Attorney fees

Legal costs the contract may require one side to pay in a dispute or collection action.

Why it matters

Attorney-fee provisions can increase the cost of defaults, disputes, and enforcement actions substantially. A one-sided attorney-fee clause that requires the seller to pay the factor fees but not the reverse can deter sellers from pursuing legitimate grievances. Some states require attorney-fee provisions to be reciprocal to be enforceable; others enforce one-sided provisions in commercial contracts. Understanding the attorney-fee structure before signing helps sellers assess the full risk exposure in the event of a dispute, particularly for businesses with smaller invoice volumes where litigation costs could exceed the disputed amount.

How it appears in contracts

Attorney-fee provisions appear in the Remedies or Default section of the factoring agreement. Common language: if the factor incurs any attorneys fees, costs, or expenses in connection with the enforcement of this agreement, the seller shall pay all such amounts upon demand. Some agreements provide for recovery by either party. Sellers should confirm whether attorney-fee recovery is mutual and whether it applies only to enforcement actions after default or also to disputes initiated by the seller. In some states, a prevailing party standard applies by statute, which can modify one-sided contractual provisions.

Related terms

Related article: Default clauses in factoring agreements

Related reading

Sources

  • International Factoring Association - International Factoring Association. Accessed 2026-05-19. Industry association source for factoring terminology and industry context.
  • Secured Finance Network - Secured Finance Network. Accessed 2026-05-19. Industry education source for secured finance and asset-based lending context.
Financial disclaimer. This page is educational only and is not financial, legal, tax, accounting, or credit advice. Factoring terms vary by provider and contract. Read the full disclaimer.