One of the first questions business owners ask when they’re facing a lawsuit (or thinking about filing one) is some version of this: “If I win, can I make the other side pay my attorney fees?” It’s a fair question. Legal fees add up fast, and if you’re a small business in Indianapolis, Fishers, Carmel, or Noblesville, the cost of litigation is a real consideration that affects whether it even makes sense to fight. The short answer in Indiana is that recovering attorney fees from the other side is possible, but it’s certainly not the default, and it’s certainly not automatic. The rules governing when and how you can recover those costs are more nuanced than most people expect. Understanding them before you’re deep into a dispute can shape how you approach your case from the beginning.
The American Rule and what it means for your business
Indiana follows what’s known as the “American Rule” when it comes to attorney fees. Under this rule, each party in a lawsuit is responsible for paying their own lawyer, regardless of who wins. That means even if you bring a breach of contract claim against another business and the court rules entirely in your favor, you don’t automatically get to hand the other side a bill for your legal costs. This surprises a lot of people, especially business owners who feel they’ve been clearly wronged and had no choice but to hire a lawyer to protect their interests. The logic behind the American Rule is that open access to the courts matters, and that people shouldn’t be scared away from bringing or defending legitimate claims by the threat of having to cover the other side’s fees if things go sideways. It’s a policy trade-off, and whether you agree with it or not, it’s the law in Indiana and has been for a long time.
That said, the American Rule is not absolute. There are meaningful exceptions, and depending on the facts of your case and the language in your contracts, you may very well have a path to recovering some or all of your attorney fees. The three most common exceptions that come up in Indiana business disputes are contractual fee-shifting provisions, statutory authorization, and findings of frivolous or bad faith litigation.
Your contract may already have the answer
The most common way that attorney fees get shifted in a business dispute is through the contract itself. If your agreement with the other party includes an attorneys’ fees clause (sometimes called a “prevailing party” clause), that provision can override the American Rule and allow the winning side to recover their legal costs from the losing side. These clauses show up in all kinds of business agreements: vendor contracts, leases, partnership agreements, loan documents, and service contracts. If you run a business in central Indiana and you’ve signed any kind of written agreement with another company or individual, there’s a decent chance it includes some language about attorney fees.
Here’s where it gets interesting, though. Not all fee-shifting clauses are created equal, and the specific language matters a lot. A provision that says “the prevailing party shall be entitled to reasonable attorney fees” is going to be interpreted differently than one that says “in the event of a breach, the non-breaching party may recover its costs.” Indiana courts will look closely at the actual words used, and they will enforce the clause according to its terms, not according to what one side thought it meant after the fact. That’s an important wrinkle to know about if settlement discussions are on the table in your contract dispute.
Indiana courts also require that any attorney fee award under a contract be reasonable. Even if the contract says the losing party pays fees, the court will not rubber-stamp an inflated or unreasonable amount. The fees have to reflect work that was actually performed and reasonably necessary to the litigation.
When a statute allows fee recovery
Beyond what your contract says, certain Indiana statutes authorize the recovery of attorney fees in specific types of cases. These statutory exceptions don’t come up in every business dispute, but when they apply, they can make a real difference. The most broadly applicable one is Indiana’s frivolous litigation statute. Under this law, a court may award attorney fees to the prevailing party if the court finds that the other side brought or continued a claim or defense that was frivolous, unreasonable, or groundless, or that the other side litigated the case in bad faith. This is not a low bar. A claim isn’t “frivolous” just because someone loses. To qualify, the claim has to be one that no reasonable attorney would consider justified based on the facts and law, or it has to have been brought primarily to harass or maliciously injure the other party. Bad faith means something more than just being wrong or making a poor strategic call; it requires a showing of dishonest purpose or intentional wrongdoing. Still, if your business has been sued on what appears to be a completely baseless claim, or if the other side is dragging out litigation for no legitimate reason, the frivolous litigation statute may give you a path to recouping your costs.
There are other statutes scattered throughout Indiana law that allow for fee recovery in more narrow circumstances, depending on the nature of the dispute. Consumer protection claims, certain wage disputes, and mechanic’s lien actions each have their own rules about when fees can be shifted. The key takeaway for business owners is that you shouldn’t assume you can or can’t recover fees without looking at the specific statutes that apply to your situation.
What this means for how you approach your case
Understanding the attorney fee landscape should affect how you think about litigation strategy from the very start. If you’re entering into a new business relationship, it’s worth having a lawyer review the agreement to make sure the attorneys’ fees language works in your favor (or at least doesn’t work against you). If you’re already in a dispute and trying to decide whether to file a lawsuit or how aggressively to defend one, the question of who might end up paying legal costs on both sides should be part of that calculation.
For business owners thinking about what kind of damages you can recover in a breach of contract action, attorney fees are a separate category from compensatory damages, and they follow their own rules. You can’t just tack them onto a damages claim and hope for the best. You need a legal basis, whether that’s the contract itself, a statute, or an equitable exception. And it’s worth noting that fee-shifting cuts both ways. If your contract has a prevailing party clause and you lose, you may be on the hook for the other side’s fees too. That’s something to think about early, not after you’re already deep into the litigation process.
If you believe the other side is engaged in frivolous or bad faith litigation, make that known during the case. Indiana courts have noted that it’s good practice to put the other side on notice that you consider their claims or defenses to be frivolous and that you intend to seek fees. Then, after you’ve prevailed on the merits, you can file a formal request for fees. Judges have broad discretion in deciding whether to grant those requests, so there are no guarantees, but preserving the issue throughout the case puts you in the strongest position.
Talk to a lawyer before the fees start piling up
Whether you’re considering filing a business lawsuit or defending one, the question of attorney fees deserves a real conversation with someone who understands how Indiana courts handle these issues. The answer to “can I get my fees paid?” is usually not a simple yes or no, and the specifics of your contract language, the nature of the dispute, and the conduct of the other side all matter.
Fugate Gangstad Lowe represents businesses across Indianapolis, Fishers, Carmel, Noblesville, and the rest of central Indiana in commercial disputes, breach of contract claims, and business litigation. If you’ve got a question about attorney fees or any other aspect of a business dispute, call us at 317-829-6797 or reach out through our contact form. We’ll give you a straight answer about where you stand.
The information provided in this article is for general informational purposes only and does not constitute legal advice. Reading this article does not create an attorney-client relationship. For legal advice tailored to your situation, please contact our firm directly.