Often times the determining factor in whether to pursue litigation or not is the cost of the litigation (i.e. attorneys’ fees). Naturally, it doesn’t make sense to spend more than you will recover. When dealing with relatively low figures in dispute, the costs of litigation can sometimes make pursuing the claim cost prohibitive. As a result, one of the most common questions asked during an initial consultation with an attorney is “how much will this cost and can I get my attorneys’ fees back?” Now this is a question that you absolutely should always ask. But the answer is not always yes or no.
The general default rule in New York is that the parties to litigation will bear their own attorney’s fees. That generally means that even in a situation where one party is 100% right, the wrong party still does not have to pay the victor’s attorneys’ fees. There are two general exceptions to this rule: 1) if there is a particular statutory violation that allows the recovery of attorneys’ fees; and 2) if there is a contractual provision allowing for the recovery of attorneys’ fees.
In the construction world there are sometimes statutory schemes that allow recovery of attorneys fees (trust diversions under Article 3A of the Lien Law for example). But the best way to protect yourself on every project is to include an attorney fee provision in your contract. The typical attorney fee provision will state that the prevailing party in any litigation (or arbitration) shall be entitled to reimbursement of reasonable attorneys’ fees.
With an attorney fee provision you at least have the ability to pursue recovery of attorneys’ fees spent in litigating a claim. In deciding whether to include an attorney fee provision in your contract there is a caveat: you may not be the prevailing party. If you are found to have been the breaching party you may end up being the one paying the attorneys’ fees to the other side. In the end, its a business decision but one that is better made before you sign the contract then after a dispute arises and you are left regretting the lack of an attorney fee provision in your contract.
The construction attorneys at Kushnick Pallaci are experienced in drafting construction contracts and are here to help with your next project. Contact us here to discuss what we can do for you.