HB 1470, signed into law last week, does away with the “American Rule,” which impacts which party is responsible for attorney fees at the conclusion of a lawsuit. Set to go into effect in November 2017, the new law requires the court to award attorney fees to the prevailing party – paid for by the non-prevailing party.
Originally designed to extend the time in which a claim of sexual abuse could be filed, HB 1470 alters the way lawsuits have been handled for nearly 300 years. Under the American Rule, each party paid for his attorney subject to a few exceptions, such as a contract provision or a statute allowing for the recovery. The new law requires the courts to award attorney fees in almost all types of civil actions to the prevailing party. As of November 1, 2017, successful litigants can recover attorney fees for nearly every civil action, including contract, parental disputes, negligence, defamation, and assault. Elimination of the American Rule is expected to have a chilling effect on the filing of new lawsuits within the state.
Attempts are being made to correct the problem before the Oklahoma Legislature adjourns on May 26, 2017. However, if the matter is not reversed by that date, your organization should:
- Review any contracts with attorney fee clauses;
- Consult with your attorney regarding the enforceability of any such provision in the State of Oklahoma; and
- Conduct a careful cost-benefit analysis of each lawsuit – your organization will need to consider not just the fees of your own counsel, but those of opposing counsel as well.