One of the most common misconceptions clients have when entering a legal battle is the belief that the "loser pays." Many people who have been wrongfully sued or are facing what they call a "frivolous" lawsuit assume that once they win, the court will automatically order the other side to reimburse their legal expenses. In Texas, however, the reality is far more complex.
The "American Rule" vs. The "British System"
In the United States, we follow what is known as the American Rule. Unlike the British system, where the winning party is generally entitled to recover their attorney's fees from the loser, the American Rule dictates that each party is responsible for their own legal fees regardless of the outcome.
Attorney's fees are never guaranteed. To recover them in a Texas court, you must have a specific legal basis. This usually comes in one of two forms:
- A Written Contract: Many business and real estate contracts include a "prevailing party" clause, which expressly states that the winner of a dispute is entitled to their fees.
- Statutory Authority: Certain Texas laws, such as Texas Civil Practice and Remedies Code Chapter 38 (covering breach of contract) or the Deceptive Trade Practices Act (DTPA), specifically provide for the recovery of attorney's fees. Without one of these, you may be left holding the bill even if you win your case.
Fighting Frivolous Lawsuits: Rule 91a
If you are hit with a truly baseless claim, Texas does provide a mechanism for a quick exit. Under Texas Rule of Civil Procedure 91a, a party can move to dismiss a lawsuit that has "no basis in law or fact."
In the past, Rule 91a was a mandatory fee-shifting rule, meaning the loser of the motion had to pay the other side's fees. However, recent changes in the law have made this permissive. Now, the court may award attorney's fees, but it is no longer required. This shift was intended to lessen the burden on the judicial system, but it also means there is less certainty for the party seeking dismissal.
The Practical Strategy: Knowing When to Walk Away
Because clients must typically pay their law firm upfront and hope for a recovery later, the firm often advises a pragmatic approach. It is rarely wise to stay in a lawsuit simply on the hopes of recovering attorney's fees.
Legal battles are expensive and unpredictable. If an opponent offers to walk away or settle for nuisance value, it is often a win—even if you feel the lawsuit should never have been brought. This is especially true in tort cases, such as negligence, where Texas law frequently lacks a provision for the defendant to recover fees. If you can get out of a case today and wake up tomorrow without a lawsuit hanging over your head, that is a successful outcome.
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