fees. This means you’d recover the payment owed to you and much more.

Beyond Just Money Disputes

Attorneys’ fees clauses aren’t just about collecting unpaid bills — they’re crucial for enforcing other important contract terms, like:

• Non-compete agreements when former employees try to steal your customers
• Confidentiality agreements when someone shares your trade secrets
• Property rights when someone won’t return your equipment
• Service agreements when someone doesn’t deliver what they promised
• And much more

The Power of Prevention

One of the best things about having an attorneys’ fees clause is that it often prevents problems before they start. When the other party knows they’ll have to pay your legal fees if they lose, they’re much more likely to honor the contract. It’s like having an insurance policy that you hope you’ll never need to use.

What Makes a Good Attorneys’ Fees Clause?

The best attorney’s fees clauses clearly state that the “prevailing party” in any dispute gets their fees paid by the losing side.

“Prevailing party” means whoever wins the case. Some clauses get more specific about what counts as winning, but the basic idea is that if you have to go to court to enforce your rights under the contract, and you win, you shouldn’t have to pay for the privilege.

Watch Out for One-Sided Clauses!

Sometimes you’ll see contracts where only one party gets their attorney’s fees paid if they win. While this might seem unfair, it’s perfectly legal in most places.

When you’re negotiating your own contracts, try to make the clause “mutual.”  This means either party can recover their fees if they win. This is not only fairer, but courts tend to look more favorably on mutual clauses.

The Bottom Line

Adding an attorneys’ fees clause to your contracts is like giving them teeth. Without one, you might win the battle but lose the war, spending so much on legal fees that your victory feels hollow.

With an attorneys’ fees clause, you have both protection and leverage: protection because you can truly enforce your rights without going broke, and leverage because the other party knows they can’t just wear you down with expensive legal tactics.

Hence, when you’re reviewing your next contract, be sure to add an attorneys’ fees clause. If you’d rather have a template all ready for you to use instead, contact Drafted Legal today. We’re here to help!