Common Fund Doctrine: An Overview
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The Common Fund Doctrine: An Overview
Under the American Rule an attorney can look only to his client
for compensation, even though that attorney's services benefit other
persons.1 Nevertheless, legislatures and courts have fashioned excep-
tions to this rule.2 Furthermore, parties to a contract can require an
award of attorney fees as penalty for litigation concerning an alleged
breach .3
Courts of equity carved out one of the first exceptions to the
American Rule, the Common Fund Doctrine. An attorney or his client
who has succeeded in a suit for the creation, preservation, or protec-
tion of common property or funds may recover from the fund the
costs of litigation, including attorney fees.4
Assuming the requirements of the Doctrine are met, the court
charges the fund for services the attorney performed first, then appor-
tions the remainder to the beneficiaries of the fund.5 Accordingly, ev-
1. See, e.g., Hall v. Cole, 412 U.S. 1 (1973); Feick v. Fleener, 653 F.2d 69 (2d Cir.
1981); Travelers Ins. Co. v. Williams, 541 S.W.2d 587 (Tenn. 1976).
2. See 18 U.S.C. § 1964(c) (1982) (Any person injured in his business or property
by reason of a violation of [Civil RICO provisions] . . . shall recover threefold the dam-
ages he sustains and the cost of the suit, including a reasonable attorney's fee.) (em-
phasis added); 42 U.S.C. § 1988 (1982) (In any action or proceeding to enforce [a
party's Civil Rights], the court, in its discretion, may allow the prevailing party, other
than the United States, a reasonable attorney's fee as part of the costs) (emphasis
added); ALA. CODE § 25-5-11(e) (1975) (employer liable for pro rata share of employee's
attorney's fees incurred in settlement of workers' compensation claim with third par-
ties). See also Maryland Cas. Co. v. Tiffin, 537 So. 2d 469 (Ala. 1988) (interpreting ALA.
CODE § 25-5-11(e) as a statutorily prescribed Common Fund Doctrine in workers' com-
pensation actions).
3. Barton v. Drummond Co., 636 F.2d 978 (5th Cir. 1981); State ex rel. Payne v.
Empire Life Ins. Co., 351 So. 2d 538, 545 (Ala. 1977), cert. denied, Exparte Moody, 435
U.S. 969 (1978); State, Dep't of Health & Rehabilitative Serv. v. Johnson, 485 So. 2d 880
(Fla. Dist. Ct. App. 1986).
4. See Vincent v. Hughes Air W., Inc., 557 F.2d 759, 769 (9th Cir. 1977).
5. See, e.g., Winslow v. Harold G. Ferguson Corp., 153 P.2d 714, 719 (Cal. 1944).](ViewImageLocal?handle=hein.journals/jlegpro14&div=17&collection=&method=preview&ext=.png&size=3)
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Common Fund Doctrine: An Overview
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