Attorney's Fees in Interpleader: Who Pays, How Much, and When Courts Say No

In most interpleaders, the insurer or bank that holds the money asks the court for its attorney’s fees and costs, to be paid from the deposit. Every dollar awarded comes out of what the claimants will share, so a fee request is often the one point on which rival claimants agree. This guide covers the federal rules. For the discharge itself and interest on the deposit, see discharge, fees and interest.

Where the power comes from

No statute expressly provides for the stakeholder’s fees. The Sixth Circuit has explained that the interpleader statute “does not contain an attorney’s fee provision,” and that courts rely on the language in 28 U.S.C. § 2361 allowing the court to “make all appropriate orders to enforce its judgment.” In its words, “modern federal practice follows the traditional equity rule that gives the trial court discretion to allow a disinterested stakeholder to recover attorney’s fees and costs from the stake itself.”¹ The Second Circuit likewise said the statute “says nothing about such allowances, leaving any award to the sound discretion of the district court.”²

The request is usually made in the motion for deposit and discharge, or in a separate motion afterwards. Under the general federal rule, a fee motion must be filed “no later than 14 days after the entry of judgment” unless a statute or court order provides otherwise, and it must state the amount sought.³ Many courts also have local rules on time records.

The general rule: modest fees for a disinterested stakeholder

Courts across the circuits describe the same basic rule. Fees are discretionary, they go to a stakeholder that is truly disinterested, and they should be modest.

• Sixth Circuit. A stakeholder may recover costs and fees when it is “(1) a disinterested stakeholder, (2) who has conceded liability, (3) has deposited the disputed funds into court, and (4) has sought a discharge from liability,” and “[t]he only limiting principle is reasonableness.”⁴ Applying that test in 2026, a Michigan federal court approved a $9,000 fee that the estate claiming an annuity death benefit had agreed to, finding that a $605,283.77 benefit “will not be unreasonably depleted.”⁵
• Eighth Circuit. Starting an interpleader, depositing the money and obtaining a discharge “does not usually involve any great amount of skill, labor or responsibility, and, while a completely disinterested stakeholder should not ordinarily be out of pocket for the necessary expenses and attorney’s fees incurred by him, the amount allowed for such fees should be modest.”⁶
• Ninth Circuit. Judgment in interpleader “ordinarily entitles the stakeholder to an award of attorneys’ fees from the interpleaded funds for work performed filing the action in interpleader,” and “these fees are normally not high.”⁷
• Fifth Circuit. Fees “are available when the interpleader is a disinterested stakeholder, and is not in substantial controversy with one of the claimants.”⁸
• Eleventh Circuit. Costs and fees “are generally awarded, in the discretion of the court, to the plaintiff who initiates the interpleader as a mere disinterested stake holder.”⁹ For that rule the Eleventh Circuit relied on a 1980 decision of the former Fifth Circuit, which is binding precedent in the Eleventh Circuit.¹⁰ That decision adds that “the plaintiff who enters the conflict (by contesting the ownership of the fund or by disputing the correct amount of his liability) will not, in the absence of special circumstances, be awarded any expenses.”¹¹

The reverse can also happen. The Ninth Circuit has said costs “should not be assessed against a stakeholder, at least where the stakeholder has not been dilatory or otherwise guilty of bad faith.”¹²

The normal-course-of-business exception

The biggest difference among courts is whether an insurer should get fees at all. Interpleader is a routine tool for life insurers, and some courts reason that the cost should fall on the insurer, which can spread it across its customers, rather than on the beneficiaries.

The Eleventh Circuit states the normal-course-of-business standard most fully, in a decision that binds only the federal courts in Alabama, Florida and Georgia. Fees may be denied “when a stakeholder’s interpleader claim arises out of the normal course of business.” Because the costs of such suits “are foreseeable, the insurance company easily may allocate the costs of these suits to its customers,” and it “can plan for interpleader as a regular cost of business and, therefore, is undeserving of a fee award.” The standard is not automatic. A blanket rule that banks may never recover was “overly broad,” and a bank acting merely as a depository might be an innocent stakeholder entitled to fees.¹³ See the decision summary.

The Seventh Circuit, which covers Illinois, Indiana and Wisconsin, treats the same idea as a condition for fees rather than an exception to them. In Aaron v. Mahl, it described the standard, which neither side disputed, as allowing fees to a prevailing stakeholder when the costs are reasonable and the stakeholder’s efforts are not part of its normal course of business. It then upheld fees for a brokerage firm that the trial court found was a disinterested stakeholder in a complex case with extensive discovery.¹⁴ In other circuits, approaches to insurer fee requests vary, as the table below shows.

A stakeholder’s own conduct can also cost it fees. In a Rhode Island case, an insurer that denied a claim on its own reading of the law, then interpleaded only after it was sued, was discharged but denied fees.

Circuit	Decision	What it said
Second	Travelers Indemnity Co. v. Israel (1965)	Affirmed denial of fees to insurers that interpleaded, rejecting "the notion that whenever a minor problem arises in the payment of insurance policies, insurers may, as a matter of course, transfer a part of their ordinary cost of doing business to their insureds."
Fifth	Rhoades v. Casey (1999)	Fees are discretionary for a disinterested stakeholder not in "substantial controversy" with a claimant. The opinion does not address a business-cost exception.
Seventh	Aaron v. Mahl (2008)	A court "may award attorneys' fees and costs to a prevailing stakeholder ... if the costs are determined to be reasonable and the stakeholder's efforts are not part of its normal course of business." The court affirmed an award to a brokerage in a complex case with extensive discovery.
Ninth	Michelman v. Lincoln National (2012)	Describes fees as ordinarily available and "normally not high," with "great discretion" to apportion them among claimants. This guide did not find a Ninth Circuit decision adopting a business-cost exception.
Eleventh	In re Mandalay Shores (1994)	Sets out the normal-course-of-business standard, typically applied to insurers, and held that a rule denying fees to every bank went too far. Binding only in the Eleventh Circuit.

Sources for the table: Israel,² Rhoades,⁸ Aaron,¹⁴ Michelman⁷ and Mandalay Shores.¹³ Courts within a circuit do not always apply these rules the same way, and the table reflects only what each appellate opinion says.

District courts in the Eleventh Circuit apply the exception by awarding fees only for work beyond the routine. In Primerica v. Donley (N.D. Ala. 2019), a slayer-statute dispute, the court awarded the insurer $3,750 from the fund “[i]n light of [its] showing that counsel performed tasks that exceeded the scope of its ‘normal course of business,’” citing Mandalay Shores.¹⁵

A claimant’s unsuccessful counterclaims do not necessarily change that result. In Lincoln National v. Steward (N.D. Ga. 2017), a group life insurer said it had offered to waive fees if the claimants consented to its discharge; the insured’s husband refused and filed counterclaims against the insurer for breach of contract, breach of the implied covenant and negligent misrepresentation. The court dismissed every counterclaim and discharged the insurer, but still denied fees. It quoted an earlier decision observing that lower courts in the Eleventh Circuit “have generally been loath to award fees and costs to life insurance companies for whom interpleader actions are an entirely predictable and routine cost of doing business” (at 15). Weighing the factors courts in the circuit use, it found the case “not particularly complex” (at 16) and said the counterclaims “certainly protracted the proceedings. However, counterclaims that ultimately are not successful are not necessarily sufficient to warrant an award of fees” (at 17). It concluded that “the dispute arose in the normal course of Lincoln National’s business” and denied the request (at 17).¹⁶

District courts within the Sixth Circuit are divided on the same question. In Unum Life v. DeBoard (S.D. Ohio 2021), no claimant responded to the insurer’s request for limited fees, and the court denied it anyway. It contrasted an Ohio decision that awarded fees with Unum Life Ins. Co. of America v. Kelling (M.D. Tenn. 2001), which had reasoned that “insurance companies should not be compensated merely because conflicting claims to proceeds have arisen during the normal course of business,” and found the Kelling approach “the more appropriate one—specifically because the costs Unum seeks to recover from the insurance proceeds are an ordinary cost of doing business.” In its words, “Unum should not be permitted to shift those costs to the beneficiary of the insurance policy simply because that individual has not yet been identified.” The insurer was ordered to deposit the full benefit with interest and was then dismissed.¹⁷

Limits courts apply

Even where fees are available, courts limit them.

• Interpleader work only. One federal court, awarding fees to an annuity issuer, said recovery “is properly limited to work related to the interpleader process, such as preparing the petition for interpleader, depositing the contested funds with the court, and obtaining discharge from liability and dismissal from the lawsuit.”¹⁸
• No fees for a stakeholder that is not neutral. In First Trust Corp. v. Bryant, the Sixth Circuit reversed a fee award of more than $53,000 to a former pension plan trustee that had brought the interpleader. It held that equity did not favor an award given how the trustee had litigated, and it held that the plan’s rightful beneficiary should recover her own fees for all issues related to her claim, not only her motion to intervene.¹
• Apportionment. A court may charge fees against the share of a claimant whose claim lacked merit rather than against the whole fund.⁷ It may also tax them directly against a claimant whose conduct justifies it, though the Eleventh Circuit reversed one such award because the finding of bad faith was “wholly unsubstantiated by the record.”⁹
• Claimants usually bear their own fees. In a Maryland decision, the winning claimant could not shift her legal fees to the other claimants, because losing after discovery is not the same as acting wrongfully or without substantial justification.

How claimants’ objections have fared

The following rulings were made after one or more claimants filed an objection to the stakeholder’s fee request. The amounts are those stated in the orders.

Agreed fee awards

Claimants sometimes agree to the stakeholder’s fee. In a California case over a life policy, the claimants stipulated to the insurer’s discharge and to $14,712.00 in fees and $402.00 in costs, deducted before deposit; the court granted the award after reviewing the billing entries, noting “the fact that the Defendants have agreed to the precise award.”¹⁹ In a Louisiana slayer case, $10,000 of the fund went to the insurer for fees and costs “[b]y consent of all parties,” and in a New Mexico case the clerk paid the insurer $5,490.00 in fees and $929.20 in expenses after an unopposed discharge motion.²⁰

The parties may also resolve a fee request before the court rules on it. In a Florida case, the court discharged the insurer and denied its fee request “as moot in light of the Joint Notice of Resolution of Primerica Life Insurance Company’s Request for Attorneys’ Fees and Costs filed on September 26, 2018,” leaving the claimants to litigate or settle their claims to the deposit.²¹ And some insurers ask for nothing. In another Florida case, the discharge order noted that “Plaintiff does not seek attorneys’ fees or costs, and all Defendants consent to the relief Plaintiff seeks.”²²

Fees for claimants

Under the usual American rule, each claimant pays its own lawyer, even if it wins the fund. There are several important exceptions.

ERISA plans. In an action under ERISA by a participant, beneficiary or fiduciary, “the court in its discretion may allow a reasonable attorney’s fee and costs of action to either party.”²³ The Supreme Court has held that a claimant need not be a “prevailing party,” but must achieve “some degree of success on the merits.”²⁴ In Bryant, a plan beneficiary who intervened in a trustee’s interpleader recovered fees under this provision.¹ See ERISA post-distribution claims.

State statutes on refusal to pay. Some states let a policyholder or beneficiary recover penalties and fees when an insurer refuses to pay without good reason. Missouri’s statute, for example, applies where an insurer “has refused to pay such loss without reasonable cause or excuse,” and allows a percentage penalty “and a reasonable attorney’s fee.”²⁵ Whether an insurer that promptly interpleads has refused to pay “without reasonable cause” depends on the statute and the facts. Several states also require interest on late life insurance payments; see interest owed before deposit.

Claims against a negligent stakeholder. In the Ninth Circuit, interpleader does not shield a stakeholder whose own negligence created the dispute, and claimants may seek “all damages directly and proximately caused” by it, including fees, as damages.²⁶ See When a claimant sues first and the decision summary.

Practical points

• Read the request closely. Courts have reduced fees for discovery, client communications, duplicate review, vague entries and work done to protect the insurer. A claimant can object to specific entries rather than the request as a whole.
• Ask for the time records. A request without contemporaneous records may be reduced or denied.
• Check the circuit’s rule. In some courts, an insurer that interpleads in the ordinary course of its business may recover nothing.
• Consider who should bear the cost. If one claimant’s position caused the delay, a court may charge the fees to that claimant’s share.
• Remember the amount at stake. Courts compare the fee with the size of the fund and with what a simple interpleader requires.

Related guides

• Discharge, fees and interest
• Named in an interpleader: what happens next
• When a claimant sues first
• Key decisions

Footnotes

1. First Trust Corp. v. Bryant, 410 F.3d 842, 856 (6th Cir. 2005). Caselaw Access Project. ↩ ↩² ↩³

2. Travelers Indemnity Co. v. Israel, 354 F.2d 488, 490 (2d Cir. 1965). Caselaw Access Project. ↩ ↩²

3. Fed. R. Civ. P. 54(d)(2)(B). Cornell LII. ↩

4. Holmes v. Artists Rights Enforcement Corp., 148 F. App’x 252, 259 (6th Cir. 2005). ↩

5. Estate of Budinski v. AAA Life Ins. Co., No. 2:25-cv-10964-TGB-EAS (E.D. Mich. June 23, 2026), ECF No. 24, at 11–13, court order (PDF). See the summary. ↩

6. Hunter v. Federal Life Ins. Co., 111 F.2d 551, 557 (8th Cir. 1940). Caselaw Access Project. ↩

7. Michelman v. Lincoln National Life Ins. Co., 685 F.3d 887, 898 (9th Cir. 2012). Opinion (PDF). ↩ ↩² ↩³

8. Rhoades v. Casey, 196 F.3d 592, 603 (5th Cir. 1999). Caselaw Access Project. ↩ ↩²

9. Prudential Ins. Co. of America v. Boyd, 781 F.2d 1494, 1497–98 (11th Cir. 1986). Caselaw Access Project. ↩ ↩²

10. Bonner v. City of Prichard, 661 F.2d 1206, 1207 (11th Cir. 1981) (en banc) (decisions of the former Fifth Circuit handed down before the close of business on September 30, 1981, are binding precedent in the Eleventh Circuit). Caselaw Access Project. ↩

11. Perkins State Bank v. Connolly, 632 F.2d 1306, 1311 (5th Cir. 1980), cited in Prudential Ins. Co. of America v. Boyd, 781 F.2d 1494, 1497 (11th Cir. 1986). Caselaw Access Project. ↩

12. Gelfgren v. Republic National Life Ins. Co., 680 F.2d 79, 81 (9th Cir. 1982). Caselaw Access Project. ↩

13. In re Mandalay Shores Coop. Housing Ass’n, 21 F.3d 380, 383 (11th Cir. 1994). Caselaw Access Project. ↩ ↩²

14. Aaron v. Mahl, 550 F.3d 659, 667 (7th Cir. 2008). Caselaw Access Project. ↩ ↩²

15. Primerica Life Ins. Co. v. Donley, No. 3:18-cv-00995-AKK (N.D. Ala.): final judgment, ECF No. 40 (Oct. 30, 2019), at 1–3, court judgment (PDF); order granting discharge and fees, ECF No. 38 (Oct. 22, 2019), court order (PDF); order appointing guardian ad litem, ECF No. 21 (Feb. 4, 2019); order granting deposit, ECF No. 6 (July 16, 2018). ↩

16. Lincoln National Life Ins. Co. v. Steward, No. 1:16-cv-03108-MHC (N.D. Ga.), order discharging the insurer, dismissing counterclaims and denying attorney’s fees, ECF No. 30 (May 31, 2017), at 15–18, court order (PDF); order of disbursement, ECF No. 32 (June 2, 2017). ↩

17. Unum Life Ins. Co. of America v. DeBoard, No. 2:21-cv-570 (S.D. Ohio), opinion and order, ECF No. 27 (Sept. 1, 2021), at 2–3, court order (PDF). The order cites Kelling as 170 F. Supp. 3d 792; the decision is reported at 170 F. Supp. 2d 792 (M.D. Tenn. 2001). ↩

18. Talcott Resolution Life Ins. Co. v. Carlyle, No. 1:19-cv-01796-DKC, ECF No. 72 (D. Md. June 29, 2022) (memorandum opinion). CourtListener (PDF). ↩

19. Penn Mut. Life Ins. Co. v. Estate of Smith, No. 1:23-cv-00722-SAB (E.D. Cal.), order granting stipulated motion for interpleader relief and attorneys’ fee award, ECF No. 26 (Sept. 8, 2023), court order (PDF), at 7. ↩

20. Transamerica Premier Life Ins. Co. v. Guy, No. 2:18-cv-07993 (E.D. La.), order and reasons, ECF No. 63 (June 28, 2021), at 5, court order (PDF); Fidelity & Guaranty Life Ins. Co. v. Shipman, No. 1:23-cv-00731-DHU-LF (D.N.M.), memorandum opinion and order, ECF No. 37 (Apr. 12, 2024), court order (PDF); final judgment, ECF No. 47 (July 22, 2024), court judgment (PDF). ↩

21. Primerica Life Ins. Co. v. Estrada, No. 1:18-cv-22868-UU (S.D. Fla.), agreed order on the insurer’s motion to interplead, for injunction, dismissal and fees, ECF No. 33 (Sept. 27, 2018), at 2, court order (PDF). ↩

22. Augustar Life Ins. Co. v. Sanchez, No. 0:25-cv-61436 (S.D. Fla.), order granting unopposed motion for order of discharge in interpleader, ECF No. 32 (Dec. 1, 2025), at 2, court order (PDF). ↩

23. 29 U.S.C. § 1132(g)(1). Cornell LII. ↩

24. Hardt v. Reliance Standard Life Ins. Co., 560 U.S. 242 (2010). Cornell LII. ↩

25. Mo. Rev. Stat. § 375.420. Missouri Revisor of Statutes. ↩

26. Lee v. West Coast Life Ins. Co., 688 F.3d 1004 (9th Cir. 2012). Opinion (PDF) (also on the Caselaw Access Project). ↩