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How Do Attorney's Fees "Work" in New Mexico? Who Is Responsible for Paying Attorney's Fees?

I.  How much are Attorney’s fees in a debt collection action?  Who is responsible for paying attorney’s fees?  


Answer:  New Mexico follows the “American rule” which states that, in the absence of statute, court rule, or contractual agreement, the prevailing party will not normally receive attorney fees.   Paz v. Tijerina, 2007-NMCA-109, ¶ 9, 142 N.M. 391, 393, 165 P.3d 1167, 1169.  This underscores the importance of adding an “attorney’s fees” clause into sales contracts and purchase agreements; the New Mexico Supreme Court held that a contract provision that allows attorney’s fees is enforceable.  In re N.M. Indirect Purchasers Microsoft Corp. Antitrust Litig., 2007-NMCA-007, ¶ 19, 140 N.M. 879, 890, 149 P.3d 976, 987; See, e.g.NARAL v. Johnson, 1999-NMSC-028, ¶ 9, 127 N.M. 654, 657, 986 P.2d 450, 453 (stating that the American rule does not bar enforcement of a contractual provision for attorney fees).  


Solution:  If your contract has a valid “attorney’s fees” clause you will likely be able to shift attorney’s fees onto the “debtor” (the party who owes you a debt).  However, if you are currently engaging in business in New Mexico without a contract, or the contract you are using lacks a valid “attorney’s fees” provision, contact us and we can assist you by adding these provisions to your contracts and teaching you how to effectively use a contract.    


II.  How to properly use a contract. 


All too often we encounter individuals with a situation that looks something like the following:  

1.         The business owner (or his/her agent) purchases a form contract from a lawyer or office supply store.  

2.         The business’s owner (or agent) mentions the contract to the customer and the business owner personally signs the contract document.  

3.         The business gets the project done in a largely (if not completely) satisfactory way. 

4.         The customer either refuses or is unable to pay the business for services completed/products delivered.  


III.  At this point, what can a business owner do?  


            In the above situation, the business owner is typically unable to recover under the contract.  Sometimes, we can argue for “quasi-contract” under a theory of “quantum meruit,” which is the Latin language phrase for saying “that it would be unfair to allow the person benefitted by the business to keep the goods/services without paying a reasonable price for them, therefore the court should give the business owner a judgment in their favor.” 

DISCLAIMER: The legal analyses and blog materials on Troon Law Group, LLC’s website are marketing materials and are not legal advice for your individual situation. These materials are opinionated content and reliance upon the following materials is not advised. While this article is written by a licensed attorney, Troon Law Group, LLC and its employees are not your attorney(s) and reading and/or acting upon this article does not create an attorney-client relationship between you and Troon Law Group, LLC or its employees. This article provides GENERAL legal information and should not be used as legal advice. Reliance on this information for your personal situation is NOT recommended, because each case is individualized and stands on its own facts and legal foundation, therefore you should consult with an attorney AND NOT rely on this information in lieu of retaining legal services.