How much does business litigation cost in California?

Most business litigation is billed hourly, with discovery the largest cost driver, and California follows the American rule: each side pays its own attorney fees (Code of Civil Procedure section 1021) unless a contract or statute shifts them. Civil Code section 1717 makes contractual fee clauses reciprocal, protecting whichever party prevails.

Cost tracks the phases: pleadings and early motions, then discovery (document production, depositions, experts), which typically consumes the largest share, then summary judgment and trial. Hourly billing dominates commercial disputes, though firms increasingly offer flat fees by phase, capped arrangements, or hybrid structures with a reduced rate plus a contingent component; whatever the structure, Business and Professions Code section 6148 requires a written fee agreement when total expense will foreseeably exceed $1,000. Who ultimately pays is a separate question. California follows the American rule, each party bears its own attorney fees (Code of Civil Procedure section 1021), unless a statute or the contract says otherwise, and most commercial contracts do. Civil Code section 1717 makes any contractual fee clause reciprocal, so even a one-sided clause protects whichever party prevails, a fact that reshapes settlement leverage. Court costs go to the prevailing party under Code of Civil Procedure section 1032. Weigh the provable damages against the cost of proving them before filing.

Authority: Cal. Civ. Code § 1717