Friday, April 26, 2013

Attorneys Fees: The American Rule

Arkansas courts follow the "American Rule" with regard to attorneys' fees.  This means that, as a general rule, both parties to a lawsuit bear their own fees and costs.  To first-time litigants, this rule often seems unfair.  However, there are numerous exceptions to this rule involving statutes that permit a prevailing party to request judgment against the other party for fees incurred in the defense or prosecution of his or her case.   Fortunately, an experienced attorney can help his or her clients soften the impact of the American Rule by carefully crafting his or her client's claims so that they fall within these statutes.  Such claims include, for example:
photo credit: kbjesq
  1. Actions for collection on an open account
  2. Actions on a promissory note
  3. Actions for breach of a written contract
There are many other causes of action where a statute allows the prevailing party to petition the court for his fees.  A business can also protect itself by inserting a mandatory fee provision in its contracts.  An experienced attorney can help your business maximize its recovery in litigation--including the recovery of fees spent protecting your rights.

Wednesday, January 16, 2013

Interest: How much is too much?

Clients often come to me with questions about maximum allowable interest rates.  A degree of confusion is understandable--Article 19 § 13 of the Arkansas Constitution previously provided for a variable interest limit depending on the type of contract and the Primary Credit Rate at the time of the contract's formation.

During the 2010 general election, Arkansas voters passed Arkansas Constitutional Amendment 89, which became effective on January 1, 2011.  Amendment 89 simplified Arkansas usury law by dividing loans into three categories:
photo credit: EJP Photo
  1. Governmental bonds and loans now nave no maximum rate.
  2. Loans by or to federally insured depository institutions headquartered in Arkansas are capped by 12 U.S.C. § 1831u
  3. All other contracts subject to Arkansas law have a maximum allowable interest rate of 17%.
There are some pretty severe penalties for violating Arkansas usury law, which I'll cover in a future post, so you should always consult your attorney if you have concerns about an interest provision in a contract.