Definition
Expense of litigation refers to the costs and financial burdens incurred in the course of prosecuting or defending a legal action. The term encompasses a range of expenditures, including court filing fees, attorney's fees, costs of service, witness fees, and related procedural outlays. In its broadest sense, it may also extend to consequential financial effects of the litigation itself, such as interest accruing on a judgment and additional damages arising on appeal.
The term appears most frequently in indemnity agreements and insurance policies, where the scope of coverage turns on what "expenses of litigation" the indemnitor or insurer has agreed to bear. In that contractual context, courts have interpreted the phrase expansively, treating it as covering not only direct out-of-pocket costs but also downstream financial consequences the assured sustains as a result of the litigation proceeding.
Why It Matters in Research
The term has no fixed statutory definition and its meaning is almost entirely context-dependent, shaped by the document or policy in which it appears. Researchers should not assume that "expense of litigation" in one instrument carries the same scope as in another.
The primary research trap is treating this term as synonymous with "costs" in the technical procedural sense. In civil procedure, "costs" is a term of art with a precise, often statutory meaning — typically limited to enumerated items taxable against a losing party. "Expense of litigation" is a contractual or equitable term that can reach well beyond taxable costs, and courts have repeatedly held that it does.
The Bouvier's entry, which is the anchoring historical source here, illustrates this expansive judicial interpretation through the Kentucky case it cites: the court there held that an indemnity policy's promise to cover "expense of litigation" included not only the assured's litigation costs but also the damages awarded on appeal and interest accrued on the underlying judgment. That reading binds the insurer to far more than bare filing fees.
For insurance and indemnity research, this distinction is critical. When reading historical policies or older litigation files, do not assume the drafter intended a narrow procedural meaning. The phrase was and is typically read to align with the practical economic burden the assured bore because of the litigation, not merely the line items on a court's cost bill.
The term also surfaces in equity, where courts historically exercised discretion to award "expenses of litigation" — sometimes including attorney's fees — in cases involving fraud, bad faith, or breach of a duty to indemnify. This equitable usage is distinct from the insurance-policy usage and should be researched separately.
Historical Dictionary Support
Bouvier's Law Dictionary provides the only dedicated historical treatment identified in the Law Mind corpus. Bouvier's defines the term operationally rather than abstractly, grounding it in a specific judicial construction: an indemnity policy's coverage of "expense of litigation" was held to include the assured's litigation costs, appellate damages, and accrued judgment interest. This functional definition reflects how courts approached the phrase in early twentieth-century insurance disputes — working outward from the policy's evident purpose rather than parsing the phrase word by word.
What Bouvier's does not address is the equitable dimension of the term, its relationship to the American Rule on attorney's fees, or its treatment in modern statutory fee-shifting regimes. Researchers working in post-1950 materials will find that the phrase increasingly appears in the context of indemnification clauses in commercial contracts, where its scope is often negotiated and defined by the parties rather than left to judicial construction. Historical sources are largely silent on this development.
Jurisdictional Note
Jurisdictions vary in how broadly they construe "expense of litigation" in indemnity and insurance instruments. Some courts apply a presumption that the phrase reaches all economic consequences flowing from the litigation; others limit it to identifiable, documented outlays. In states with strong insured-favoring construction rules, ambiguity in the phrase will typically be resolved against the insurer.
Encyclopedia Cross-Reference
Tax treatment of litigation expenses, including deductibility as trade or business expenses, is addressed in: Deductions — Trade or Business Expenses (The Law Mind Tax Encyclopedia, tax_40). For expensing elections more broadly, see Section 179 Expensing (The Law Mind Tax Encyclopedia, tax_168). Note that tax treatment and legal definition of this term operate on separate tracks; the encyclopedia entries address deductibility, not the contractual or indemnity-law meaning covered here.