Without A Fee-Shifting Provision, Recovery Of Attorney's Fees Is Highly Unlikely In Construction Disputes

In my representation of clients in the construction industry, a question that continually arises (the answer to which often causes frustration) is whether my client can recover its attorney's fees. The answer to that question is generally "no" unless the underlying contract contains what is known as a "fee-shifting" provision. This provision allows the winning or "prevailing" party to recover its fees and expenses from the losing or non-prevailing party if the dispute goes through a trial or arbitration that results in a judgment or award. Otherwise, and subject to some other exceptions, Virginia follows "the American Rule" which provides that each party shall bear its own legal costs. The question of recovery of attorney's fees comes up frequently in mechanic's lien and payment bond claims:

• Can my mechanic's lien include attorney's fees? No. Mechanic's liens are only recoverable for the value of labor and materials (plus interest) that is added by the claimant to the property being liened. Since attorney's fees don't add any value to property, they cannot be included in a lien. However, IF there is a fee-shifting provision in the underlying contract, a lien claimant can include a claim for attorney's fees under its contract when it files suit to enforce its mechanic's lien and can recover its fees if it prevails.

• Can I include attorney's fees in my payment bond claim? Yes. Although the federal Miller Act and Virginia's "Little Miller Act" do not mention attorney's fees recovery, courts may allow recovery to a payment bond claimant against the surety IF the claimant's contract permits it to recover as the prevailing party.

Construction disputes almost always involve contract issues. Contractors should therefore include fee-shifting provisions in their contracts and subcontracts to preserve their rights to recover attorney's fees in the event of disputes.