American Rule

California follows what is commonly referred to as the American rule, which provides that each party to a lawsuit must ordinarily pay his own attorney fees. (Gray v. Don Miller & Associates, Inc. (1984) 35 Cal.3d 498, 504; United Services Auto. Assn. v. Dalrymple (1991) 232 Cal.App.3d 182, 87.) The Legislature codified the American rule in 1872 when it enacted Code of Civil Procedure section 1021, which states in pertinent part that "Except as attorney's fees are specifically provided for by statute, the measure and mode of compensation of attorneys and counselors at law is left to the agreement, express or implied, of the parties; . . ." (See, e.g., Bruno v. Bell (1979) 91 Cal.App.3d 776, 781 [American rule codified by Code Civ. Proc., section 1021].) The Legislature has since enacted several statutory exceptions to the American rule, and we have relied on our "inherent equitable authority" to develop three additional exceptions-the common fund, substantial benefit, and private attorney general theories of recovery. (See Gray v. Don Miller & Associates, Inc., supra, 35 Cal.3d 498, 505; Consumers Lobby Against Monopolies v. Public Utilities Com. (1979) 25 Cal.3d 891, 906 (Consumers Lobby); Serrano v. Priest (1977) 20 Cal.3d 25; see generally Cal. Attorney Fee Awards (Cont. Ed. Bar 2d ed. 1994) ch. 7.)