When a legal dispute arises and the matter ends up in court, the general rule is that each party pays their own attorney fees unless a specific statute allows the prevailing party to collect attorney fees, or the contract which is the subject of the dispute, contains an attorney fees provision. Note that it is uncommon for statutes to provide for attorney fees so many contracts contain such provisions.

Attorney fees provisions in contracts are like two edged swords. They can work for you or against you. While not all attorney fees clauses are the same, following is one example:

The Parties agree to mediate any dispute or claim arising between them out of this Agreement, or any resulting transaction, before resorting to court action. Mediation fees shall be divided equally among the parties involved. If, for any dispute or claim to which this paragraph applies, any Party (1) commences an action without first attempting to resolve the matter through mediation, or (2) before commencement of an action, refuses to mediate after a request has been made, then that Party shall not be entitled to recover attorney fees, even if they would otherwise be available to that Party in any such action.

In the event that any suit is instituted concerning or arising out of the Agreement, the prevailing party shall recover all of such Party's costs, including, without limitation, the court costs and reasonable attorney fees incurred in each and every such action, suit or proceeding, including any and all appeals or petitions therefrom.

Following are key definitions:

Prevailing Party: The party to a lawsuit who successfully prosecutes the action or who successfully defends against it.

Reasonable: Fair or appropriate under the circumstances. Not excessive. The court has the right to determine what is reasonable.

Costs: Expenses in prosecuting or defending a case, not including attorney fees.