What is fee shifting?

Review what fee shifting means and if you should opt to include it in your legal contracts.

A fee shifting provision is a provision in contracts that will require the losing party to pay the winner's legal fees. This is not the standard practice in the United States. In the US, the default rule is that each party will pay their own fees and costs associated with a dispute (with attorney’s fees being the biggest component of that). 

Under this default rule, the winning party never fully recovers what they lost. They will win a damages award on the underlying claim, but they will be out the costs associated with pursuing the claim. 

If you enable fee shifting, we’ll include a clause in agreements that requires the losing party to reimburse the winning party for their reasonable fees. With this provision in place, the party that wins in a dispute has the potential to fully recover what they lost. 

Because very few disputes will ever get to a final decision (whether by an arbitrator or a court), it’s unlikely that a fee shifting clause will ever be enforced. That being said, including a fee shifting clause can affect the incentives at play earlier in a dispute. For example, fee shifting clauses can encourage people to bring smaller dollar-value claims because the ability to recover fees makes them worthwhile to pursue. 

While we can’t provide you advice on which option to choose, the most common practice is to not include a fee shifting clause. If you want to follow this most common practice, select “no” for the Enable Fee Shifting question.