Litigation and suing others can be expensive. Sometimes a lawsuit is simply cost-prohibitive for an individual or a business because you usually have to pay your attorney throughout the course of the lawsuit—and a winning result is never guaranteed. In addition, Texas follows what lawyers refer to as “The American Rule” when it comes to who pays attorney fees. Simply put, unless a specific statute or law allows a party that wins a lawsuit to recover their attorney fees, they must shoulder the entirety of fees by themselves.
Thankfully for many business and individual clients, Texas law allows you to seek and recover your attorney fees if you succeed in a breach-of-contract case. (Tex. Civ. Prac. & Rem. Code § 38.001). This can be a very helpful informational item even before a lawsuit—such as in negotiating with a party that has breached a contract. The wronged party can use this information to remind the breaching party or business that, if they are sued and lose, not only will they likely have to pay monetary damages but will have to pay the wronged party’s attorney fees as well. This can help speed negotiations along and often lead to a resolution even before litigation begins.
One note: the Texas legislature recently closed a loophole in this law. Until September 1, 2021, you could only recover your attorney fees for a breach of contract if you were suing an individual or a corporation. That left out all other entities like LLCs, partnerships, limited partnerships, etc. This loophole was left open for decades, but as of now the statute applies to all of the following entities: “a corporation, limited or general partnership, limited liability company, business trust, real estate investment trust, joint venture, joint stock company, cooperative, association, bank, insurance company, credit union, savings and loan association, or other organization, regardless of whether the organization is for-profit, nonprofit, domestic, or foreign.” Tex. Bus. Org. Code § 1.002(62). For the most part, if you need to sue on a breach of contract and prevail, you will be able to seek attorney fees from the losing party.
If you need help navigating a through your rights and obligations regarding breach-of-contract issues, reach out to the firm to schedule a consult. VPLF Law has extensive experience prosecuting and defending similar contracts cases and we’ll be happy to talk you through your options.
Blog posts are for informational purposes only and, to the extent they provide opinions about law, cases, or public-interest matters, are the sole opinions of the writer, not the firm or its clients. Every case is different, so don’t rely on this post (or other blog posts) for legal advice. Always consult your lawyer on whether and how particular cases, laws, or decisions affect your case.