Attorneys' Fees Provisions by State: When Contractual Fee-Shifting Survives

Short answer: Most states enforce a clear attorneys' fee clause, because the American Rule (each side pays its own fees) gives way to an enforceable contract term. There are real exceptions. Nebraska does not enforce contractual fee clauses at all unless a statute allows the fees. North Carolina enforces reciprocal business-contract fee clauses only when every party signs. Georgia, North Dakota, South Dakota and others restrict fee clauses in notes and other debt instruments. And four states (California, Montana, Oregon and Washington) rewrite a one-way "only the licensor recovers" clause into a mutual one by statute, while Florida and Utah let a court do the same. The table below shows what we verified, state by state.

Reviewed and corrected on 6 October 2026. This is general information, not legal advice; check the cited statute or opinion before relying on it.

Official text, as of 6 October 2026

Cal. Civ. Code § 1717(a), read on the California Legislative Information site:

"...the party who is determined to be the party prevailing on the contract, whether he or she is the party specified in the contract or not, shall be entitled to reasonable attorney's fees in addition to other costs."

Subdivision (b)(2) adds: "Where an action has been voluntarily dismissed or dismissed pursuant to a settlement of the case, there shall be no prevailing party for purposes of this section."

What changed in 2026: nothing found for this section. The official text shows it was last amended by Stats. 1987, Ch. 1080. The recent movement is in court decisions, covered below.

What fee shifting means

Fee shifting means the loser pays some or all of the winner's attorneys' fees. The default in the United States is the opposite: each side pays its own. That default has two common exceptions. A statute can shift fees (42 U.S.C. § 1988 is the federal civil-rights example), or the parties can shift them by contract. This post is about the contract route, and about the state statutes that change how a contract clause works once a dispute starts.

A clause that looks fine and is not

Picture a master services agreement with a long prevailing-party fee clause copied from a real estate purchase form. The licensor is a Delaware company, the licensee is a California LLC, and the contract picks New York law. The clause is one-way: the licensor recovers fees and the licensee does not.

Whether that clause "works" depends on the forum and the statute. In California it is read as mutual by statute, and a California court may apply that rule even though the contract chooses New York law (see ABF Capital below). In Nebraska it would not be enforced at all. The clause is one sentence, and it carries a different consequence in each state, because the drafter assumed contract language overrides the American Rule the same way everywhere. It does not.

TL;DR

• The American Rule is the default in federal court. Alyeska Pipeline Service Co. v. Wilderness Society, 421 U.S. 240 (1975), describes it this way: "absent statute or enforceable contract, litigants pay their own attorneys' fees."
• Four states make a one-way clause mutual by statute: California (Cal. Civ. Code § 1717), Montana (Mont. Code Ann. § 28-3-704), Oregon (Or. Rev. Stat. § 20.096) and Washington (RCW 4.84.330). Florida (Fla. Stat. § 57.105(7)) and Utah (Utah Code § 78B-5-826) say a court "may" extend a one-way clause to the other side. Hawaii (Haw. Rev. Stat. § 607-14) is a different kind of statute: it caps the fees taxed in assumpsit actions and actions on a note or written contract with a fee clause at 25 percent of the judgment, with exceptions.
• Nebraska does not enforce contractual fee clauses without a statute or a uniform course of procedure that allows the fees (Stewart v. Bennett, 273 Neb. 17 (2007)).
• North Carolina enforces reciprocal fee clauses in business contracts only if all parties sign (N.C. Gen. Stat. § 6-21.6), and caps the award in a damages suit at the amount in controversy.
• Narrower statutes cover leases, consumer contracts and debt instruments. The table lists the ones we read.
• "Prevailing party" has statutory definitions in some states that a contract cannot waive. In California a settlement means no prevailing party. In Washington it means the party in whose favor final judgment is rendered.

Part of our state-law reference series. The fee clause rarely travels alone, so see also our state-by-state guides to choice-of-law clauses, liquidated damages, and indemnification caps.

The American Rule and what it actually does

The federal baseline comes from Alyeska Pipeline Service Co. v. Wilderness Society, 421 U.S. 240 (1975). The Supreme Court wrote that "absent statute or enforceable contract, litigants pay their own attorneys' fees," and it reversed an award built on a "private attorney general" theory. The Court had said much the same in Fleischmann Distilling Corp. v. Maier Brewing Co., 386 U.S. 714 (1967), which traces the rule to Arcambel v. Wiseman, 3 Dall. 306 (1796).

States mostly follow the same default, with exceptions. Alaska's Civil Rule 82(a) says that, "[e]xcept as otherwise provided by law or agreed to by the parties," the prevailing party "shall be awarded attorney's fees calculated under this rule" (partial fees), and the Alaska Supreme Court has held that Rule 82 "may be overridden by agreements" such as a contract fee clause (Gamble v. Northstore Partnership, 28 P.3d 286 (Alaska 2001)).

The Court returned to the meaning of "prevailing party" in Lackey v. Stinnie, No. 23-621 (U.S. Feb. 25, 2025), decided 7 to 2. It held that plaintiffs who gained only preliminary injunctive relief before their case became moot are not "prevailing parties" under 42 U.S.C. § 1988(b), because no court conclusively resolved their claims on the merits. That is a decision about a federal statute. A contract can define "prevailing party" differently, and some state statutes already do.

The reciprocity rule: Cal. Civ. Code § 1717

If a corporate lawyer commits one statute from this piece to memory, it should be this one. Section 1717(a) applies "in any action on a contract, where the contract specifically provides that attorney's fees and costs, which are incurred to enforce that contract, shall be awarded either to one of the parties or to the prevailing party." The party who prevails on the contract gets reasonable fees "whether he or she is the party specified in the contract or not." A waiver of that right is void.

The effect is that a one-way fee clause in a contract that falls under § 1717 is read as mutual. The statute also says who prevails: the party who "recovered a greater relief in the action on the contract," and the court may find no prevailing party at all. After a voluntary dismissal or a settlement, there is none.

Two California Court of Appeal decisions show how this plays out:

• American Building Innovations LP v. Balfour Beatty Construction, LLC (Cal. Ct. App. 4th Dist., Div. 3, Sept. 3, 2024, No. G062471) affirmed a fee award of more than $1.55 million. A subcontractor sued for payment and lost because its license had been suspended (Bus. & Prof. Code § 7031 bars an action for compensation by a contractor who was not duly licensed throughout the work). The court held that a party who defeats a contract claim by showing the contract unenforceable, for reasons other than illegality, can recover fees under § 1717 if the other side would have been entitled to fees had it won, citing Santisas v. Goodin, 17 Cal.4th 599, 611 (1998). The subcontract's clause was a prevailing-party clause. We did not check whether further review was sought.
• Martinez v. Sai Long Beach B, Inc. (Cal. Ct. App. 2d Dist., Div. 5, Jan. 28, 2025, No. B320441) reversed a fee award to a seller that won summary judgment on warranty and consumer claims. The court wrote that "section 1717 does not allow a prevailing defendant on a Song-Beverly Act claim to be awarded attorney fees," and extended the point to Consumers Legal Remedies Act claims absent a finding of bad faith. Section 1717 does not let a seller turn a consumer's one-way statute around.

Does a choice-of-law clause save a one-way clause?

Not reliably. California courts apply the test from Nedlloyd Lines B.V. v. Superior Court, 3 Cal.4th 459 (1992), to decide whether to honor a contract's choice of another state's law. Nedlloyd itself does not mention § 1717 or attorney's fees. The case that applies the test to fee reciprocity is ABF Capital Corp. v. Grove Properties Co., 126 Cal.App.4th 204 (2005). A New York choice-of-law clause led the trial court to deny fees under a one-sided clause. The Court of Appeal reversed, holding that § 1717 reflects a fundamental California policy and that the trial court erred in failing to apply California law. The test asks whether another state has a materially greater interest, so the answer turns on the facts of each deal.

How the states split

Four things drive the outcome.

1. Statutes that make a clause mutual. California, Montana, Oregon and Washington have mandatory statutes, and we read each one. Montana's § 28-3-704 says that when one party has an express right to recover attorney fees, "all parties to the contract or obligation are considered to have the same right," except that a party with condemnation authority over the other's property cannot use it against that owner. Oregon's § 20.096 gives fees to the party that prevails on the claim "without regard to whether the prevailing party is the party specified in the contract." Washington's § 4.84.330 defines "prevailing party" as "the party in whose favor final judgment is rendered." Florida's § 57.105(7) says that when a contract allows fees to a party enforcing it, "the court may also allow reasonable attorney's fees to the other party when that party prevails." Utah's § 78B-5-826 says a court "may award costs and attorney fees to either party that prevails" in an action on a written contract that lets at least one party recover fees. The Utah Supreme Court, citing an earlier case, has said the statute can be used where a clause creates "an unequal exposure to the risk of contractual liability for attorney fees," but in Giusti v. Sterling Wentworth Corp., 2009 UT 2, it held the statute did not help a party whose clause gave fees to the "non-defaulting party."

2. Statutes aimed at leases and consumer contracts. Many states fix the one-way problem only for residential leases or consumer deals. Colorado bars a "one-way, fee-shifting clause" in a residential rental agreement (C.R.S. § 38-12-801(3)(a)(II)). New York (Real Prop. Law § 234), Massachusetts (G.L. c. 186, § 20) and New Jersey (N.J.S.A. 2A:18-61.66) each read an implied landlord covenant to pay the tenant's reasonable fees into a residential lease that gives the landlord fees. Minnesota (§ 504B.172) gives a prevailing tenant the same fee right the lease gives the landlord. Connecticut's § 42-150bb awards fees to a consumer (a buyer, debtor or lessee on a personal, family or household contract or lease) who successfully prosecutes or defends an action on a contract that gives the commercial party fees, and § 42-150aa bars fees for a salaried-employee attorney or before suit and caps outside-counsel fees at 15 percent of the judgment in a money suit on such a contract.

3. Statutes that restrict fee clauses in debt instruments. Georgia's O.C.G.A. § 13-1-11 makes a fee obligation on a note or other evidence of indebtedness enforceable only after written notice gives the debtor ten days to pay without fees, and caps a stated percentage at 15 percent of principal and interest. The Georgia Supreme Court treats a lease as an "evidence of indebtedness" (RadioShack Corp. v. Cascade Crossing II, LLC, 282 Ga. 841 (2007)). North Dakota (N.D.C.C. § 28-26-04) and South Dakota (SDCL § 15-17-39) declare fee provisions in notes, mortgages and similar debt documents against public policy and void (South Dakota "except as authorized by specific statute"). North Carolina's § 6-21.2 sets a 15 percent default for fees on notes and similar evidence of indebtedness.

4. How courts test the amount. Courts review the amount even when the contract fixes a number, and they do not all use the same test. Federal courts use the lodestar (hours times a reasonable rate) for statutory fees (Perdue v. Kenny A. ex rel. Winn, 559 U.S. 542 (2010)). Texas requires proof of reasonable hours multiplied by a reasonable rate for fee shifting "whether by statute or contract" (Rohrmoos Venture v. UTSW DVA Healthcare, LLP, 578 S.W.3d 469 (Tex. 2019)). The District of Columbia computes a lodestar first (James G. Davis Construction Corp. v. HRGM Corp., 147 A.3d 332 (D.C. 2016)). Maryland's high court has held the lodestar method "an inappropriate mechanism for calculating fee awards in private, contractual debt-collecting cases" (Monmouth Meadows Homeowners Ass'n v. Hamilton, 416 Md. 325 (2010)). Delaware weighs the factors in Rule 1.5(a) of its Lawyers' Rules of Professional Conduct (Mahani v. EDIX Media Group, Inc., 935 A.2d 242 (Del. 2007)), and Ohio, in a noncommercial condominium-assessment case, asks whether the fees are "fair, just and reasonable" on all the circumstances (Nottingdale Homeowners' Ass'n v. Darby, 33 Ohio St.3d 32 (1987)). Wyoming's court may "allow only such sum as is reasonable" or even disallow fees on equitable grounds despite a valid clause (Stafford v. JHL, Inc., 2008 WY 128).

Texas shows why the label matters. Tex. Civ. Prac. & Rem. Code § 38.001(b) lets a person recover reasonable fees from an individual or organization on a claim for, among others, "an oral or written contract" (amended in 2021 to say "organization"). That statute gives a claimant a right to fees. It is not a rule about contract clauses, and the Texas Supreme Court has said "parties are free to contract for a fee-recovery standard either looser or stricter than Chapter 38's" (Intercontinental Group Partnership v. KB Home Lone Star L.P., 295 S.W.3d 650 (Tex. 2009)). Texas also has an eviction-suit rule: if a written lease entitles the landlord or the tenant to fees, a prevailing tenant gets reasonable fees from the landlord (Tex. Prop. Code § 24.006(c)).

Nebraska is the outlier on enforcement. In Stewart v. Bennett, 273 Neb. 17, 727 N.W.2d 424 (2007), the Nebraska Supreme Court wrote that "in the absence of a uniform course of procedure or authorization by statute, contractual agreements for attorney fees are against public policy and will not be judicially enforced," and it declined to reconsider. The court repeated the rule in Hand Cut Steaks Acquisitions, Inc. v. Lone Star Steakhouse & Saloon of Nebraska, Inc., 298 Neb. 705, 905 N.W.2d 644 (2018), affirming the denial of fees under a lease clause and writing that it would "decline to depart from our long-held jurisprudence." We read both opinions in October 2026 and found no later Nebraska decision or statute that changes the rule, but we did not search every Nebraska statute, so check before relying on it.

The state table

The columns ask two questions for each state: what statute or rule changes how a fee clause works, and what a court opinion we read says about enforcing the clause. Every statement in the table is tied to a statute or opinion we read in October 2026. Where we did not find a statute, the cell says so. A cell that says "No clause-reversal statute found" means we found none in our review, not that none exists.

Washington's statute is the closest cousin to California's. Both void a waiver of the right, but they define the winner differently: Washington's winner is the party with final judgment, and California's winner is the party who recovered greater relief on the contract, with no winner after a settlement. Utah's and Florida's statutes are discretionary, so a one-way clause there is a risk and not a certainty. Hawaii's § 607-14 caps the fee it taxes at 25 percent of the judgment, with exceptions.

What to do when the deal spans states

The choice-of-law clause is the first lever, and as the California cases show, it is not a complete one on the fee question. These are working rules, not holdings:

1. If a counterparty is in California, Montana, Oregon or Washington, draft the clause mutual. The statutes there will make it mutual anyway, and a waiver of the right is void. In Florida and Utah a court may extend a one-way clause to the other side.
2. If Nebraska courts could hear the dispute, do not rely on a fee clause. Check whether a Nebraska statute authorizes the fees you want, or plan on each side bearing its own.
3. If the contract is a note, lease or other debt instrument, read the debt-instrument statutes first. Georgia's notice step, North Dakota's and South Dakota's voiding rules (South Dakota with its specific-statute exception) and North Carolina's 15 percent default can all decide the question before reciprocity is reached.
4. For consumer contracts and residential leases, assume a one-way statute will shape the result. Connecticut, Colorado, New York, Massachusetts, New Jersey and Minnesota are examples, and in California Martinez shows § 1717 does not let a seller recover fees on warranty and consumer claims.

The fee question runs on top of the choice-of-law question. A choice-of-law result does not answer it.

The four enforcement failure modes

1. One-way drafting that gets turned around. A licensor-only fee clause in a contract that falls under § 1717, § 28-3-704, § 20.096 or § 4.84.330 is read as mutual, and the clause that was supposed to deter the other side can be used against the drafter. American Building Innovations shows the reach: the defendant recovered more than $1.55 million after winning on a licensing defense.

2. "Reasonable" left to the court. A fee clause that says "reasonable attorneys' fees" leaves the test to the court, and courts do not all use the same one (see axis 4 above). Maryland courts read a reasonableness limit into a fee clause even when it omits the word (Myers v. Kayhoe, quoting Ulico), and Wyoming's court may cut a fee or deny it despite a valid clause (Stafford v. JHL). If you expect above-market rates, say so in the clause.

3. Debt-instrument and consumer rules that void or cap the clause. In Georgia, a fee obligation on a note is enforceable only after a ten-day written notice (O.C.G.A. § 13-1-11). In North Dakota a fee clause in a note or mortgage is void, and South Dakota voids one "except as authorized by specific statute." In Wisconsin, a consumer credit transaction cannot carry a customer-paid fee term, subject to the statute's exceptions. A fee clause also sits next to a liquidated damages clause in many contracts, and that clause has its own enforceability test.

4. Fees-on-fees. Recovery of the fees spent recovering fees is not automatic. In 1046 Munras Properties, L.P. v. Kabod Coffee, 2025 COA 71 (Aug. 7, 2025), the Colorado Court of Appeals called the question one of first impression, noted that "[c]ourts disagree whether a prevailing party is entitled to an award of fees on fees based on a general fee-shifting provision," and held that the lease's clause entitled the landlord to them. The lease said that "all reasonable costs incurred in connection therewith, including attorney[] fees" go to the prevailing party in an action to enforce or interpret it. A clause that says "including any action to recover such fees" is the safest formulation.

Recent authority worth tracking

• Lackey v. Stinnie, No. 23-621 (U.S. Feb. 25, 2025): the 7-2 decision that plaintiffs who won only a preliminary injunction before their case became moot are not "prevailing parties" under 42 U.S.C. § 1988(b). It is a federal-statute decision, and a contract can define the term.
• Martinez v. Sai Long Beach B, Inc. (Cal. Ct. App. Jan. 28, 2025): section 1717 does not let a prevailing defendant recover fees on Song-Beverly claims, and the court extended the point to CLRA claims absent bad faith.
• 1046 Munras Properties, L.P. v. Kabod Coffee, 2025 COA 71: fees on fees under a lease clause, with the survey of the split quoted above.
• American Building Innovations LP v. Balfour Beatty Construction, LLC (Cal. Ct. App. Sept. 3, 2024): defeating a contract claim on a statutory licensing bar supported a $1.55 million fee award under § 1717.
• Golden v. WorldQuant Predictive Technologies, LLC, 235 Conn. App. 377 (2025): the Appellate Court affirmed an arbitrator's award of $690,578.60 to an employer, covering damages and attorneys' fees, costs and expenses (the employer had asked for $2,820,169.13). The employment agreement's arbitration clause said the prevailing party "shall be entitled to receive" the costs of the arbitration, "including, without limitation, reasonable attorneys' fees, costs and expenses." The court called that language unambiguous and refused to vacate the award, which the employee had attacked for exceeding the submission and for manifest disregard of the law.
• N.C. Gen. Stat. § 6-21.6 was last amended by S.L. 2025-25, s. 43, which sits in a part of that act titled "Electronic Signatures." The current subsection (b) accepts a hand signature, an electronic signature that reflects an affirmative act, or a manual signature delivered as an electronic image. We did not isolate the exact words that changed.

The drafting checklist

A defensible fee clause in a commercial contract looks something like this. Each line answers a problem a statute or opinion above creates.

1. Mutual language. Draft mutual unless you have a specific reason for asymmetry and a forum where the clause will hold. In California, Montana, Oregon and Washington a one-way clause will be read as mutual.
2. Define "prevailing party," and know what statutes override. A definition like "the party that obtains a final judgment on the merits" works in states with no statutory test. In California, § 1717(b)(2) says no one prevails on a settlement, and § 1717 cannot be waived. In Washington, "prevailing party" is by statute the party with final judgment, and a waiver is void. If you want fees to follow a settlement, allocate them in the settlement agreement.
3. Say what "reasonable" means for you. Courts review reasonableness anyway. Name a rate band or a cap if you want something other than the court's default test.
4. Check the contract type. A note, a lease and a consumer contract each trigger statutes above. Georgia's notice step is the example most often missed.
5. Allow fees-on-fees expressly. Use language like "including any action or proceeding to enforce, collect, or determine the amount of such fees." That is the formulation Munras tested.
6. Align the arbitration clause. If the contract has an arbitration clause, make sure the fee language there is as clear as the fee clause in the contract. In Golden, a clear prevailing-party sentence inside the arbitration clause produced a six-figure award that survived judicial review.
7. Leave out consumer statutory claims. If the contract may reach consumers, § 1717 will not make the seller whole on warranty and consumer-statute claims (Martinez).

For a short deadline, the minimum clause is two moves: make it mutual, and say how the amount is decided.

FAQ

Are attorney fee clauses enforceable? In most states, yes, when the clause is clear. The American Rule is a default that an enforceable contract term overrides (Alyeska, 421 U.S. 240). Nebraska is an exception: its Supreme Court has held contractual fee agreements "against public policy and will not be judicially enforced" without a statute or uniform course of procedure (Stewart v. Bennett). Other states limit clauses in notes, leases and consumer contracts.

What is the American Rule? Each party pays its own attorney's fees regardless of who wins, unless a statute or an enforceable contract says otherwise. The Supreme Court states it in Alyeska Pipeline Service Co. v. Wilderness Society, 421 U.S. 240 (1975). Alaska's Civil Rule 82 departs from it by awarding the prevailing party partial fees, and a contract clause can override that rule.

What is fee shifting? A rule or agreement that makes the loser pay some or all of the winner's attorneys' fees. It arises by statute (42 U.S.C. § 1988) or by contract.

Which states make a one-way attorney fee clause mutual? Four do so by mandatory statute: California (Cal. Civ. Code § 1717), Montana (Mont. Code Ann. § 28-3-704), Oregon (Or. Rev. Stat. § 20.096) and Washington (RCW 4.84.330). Florida (Fla. Stat. § 57.105(7)) and Utah (Utah Code § 78B-5-826) say a court "may" award fees to the other side. Several states reach the same result only for residential leases or consumer contracts.

What does California Civil Code 1717 say? It applies in "any action on a contract" with a fee clause. The party who prevails on the contract is entitled to reasonable fees "whether he or she is the party specified in the contract or not," and a waiver is void. The prevailing party is the one who "recovered a greater relief in the action on the contract," and a dismissal or settlement means there is none.

What does "prevailing party" mean in a fee clause? It depends on the contract and the governing statute. California asks who recovered a greater relief on the contract, with no winner after a settlement. Washington asks who received final judgment. In Lackey v. Stinnie (U.S. Feb. 25, 2025), the Supreme Court held that a plaintiff who gained only a preliminary injunction before the case became moot is not a prevailing party under 42 U.S.C. § 1988(b), which is a federal-statute rule. Define the term in the contract, and check whether a statute overrides your definition.

Can a choice-of-law clause defeat a state reciprocity statute? Sometimes it cannot. In ABF Capital Corp. v. Grove Properties Co., 126 Cal.App.4th 204 (2005), the Court of Appeal held § 1717 reflects a fundamental California policy and reversed a trial court that had applied New York law to deny fees. For other states, read the statute and local case law.

Does Texas enforce one-way attorney fee clauses? We did not find a Texas Supreme Court case on a one-way clause. What we read is that parties are "free to contract for a fee-recovery standard either looser or stricter than Chapter 38's" (KB Home, 295 S.W.3d 650), and that the amount must be proved by reasonable hours times a reasonable rate (Rohrmoos, 578 S.W.3d 469). In an eviction suit, a written lease that entitles either party to fees lets a prevailing tenant recover them (Tex. Prop. Code § 24.006(c)).

Can you recover the fees spent recovering fees? It depends on the clause. The Colorado Court of Appeals allowed it under a lease clause covering all reasonable costs and attorney fees in an action to enforce the lease, and noted that courts disagree about general clauses (1046 Munras Properties, L.P. v. Kabod Coffee, 2025 COA 71).

Which states do not enforce attorney fee clauses? Nebraska, absent a statute or uniform course of procedure (Stewart v. Bennett, 2007). North Dakota and South Dakota void fee clauses in notes, mortgages and other evidence of debt. We did not find other states that bar them outright, but we did not read every state's cases, and a "no statute found" entry in the table means only that we found none.

Closing

The American Rule has been the federal default since Arcambel v. Wiseman in 1796, and the Supreme Court restated it in Fleischmann in 1967 and Alyeska in 1975. States run their own exceptions on top of it. The drafter who treats a fee clause as boilerplate is accepting each state's rule by default. The drafter who knows when § 1717 or RCW 4.84.330 will attach, when a note or lease statute applies, and when Nebraska is a possible forum is doing the work the boilerplate was supposed to do.

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Arshita Anand

Co-Founder & CEO · Attorney

Arshita leads product and strategy at Vaquill AI, the US primary law data API. As an attorney, she decides which law we carry, how each section is sourced and cited, and what legal AI and compliance teams need from the data.