If My Company Wins Its Lawsuit in California, Does the Losing Side Pay Our Costs?

Last updated: November 2026. Reviewed by Pavel Kolmogorov, California business litigation attorney (State Bar No. 321018).

Yes, in part. A prevailing party in a California lawsuit is entitled as a matter of right to recover its allowable costs, under Code of Civil Procedure section 1032. Allowable costs are the items listed in section 1033.5, such as filing fees, deposition costs, and service of process. Attorney fees are recoverable only when a contract, statute, or other law provides for them, and expert fees usually are not. Kolmogorov Law, P.C. litigates cost and fee awards for businesses in Orange County and Los Angeles.

Call (909) 235-6116 or contact us online to discuss what a judgment for or against your business will include.

Costs are not attorney fees

Owners use "costs" to mean everything the lawsuit cost them. The statute means something narrower. Costs are the expenses incurred in moving a case through court. Attorney fees are a separate question, and the default answer in California is that each side pays its own.

Fees become recoverable when a contract, a statute, or other law authorizes them, and they are then claimed as an item of costs. (Code Civ. Proc., § 1033.5, subd. (a)(10).) Our page on attorney fees clauses covers that test, which is not the same as the one below.

In most business cases, recoverable costs are a small fraction of what the case cost to litigate. Our cost breakdown explains where the money goes.

Who counts as the prevailing party

Except where a statute says otherwise, a prevailing party is entitled as a matter of right to recover costs. (Code Civ. Proc., § 1032, subd. (b).) The statute names four winners. They are the party with a net monetary recovery, a defendant in whose favor a dismissal is entered, a defendant where neither side obtains any relief, and a defendant against plaintiffs who recover nothing from it. (Code Civ. Proc., § 1032, subd. (a)(4).)

Mixed results are different. If a party wins something other than money, or the outcome fits none of the four categories, the judge decides who prevailed. The judge may then allow costs, deny them, or apportion them.

"Net" matters. A plaintiff awarded less on the complaint than the defendant wins on a cross-complaint is not the party with the net recovery.

What the winner can recover

The list is in the statute. (Code Civ. Proc., § 1033.5, subd. (a).) The items that matter in most business cases are these:

Filing fees, motion fees, and jury fees.
The cost of taking, video recording, and transcribing necessary depositions, and travel to attend them.
Service of process.
Ordinary witness fees.
Court reporter fees set by statute.
Models, enlargements, and copies of exhibits, if reasonably helpful to the judge or jury.
Attorney fees, when a contract, statute, or law authorizes them.

Two standards apply to every item. The cost must be reasonably necessary to the conduct of the litigation, not merely convenient or beneficial to its preparation. It must also be reasonable in amount. (Code Civ. Proc., § 1033.5, subd. (c)(2), (3).)

What the winner cannot recover

The same statute has a second list. These items are not allowable unless another law expressly authorizes them: fees of experts not ordered by the court, investigation expenses, postage, telephone and photocopying charges other than for exhibits, juror investigation, and transcripts the court did not order. (Code Civ. Proc., § 1033.5, subd. (b).)

Expert fees are the surprise. In a damages-heavy case, the forensic accountant can be the largest expense after counsel, and the ordinary cost award does not reach it. Items on neither list are left to the judge's discretion. (Code Civ. Proc., § 1033.5, subd. (c)(4).)

How a section 998 offer changes the math

A written settlement offer under section 998 can rewrite the cost award. Suppose a plaintiff rejects a defendant's offer and then fails to obtain a more favorable judgment. The plaintiff does not recover its own post-offer costs and must pay the defendant's costs from the time of the offer. The court may add the defendant's post-offer expert witness fees. (Code Civ. Proc., § 998, subd. (c)(1).)

It works for plaintiffs too. A defendant who rejects a plaintiff's offer and does no better at trial may be ordered to pay the plaintiff's post-offer expert fees on top of ordinary costs. (Code Civ. Proc., § 998, subd. (d).) This is the main route to recovering expert fees. The offer must be served at least 10 days before trial. (Code Civ. Proc., § 998, subd. (b).) Our page on section 998 offers covers drafting and timing.

If you won: claiming your costs

Costs are not awarded automatically. They are claimed and contested under the Judicial Council's rules. (Code Civ. Proc., § 1034, subd. (a).) The winner files a memorandum of costs, a form that lists the amounts claimed in each category. The deadline is short and is set by California Rules of Court, rule 3.1700. Contractual attorney fees are usually set by a separate noticed motion.

One trap applies to small recoveries. If the case was filed as an unlimited civil case and the judgment could have been rendered in a limited civil case, the award of costs is in the judge's discretion. (Code Civ. Proc., § 1033, subd. (a).) Our page on small claims, limited, and unlimited civil cases explains the thresholds.

If you lost: challenging the cost bill

A cost memorandum is a request, not an order. The losing party may move to strike or tax costs, also under rule 3.1700, and the memorandum is worth reading line by line. I look first for expert fees presented as something else, deposition costs for witnesses who were never needed, and attorney fees claimed without a contract, statute, or other law behind them.

A cost or fee order made after judgment is separately appealable. (Code Civ. Proc., § 904.1, subd. (a)(2).) Our page on appealing a business judgment covers the deadlines. Interest is a separate component, covered on our prejudgment interest page. See also our civil litigation practice page.

What to bring to the first meeting

The judgment, verdict, or dismissal, and any notice of entry.
The contract, so we can check for an attorney fees clause.
Any section 998 offer made or received, with its date.
Invoices for filing fees, depositions, experts, and service of process.
Any memorandum of costs already served on you.

Frequently asked questions

If my company wins its lawsuit, which of our expenses does the losing side have to reimburse in California?

The allowable costs listed in Code of Civil Procedure section 1033.5: filing, motion, and jury fees, necessary deposition costs, service of process, ordinary witness fees, statutory court reporter fees, and helpful trial exhibits, among others. Each must be reasonably necessary and reasonable in amount. Attorney fees are added only if a contract, statute, or other law authorizes them. Expert fees, investigation, postage, and routine copying are generally excluded.

We won at trial but spent more on expert witnesses than on anything else. Can we recover those fees?

Usually not as ordinary costs. California Code of Civil Procedure section 1033.5 excludes fees of experts the court did not order, unless another law expressly authorizes them. The main exception is section 998. If you served a qualifying written offer that the other side rejected and then failed to beat, the judge has discretion to award your reasonable post-offer expert fees.

Are attorney fees recoverable as costs in California?

Only when a contract, a statute, or other law authorizes them. Section 1033.5 of the Code of Civil Procedure then treats the fees as an allowable item of costs, usually fixed by a noticed motion after judgment. Without a fee clause, a fee statute, or another legal basis, each side in a California business case pays its own lawyers, whoever wins.

Who is the prevailing party under CCP 1032?

Section 1032 of the California Code of Civil Procedure names four. They are the party with a net monetary recovery, a defendant who obtains a dismissal, a defendant where neither side gets relief, and a defendant against plaintiffs who recover nothing from it. In other situations, including cases resolved with non-monetary relief, the court decides who prevailed and may allow, deny, or apportion costs.

What is a memorandum of costs?

It is the form a prevailing party files in a California court to claim costs after judgment. It lists the amounts claimed, category by category. The filing deadline is set by California Rules of Court, rule 3.1700, and it is short. The other side may respond with a motion to strike or tax costs, and the judge then decides which items are allowed.

Talk to a California business litigation attorney

If you are weighing a lawsuit, a settlement offer, or a cost bill, call (909) 235-6116 or contact us online. Kolmogorov Law, P.C. is located at 327 Magnet, Irvine, CA 92618, and represents businesses in Orange County, Los Angeles, and throughout California.

This page provides general information about California law and is not legal advice. Outcomes depend on the judgment, the contract, and the court's discretion.