Identifying the Prevailing Party in Contract Litigation

Many commercial contracts expressly provide that the prevailing party will be entitled to its litigation costs and attorneys’ fees in any court dispute concerning the contract.  These contracts rarely define what it means to be the “prevailing party.”  That is usually left to the parties to dispute and for the courts to decide.

Michigan case law primarily defines the prevailing party by what it is not: the prevailing party need not prevail in full on all its claims or defenses.  The courts will generally recognize that as long as the party has improved his or her position in court, that party can be the prevailing party for these purposes.

These rules may seem a bit opaque and vague, but they are really quite sensible.  The concept of a prevailing party has a sort of “I know it when I see it” quality that most can relate to.  If the contracting party would be normally be considered the “winner,” that party stands a good chance of recovering attorneys’ fees and costs.

It would indeed be nonsensical for courts to require full recovery in these circumstances.  Litigating parties routinely push their case to the limits when pleading their case.  The rule for awarding legal fees to a prevailing party should recognize this practical reality, and happily, it does.

Recovering attorneys’ fees and litigation costs is not easy in most cases, but at least a litigant does not have to surpass a nearly impossible threshold to do so in Michigan.