MAKING THE OTHER GUYS PAY: ATTORNEY FEES AND THE COMMON FUND THEORY

By Margaret M. Hand^*

I. INTRODUCTION; THE AMERICAN RULE

Code of Civil Procedure § 1021 codifies what is often called the "American Rule" of attorney’s fees, the rule that says unless otherwise provided by statute, the measure and manner of paying attorney fees is left to the agreement of the parties.¹ Parties to litigation so rarely agree to pay their opponent’s fees, the American Rule has come to be known as the rule that each party bears its own attorney fees. This rule applies in proceedings under the Probate Code, as well as in general civil litigation.² When advised of the American Rule, many clients are incredulous. Petitioners, the indignant victims of wrongdoing, cannot believe they must pay for justice. Defendants, the innocent victims of false allegations, cannot believe the injustice of having to pay for a defense. In some instances, the injustice and inequity of the American Rule is so great, the courts have reacted to create nonstatutory exceptions, despite the Code of Civil Procedure prohibition against doing so. One of those exceptions, payment of fees under the common fund theory, is the subject of this article, which begins with a brief discussion of some statutory exceptions to the American Rule.

II. SOME STATUTORY EXCEPTIONS TO THE AMERICAN RULE