Attorney fees in construction and mechanic’s lien litigation are recoverable only when a specific statute or a contract clause authorizes it, because the American legal system otherwise requires each side to pay its own lawyers. For contractors, subcontractors, suppliers, and property owners, that single rule drives most of the strategic decisions in a payment dispute: whether to file a lien at all, how to draft the contract before work starts, and when to settle. The exceptions matter, and so do the procedural traps that can wipe out an otherwise valid fee claim.
When a Lien Statute Lets You Recover Fees
Every state has a mechanic’s lien law giving unpaid contractors, subcontractors, and material suppliers a claim against the improved property. A subset of those statutes go further and let the prevailing party in a lien foreclosure action recover attorney fees from the losing side. Some states make the award mandatory when a claimant successfully forecloses; others leave it to the trial judge. Washington’s lien statute, for example, allows courts to award attorney fees, bond costs, and title report expenses to whichever party prevails.
The statutory right has conditions. Lien laws impose strict procedural requirements: preliminary notices within a set window after work begins, filing the lien before a statutory deadline, and proper service on the property owner. Miss any of them and the lien itself may be invalid, which eliminates the statutory fee entitlement along with it. Courts will not override the American Rule just because someone won a construction case; the legislature has to have authorized fee-shifting, and that authorization usually sits inside the lien statute itself.
Fee-shifting cuts both ways. A property owner who defeats a lien in a state with a reciprocal provision can collect fees from the claimant. That reality is what keeps marginal lien filings in check.
Contractual Fee Clauses in Construction Agreements
A fee-shifting clause in the construction contract operates on its own authority, independent of any lien. It stays available when no lien was filed, when a lien has expired, and in disputes that have nothing to do with liens: defective workmanship, scheduling delays, change-order fights, scope disagreements.
Do not assume industry-standard forms include a mutual clause. The widely used AIA A201 General Conditions does not. Its fee references run one direction: the contractor reimburses the owner for attorney fees in dealing with lien claims and certain indemnification situations, with no reciprocal entitlement for the contractor. If you want balanced fee protection, you have to negotiate the language in.
Seven states have mutuality statutes that automatically convert a one-sided fee clause into a reciprocal one. In those jurisdictions, a contract giving only the owner the right to fees gives the contractor the same right by operation of law. Everywhere else, a one-sided clause means what it says.
Enforcement is usually routine as long as the language is clear and the fees are reasonable. In commercial construction, judges rarely find these provisions unconscionable because both sides are sophisticated. Enforcement gets harder in residential work when a homeowner signed a contractor’s standard form without negotiating. A court reviewing that kind of adhesive contract may refuse to enforce a fee clause that operates unfairly against the homeowner.
Who Counts as the Prevailing Party
Statutory and contractual fee rights almost always hinge on identifying a prevailing party, and that is where many fee requests quietly die. Picture a contractor who files a $200,000 lien, an owner who counterclaims for $80,000 in defective work, a jury that awards the contractor $90,000 and the owner $40,000. Who won?
Courts generally weigh the contract language, the number and relative importance of claims on each side, the amounts sought versus the amounts awarded, and whether the circumstances support finding that both parties or neither party prevailed. Trial judges have real discretion here, which is why experienced construction lawyers draft fee clauses that define “prevailing” with specificity, sometimes requiring a party to recover a stated percentage of the original claim before qualifying.
The practical lesson is to keep demands realistic. An inflated lien or bloated damage figure that gets slashed at trial can flip the prevailing-party analysis and leave the claimant with no fees at all, or worse, owing the other side’s.
Federal Projects and the Miller Act
Federal construction projects run on a different payment-security system. Mechanic’s liens against federal property are not permitted; instead, the Miller Act requires contractors on federal projects over $100,000 to post payment bonds, and unpaid subcontractors and suppliers sue on the bond.1Office of the Law Revision Counsel. 40 USC 3133 – Right To Bring a Civil Action
The Miller Act contains no fee-shifting provision. The Supreme Court confirmed as much in F.D. Rich Co. v. United States ex rel. Industrial Lumber Co., holding that the American Rule applies to Miller Act cases and that the statute’s reference to “sums justly due” does not include attorney fees.2Library of Congress. F.D. Rich Co. v. Industrial Lumber Co., 417 U.S. 116 (1974) The statute also states that the federal government is not liable for any costs or expenses of a bond claim action.1Office of the Law Revision Counsel. 40 USC 3133 – Right To Bring a Civil Action
Fee recovery on federal projects is still possible through three routes:
- A fee-shifting clause in the subcontract between the claimant and the general contractor. Courts routinely require the bond surety to cover those fees.
- Bad faith conduct by the opposing party before or during litigation, though jurisdictions split on how broadly to apply the exception.
- Supplemental state law claims brought alongside the Miller Act claim, which can tap into state fee-shifting rules. Fees recovered this way typically run against the general contractor rather than the surety.
On a federal project, the subcontract is the fee-recovery lifeline. Without contractual language, a claimant absorbs its own legal costs even after winning every dollar.
How a Settlement Offer Can Shut Down Post-Offer Fees
A formal offer of judgment under Federal Rule of Civil Procedure 68 is a tactical weapon that gets overlooked. A defendant serves a written offer for a specific amount. If the claimant rejects it and ultimately wins a judgment no more favorable than the offer, the claimant must pay the defendant’s costs incurred after the offer date.3Legal Information Institute. Federal Rules of Civil Procedure Rule 68 – Offer of Judgment
Whether “costs” includes attorney fees depends on the underlying fee-shifting authority. In Marek v. Chesny, the Supreme Court held that when the applicable fee-shifting statute defines costs to include attorney fees, those fees fall within Rule 68’s cost-shifting mechanism.4Justia. Marek v. Chesny, 473 U.S. 1 (1985) A well-timed offer can freeze the opposing party’s post-offer fees and sometimes shift them.
In a lien foreclosure, an owner who serves a generous Rule 68 offer early sets a ceiling on the contractor’s potential fee recovery. If the contractor refuses and lands below the offer, the contractor loses post-offer fees and may owe the owner’s post-offer costs. Many construction cases settle because of exactly this pressure. State courts often have analogous offer-of-judgment rules that work the same way.
What Courts Require to Actually Award Fees
A fee-shifting right on paper means nothing without records that survive judicial scrutiny. Courts expect contemporaneous billing records showing the specific task, the date, and the time in increments no larger than a tenth of an hour. Reconstructed or estimated entries carry far less weight than records created in real time.
Entries must be granular enough for a judge to assess whether each task was necessary and the time proportionate. This is where block billing creates problems. Lumping multiple tasks into one entry (“research, draft motion, review documents — 6.5 hours”) leaves a judge unable to evaluate reasonableness. Courts regularly cut block-billed requests, sometimes by as much as 50 percent.
The fee petition should include the engagement letter or fee agreement showing the hourly rates and identify the specific statute or clause authorizing the award. Work must be categorized to separate recoverable lien-related tasks from unrelated matters. If an attorney spent ten hours on the lien foreclosure and four hours on a separate warranty dispute, only the lien hours belong in the request.
Start tracking time from the moment a dispute surfaces, not when the lawsuit is filed. Pre-litigation work (demand letters, lien preparation, preliminary notice compliance) is often compensable if the statute or contract covers it, but only if the records exist to support it.
How the Fee Amount Is Calculated
The dominant framework is the lodestar method, which the Supreme Court endorsed in Hensley v. Eckerhart: multiply reasonable hours by a reasonable hourly rate for the local market.5Justia. Hensley v. Eckerhart, 461 U.S. 424 (1983) The concept is simple; the execution is contested.
Reasonable hours means the court can cut time that looks excessive, duplicative, or poorly documented. If two attorneys from the same firm both attended a routine hearing, the court may allow hours for only one. Reasonable rate is benchmarked against what attorneys of similar experience charge for similar work in the same geographic market. In 2025, the national average hourly rate for attorneys was roughly $349, with typical rates between about $200 and $490 depending on market and experience. Construction litigation specialists in major metropolitan areas often charge above that range.
Judges can adjust the lodestar up or down based on the complexity of the construction issues, the results obtained, and the skill of counsel. In contested cases, the court may hold an evidentiary hearing where both sides argue over specific entries, often with testimony from other local construction attorneys about prevailing rates.
Deadlines are tight. Under Federal Rule of Civil Procedure 54(d)(2)(B)(i), a motion for attorney fees in federal court must be filed no later than 14 days after entry of judgment. State rules vary but most impose similarly short windows. Missing the deadline forfeits the fee claim regardless of how strong the underlying entitlement was. Once entered, the fee order becomes part of the enforceable judgment and can be collected through the same mechanisms as the underlying construction debt, including, in some cases, folding it into the property lien.
When Fees Run Against the Lien Claimant
Fee-shifting is not a one-way street. Many states penalize contractors who file liens that are willfully exaggerated or without merit. The standard in most of those states goes beyond mere inaccuracy; the property owner must show the inflated amount was a deliberate overstatement, not an honest mistake. When the owner makes that showing, the owner can recover attorney fees incurred in defending the lien, and some jurisdictions authorize additional statutory damages.
A contractor who inflates a $50,000 claim to $120,000 hoping for settlement leverage can end up paying the owner’s legal bills instead of collecting on the lien. Courts take this seriously because an exaggerated lien clouds title, blocking sale or refinance until the lien is resolved.
Property owners should not assume fee recovery is automatic. The burden of proving willful exaggeration falls on the owner, and courts generally require a full trial or at minimum a summary judgment motion to resolve the question. Proving the lien was frivolous can itself be expensive, which is why owners sometimes find it cheaper to negotiate a release even when they believe the claim is overblown.
Expert Witness Costs Are Not Attorney Fees
Construction cases almost always involve expert witnesses: engineers inspecting defective work, estimators calculating repairs, scheduling consultants analyzing delays. Winning a right to attorney fees does not automatically entitle you to recover expert fees.
Courts treat expert witness fees as separate from attorney fees and typically require specific statutory or contractual authorization before shifting them. A clause that says only “reasonable attorney fees” will not cover the $15,000 you spent on a structural engineer. If the contract or lien statute does not expressly mention expert fees, recovering them from the other side is unlikely without a separate basis such as an offer-of-judgment rule.
Ordinary litigation costs (filing fees, deposition transcript charges, service of process) are treated differently. Most court rules allow the prevailing party to recover these as a matter of course, though amounts are modest compared to attorney fees or expert costs.
Self-Represented Parties Cannot Collect Fees
Parties who represent themselves sometimes assume they can bill their own time and recover it as attorney fees if they win. They cannot. In Kay v. Ehrler, the Supreme Court held that a pro se litigant is not entitled to attorney fees under fee-shifting statutes, even if the litigant happens to be a licensed attorney.6Legal Information Institute. Kay v. Ehrler, 499 U.S. 432 (1991) The rule applies broadly across federal fee-shifting statutes and most state equivalents. Anyone considering self-representation in a significant construction dispute should weigh the lost opportunity to recover fees against the cost of hiring counsel.
How Fee Awards Are Taxed
An attorney fee award in a commercial construction case is generally taxable income. Under the Internal Revenue Code, gross income includes income from all sources unless a specific exclusion applies, and no exclusion covers these awards.7Internal Revenue Service. Tax Implications of Settlements and Judgments The IRS treats the fee award as part of the overall recovery, meaning you report it even though the money goes straight to your attorney.
Businesses offset the income because attorney fees paid in connection with a trade or business qualify as a deduction for ordinary and necessary business expenses.8Office of the Law Revision Counsel. 26 U.S. Code 162 – Trade or Business Expenses A general contractor who spends $40,000 on a lien foreclosure and later recovers that same amount reports both and roughly washes out. The problem comes when only part of the fees are recovered or when the income and deduction fall in different tax years, creating a cash-flow mismatch.
Reporting adds administrative work. When a settlement or judgment includes attorney fees as part of a payment includable in the claimant’s income, the payor must file separate Forms 1099-MISC listing both the claimant and the attorney as payees.7Internal Revenue Service. Tax Implications of Settlements and Judgments Allocate fee amounts clearly in the settlement agreement to avoid later disputes with the IRS over characterization.