Loser Pays—Worth the Risk?

In most cases both sides must pay their own attorney fees and costs regardless of the outcome.  (This is called the “American Rule”.  The “English Rule” shifts attorney fees and costs to the losing party.)

But there is an exception to the American Rule in Washington for cases where $10,000 or less is at issue. RCW 4.84.250 provides that in cases where $10,000 or less is sought, the loser has to pay the winner’s attorney fees and costs.  The purpose is to encourage out-of-court settlements, penalize parties who unjustifiably bring or resist small claims, and enable parties to pursue meritorious small claims without seeing the award consumed by attorney fees and costs.

By seeking $10,000 or less we can invoke the “loser pays” statute.  Here’s how the court determines who has won and who has lost:

If you get more than what the defendant offers the defendant pays all your costs and attorney fees.

If you get less than what the defendant offers you pay all of the defendant’s costs and attorney fees.

(And, of course, if you receive an offer that’s reasonable you can accept it and settle the case without receiving or paying fees and costs.)

If you have confidence in your claim it definitely makes sense to accept some exposure and take advantage of RCW 4.84.250.

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