Construction disputes can often escalate from small grievances to arbitration to large-scale lawsuits. When there is even a possibility of legal action, it is in your best interest to include an attorneys’ fees clause in your construction contracts. An attorneys’ fees clause stipulates that in the event of a dispute the losing party pays for the winning party’s legal costs. In this article, Denver construction lawyers at Cotney Construction Law will discuss the pros and cons of including an attorneys’ fees clause in your construction contracts.
The Downsides of an Attorneys’ Fees Clause
The main downside of an attorneys’ fees clause is that it encourages the escalation of disputes, especially when both parties believe they will be off the hook for legal fees. This also creates an unbalanced dynamic that may force one party to settle in order to avoid paying for their opposition’s outrageous legal fees.
Be aware if the clause applies to one party and not the other. If it is not a mutual provision it means that in the event of a dispute one party is entitled to attorneys’ fees while the other is not. This gives one party, the prevailing party, an advantage that does little to foster a swift resolution. Additionally, a court may review a provision that favors only one party and change it to be mutual if it is deemed unfair.
The Positives of an Attorneys’ Fees Clause
The positive of having an attorneys’ fees clause is simple and effective: no one is without power. An attorneys’ fees clause ensures that a party who has been wronged can seek resolution no matter how small the cause of the grievance may be. It also discourages one side from continuing to commit wrongdoings unabated. If you’re worried about doing business with a party that would be a powerhouse in a dispute, this clause may be incredibly beneficial to you.
As detailed above, there are substantial pros and cons to consider before placing an attorneys’ fees clause in your construction contract. To ensure that the right clause is included for your situation, we ask that you turn to a Denver construction lawyer for the drafting of your construction contracts.
Disclaimer: The information contained in this article is for general educational information only. This information does not constitute legal advice, is not intended to constitute legal advice, nor should it be relied upon as legal advice for your specific factual pattern or situation.