It is common knowledge among construction litigators that in order for a contractor to recover attorneys’ fees from a subcontractor, the subcontract must specifically state that attorneys’ fees are recoverable. However, in litigation, the arguments impeding a contractor’s recovery of fees are quite nuanced. To short-circuit these arguments before litigation occurs, contractors should consider the following issues:
- whether the contractor may recover all fees incurred for any reason, including litigation to enforce a subcontract, or whether recovery is limited to fees related to tasks such as completing the subcontractor’s late or deficient work, dealing with governmental authorities, or resolving a mechanics lien;
- whether a reasonableness requirement on fees gives the subcontractor an argument to object to the contractor’s chosen legal counsel on the basis that the counsel’s hourly rates are unreasonably expensive;
- the timing of when fees are due and payable to a contractor (i.e., as they are incurred regardless of liability or only after liability is established by a judgment in litigation or arbitration);
- whether the language of a performance bond (in such a context) conflicts with and impedes a contractor’s reliance on its subcontract language regarding attorneys’ fees.
Courts closely scrutinize attorneys’ fees provisions in contracts and subcontracts, so thoughtful, articulate drafting is essential.
The attorneys in Ogletree Deakins’ Construction Law Industry Group will continue to cover any developments, news, and legislation pertinent to the construction industry.