The Changing Landscape of Attorney Fee Provisions in Consumer Contracts
Overview
The bargaining power in consumer contracts, also known as a consumer agreement in which money, property, or services are provided for personal, family or household purposes, resided with the business vendor in the past. If consumers did not agree to terms set forth in the vendor’s contract, including attorney fee shifting provisions, then the business would tell them to find a new vendor. Attorney fee shifting provisions were often drafted so that if the vendor wins in a lawsuit, the consumer will pay the vendor’s attorneys’ fees, but if the consumer wins, then the consumer’s attorneys’ fees would not be recoverable. This situation left many consumers struggling to maintain civil lawsuits with relatively small damages against business vendors.
Consumer Contract Reciprocal Attorney’s Fees Act
Recently, the Illinois legislature passed the Consumer Contract Reciprocal Attorney’s Fees Act (the Act) to strengthen consumer rights. Under the Act, a consumer contract allows for the recovery of attorney’s fees in a lawsuit by the defendant if the defendant prevails. For example, if a business vendor filed suit against a consumer for breach of contract, and the contract only had a unilateral fee shifting provision favoring the business vendor, the Act would still permit the consumer/defendant to recover its attorneys’ fees if a lawsuit or arbitration is filed and the consumer prevails. This provides a level of protection to the consumer.
What this Means for Consumers
The Act is not a wholesale win for consumers. First, the fee shifting provision in the Act is discretionary and not mandatory. There are circumstances where a Court may not allow a prevailing consumer/defendant to recover its fees. Additionally, the Act applies where the damages sued do not exceed the small claims threshold in Illinois ($10,000.00). Finally, the Act does not apply if the business vendor does not request attorney’s fees in its lawsuit or if each party to the consumer contract was represented by counsel in the negotiation of the agreement.
For detailed insights and strategic advice on drafting business contracts or business and consumer litigation, you can consult the consumer lawyers in Levin Ginsburg’s business litigation practice group. This includes Roenan Patt, Howard L. Teplinsky, Jonathan M. Weis, Joseph A. LaPlaca, and Mark L. Evans.
