Recovery of Attorney's Fees in Kansas
| Jurisdiction | Kansas,United States |
| Citation | Vol. 77 No. 4 Pg. 20 |
| Pages | 20 |
| Publication year | 2008 |
By Jerry D. Fairbanks, First National Bank, Goodland, Corporate Counsel Section CLE liaison
Litigation is expensive and one of the major concerns for corporate counsel is attorney's fees. There may be times when those fees can be recovered.
The general rule under Kansas law is that attorney's fees are not recoverable unless authorized by statute or agreement of the parties. Golconda Screw Inc. v. West Bottoms Ltd., 20 Kan. App. 2d 1002, 894 P.2d 260 (1995).
In 1876, the Kansas Legislature passed a law declaring that a contractual provision providing for recovery of attorney's fees in a note, bill of exchange, bond, or mortgage shall be null and void and unenforceable. This law was later codified in K.S.A. 58-2312. The 1994 Kansas Legislature repealed the prohibition against attorney's fees and amended K.S.A. 58-2312, as well as parts of the Kansas Uniform Consumer Credit Code, which specifically allowed contractual agreements for the recovery of attorney's fees.
The amendment became effective July 1, 1994, and K.S.A. 58-2312 now provides as follows:
Except as otherwise provided by law, any note, mortgage or other credit agreement may provide for the payment of reasonable costs of collection, including, but not limited to, court costs, attorney fees and collection agency fees, except that such costs of collection: (1) may not include costs that were incurred by a salaried employee of the creditor or its assignee and (2) may not include the recovery of both attorney fees and collection agency fees.
The Kansas Court of Appeals in Ryco v. Chapelle Intern., 23 Kan. App. 2d. 30, 926 P.2d 669 (1996), held that the amendment to K.S.A. 58-2312 was substantive and refused to allow its retroactive application. The credit agreement allowing attorney's fees must have been entered into after July 1994.
On its face this statute prohibits the collection of attorney's fees for inside or corporate counsel as they would be a "salaried employee." It has been suggested that, despite the statutory language, it may be possible to collect attorney's fees for a "salaried employee" if such a provision is included in the note, mortgage or other credit agreement. Colorado has the same statutory prohibition for salaried employees, but the Colorado courts have allowed attorney's fees if specifically authorized in the credit agreement.
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