Exceptions to American Rule on Attorney Fees

The “American Rule” in litigation is that all parties, win or lose, are responsible for their own attorney fees. There are five main exceptions to this rule in Missouri: first, when a statute authorizes recovery; second, when a contract permits an award of fees; third, when a party is forced to defendant collateral litigation; fourth, when a court of equity finds that fees are appropriate to “balance the benefits” in unusual circumstances; and, fifth, when there is award of attorney fees under Rule 55.03 for frivolous or bad faith litigation. Lorenzini v. Short, 312 S.W.3d 467, 473 (Mo. Ct. App. 2010).

The “balance the benefits” exception applies when a party’s pursuit of litigation benefits other parties — like increasing a common fund for the benefit of others (eg, a trust, estate, taxpayer funds, etc.). Consolidated Public Water Supply District No. C-1 of Jefferson County v. Kreuter , 929 S.W.2d 314, 316-17 (Mo. Ct. App. 1996). The “collateral litigation” exception may exist where the natural and proximate result of a breach of duty is to involve the wronged party in collateral litigation. David Ranken, Jr. Tech. Inst. v. Boykins, 816 S.W.2d 189, 193 (Mo. 1991).

If an exception applies, attorney fees are special damages that must be pleaded specifically. Bailey v. Hawthorn Bank, 382 S.W.3d 84, 107 (Mo. Ct App. 2012).