By: William E. Underwood, Partner, Jones Walker, LLP
December 18, 2023

Careful consideration should always be given to both the long-term cost of a dispute and the potential to recover those costs. Construction disputes can be very expensive, with attorney’s fees and litigation costs generally serving as the main driver of these expenses. But people often assume that victory will soften the impact of these costs—they assume that winning makes it all worth it because either these costs will be recovered, or the rewards will be so great that the costs were worth it.

This line of thinking can be a mistake that leads to unpleasant outcomes. Winning claimants are rarely guaranteed to recover their costs. And sometimes they find that “if we are victorious in one more battle… we shall be utterly ruined.”[1]

As a result, it is important to consider the long-term costs of a dispute at its very outset, including attorneys’ fees and litigation costs, should the matter go through litigation. And it is equally as important to consider whether and how these costs might be recovered. To that end, do not assume that these costs can be recovered. In fact, the general rule in the United States (known as the “American rule”) is that each party to a dispute bears its own costs, regardless of the outcome.

That said, there are still ways to recover fees and costs, including via contract clauses or through certain state and federal statutes. As a result, identifying and evaluating potential ways to recover these costs prior to a dispute is important. And it should be an issue that is studied early and often when considering whether to seriously pursue a potential formal claim that could culminate in litigation. But it is also worth noting that this analysis can be beneficial to defendants as well, as understanding who can and cannot recover costs can significantly impact the defense of a claim.

With that in mind, this article will examine various ways to potentially recover litigation fees and costs in construction disputes.

Contract Clauses

Again, the default rule in America is that each party bears its own litigation fees and costs. But most states will permit parties to circumvent this default rule through the inclusion of a fees clause in their contract. For example, the ConsensusDocs 205 (2023) standard agreement contains an attorneys’ fees clause, which states, “The costs of any binding dispute resolution procedures and reasonable attorneys’ fees shall be borne by the non-prevailing Party, as determined by the adjudicator of the dispute.”  Thus, under this clause, if a dispute proceeds to “binding dispute resolution,” the winner can collect its fees and costs.

As a general rule, most states will enforce these fee-shifting clauses (but as always, it is important to the understand the specific state laws governing the contract and/or the dispute). Although it may go without saying, start with the contract to determine if there is a way to recover attorneys’ fees and costs. It is also important to note that contractual clauses dealing with fees and costs may also be “buried” in other areas of the contract, like an indemnity provision. In other words, they may not exist as a standalone contract clause, but the effect is nonetheless the same.

But this also raises two important questions: 1) what is a “prevailing party,” and 2) what costs are actually covered under the clause?  As for question one, there is no simple answer—different states define “prevailing party” differently. For example, the Virginia courts define “prevailing party, for purposes of an award of attorney’s fees, as one whose favor a judgment is rendered, regardless of the amount of damages awarded.”[2]  In others words, it would appear that in Virginia (using an extreme hypothetical), one could argue that that simply recovering $1.00 on a $100 million claim, makes the claimant a “prevailing party.”

However, other courts, like Rhode Island, take a more flexible approach: “[T]he fairest test to determine who is the prevailing party is to allow the trial judge to determine from the record which party has in fact prevailed on the significant issues tried before the court.”[3]  In other words, it will likely take more than winning $1.00 to attain “prevailing party” status. And the judge will take many different things into consideration to determine who “won.”

Overall, do not assume that just because the claimant recovered money, he or she will automatically be deemed the “prevailing party” for purposes of recovering fees. Again, understanding the specific state law is important. And many times, a fact intensive analysis will be required. So be sure to including these considerations when evaluating a claim. And as a final note, it is also worth considering whether to specifically define “prevailing party” in the contract clause. This is not a cure-all, but it can help provide greater predictability for this analysis.

As for the second question, it is important to understand what fees and costs are recoverable. If, for example, the contract clause states that “the prevailing party is entitled to recover its attorneys’ fees,” then this might only cover attorneys’ fees; and it might not include other litigation costs, like experts and court reporters (which can be substantial). Or a contract clause might state “the prevailing party is entitled to recover its litigation costs.”  Does this include attorneys’ fees?  Or does it only cover litigation “costs,” like experts, court reporters, and filing fees?  The answer is not clear and will depend on a close reading of contract itself as well as applicable case law regarding the interpretation of similar clauses. In other words, give the contract a close reading. And do not make any assumptions, because the contract clause might not allow for a broad, all-encompassing recovery of fees and costs.

State Statutes

Some states have statutes that allow a party to recover attorneys’ fees and costs for certain types of claims under certain circumstances. These statutes vary widely from state to state, but they can offer various avenues to recover fees.

For example, under section 38.001 of the Texas Civil Practice and Remedies Code, a prevailing party (see above regarding issues with defining “prevailing party”) may recover reasonable attorneys’ fees on a breach of contract claim, regardless of whether the contract contains attorneys’ fees provision (see above for these contract clauses). Such statutes can be very beneficial to construction claimants. And many states, like Georgia, have also enacted prompt payment acts that allow for the recovery of attorneys’ fees for actions to recover unpaid amounts under a contract.[4]  And finally, many states also have statutes that allow claimants to recover their attorneys’ fees against parties that have either prosecuted or defended frivolous actions or otherwise acted in bad faith.[5]

Overall, these statutes offer various ways for a claimant to recover fees and/or costs under certain circumstances (depending on the language of the statute) if they prevail on their claim. But it is important to note that these statutes differ by state, including what claims are covered by the statute (some states, for example, only cover personal injury) and what types of costs may be recovered. And these statutes do not universally exist in all states.

As always, it remains important to understand the law governing the dispute. But know that there may be other avenues beyond a contract clause to recover attorneys’ fees and costs. And identifying and evaluating these avenues is an important component in weighing the value of claim.

Statutory Offers of Settlement

Some states also have what are called “offer of judgment” or “offer of settlement” statutes that allow parties to recover their fees and/or costs if they make a settlement offer that is rejected, and then the party beats its settlement offer at trial. For example, under Florida law, if a defendant 1) makes a settlement offer by following the requirements of the statute, 2) the offer is rejected, and the 3) the final judgment is at least 25% less than the offer, then defendant is entitled to recover its “reasonable costs and attorney’s fees” incurred after the offer was made.[6]  Conversely, under this same statute, if a claimant makes such an offer that is rejected, and the claimant recovers a judgment of at least 25% greater than the offer, then the claimant is entitled to recover “reasonable costs and attorney’s fees” after the offer was made.[7]  So Florida provides a framework for parties to recover their fees if their settlement efforts are rejected and they “beat” those settlement offers at trial.

Many other states have similar statutes. But it is important to note that these statutes do not always cover every type of claim. And these remedies are not available in every state. However, it is an option that should be identified and evaluated.

Further, it is important to take careful note of the language of the statute itself. For example, the federal rules of civil procedure provide an offer of settlement framework. But the rule states that “if the judgment that the offeree finally obtains is not more favorable than the unaccepted offer, the offeree must pay the costs incurred after the offer was made.”[8]  Importantly, the rule only uses the word “costs.”  It does not expressly state “attorneys’ fees.”  So someone who makes an offer under this rule generally can only recover their litigation costs—expenses like filing fees and court report expenses. And attorneys’ fees generally are not available under the language of the rule (note, there are some complex exceptions). So it is important to closely study the language of these statutes to determine what can be recovered.


Understanding whether attorneys’ fees and costs can be recovered is an important component to evaluating any construction claim that could lead to formal litigation. A $1 million judgment is great. But it suddenly looks a lot different if it cost $1,250,000 in unrecoverable fees and costs to achieve. One more “victory” like that could ruin a party. Thus, understanding what fees and costs are, or may be, recoverable will go a long way to avoiding backbreaking victories.

“The Construction Industry Team at Jones Walker LLP is one of the most highly regarded and award-winning construction law practices in the nation. Our experienced construction attorneys understand the complex dynamics between — and the unique priorities of — project participants and can craft effective solutions that minimize disputes, manage risks, and help keep projects moving from conception to completion.”

The views expressed in this article are not necessarily those of ConsensusDocs. Readers should not take or refrain from taking any action based on any information without first seeking legal advice.

[1] Plutarch, Lives of the Noble Greeks and Romans, “Pyrrhus.” In 279 BC, Pyrrhus of Epirus defeated the Romans at the Battle of Asculum. But in doing so, Pyrrhus lost most of his army and was forced to end his military campaign in Italy. Hence, a “Pyrrhic Victory” is one that inflicts losses the winner cannot afford.

[2] Dogwood Valley Citizen’s Association v. Miller, 2023 Va. Cir. LEXIS 8, at *5 (Cir. Ct. Greene County, 2023) (citing Ulloa v. QSP, Inc., 271 Va. 72, 82-82, 624 S.E.2d 43 (2006); Sheets v. Castle, 263 Va. 407, 413, 559 S.E.2d 616 (2002); Rose Hall HOA, Inc. v. Jelinek, 66 Va. Cir. 172 (Fairfax Cir. Ct. 2004

[3] Clean Harbors Environmental Services, Inc. v. 96-108 Pine Street, LLC, 286 A.3d 838, 844 (R.I. 2023) (internal citations omitted).

[4] See O.C.G.A. § 13-11-1 et seq.

[5] See e.g. O.C.G.A. § 9-15-14 (2020).

[6] Fla. Stat. 768.79

[7][7] Id.

[8] F.R.C.P 68(d) (emphasis added).