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.