Reviewed September 7, 2026.
Winning a construction payment case does not ordinarily entitle the winner to reimbursement of its attorney's fees. New York generally requires an applicable agreement, statute or court rule authorizing that recovery. Taxable costs and disbursements are different from reimbursement of legal fees.
In Sage Systems, Inc. v. Liss, 39 NY3d 27 (2022), the Court of Appeals rejected reliance on a broad indemnity clause that did not clearly provide for fees in a dispute between the contracting parties.
Plan before a payment dispute develops
A contract can address reasonable collection fees, litigation and arbitration, but the language must fit the intended disputes. Review whether it covers direct claims, identifies the party entitled to recover, and addresses mixed results or appeals. Consumer contracts can raise additional statutory requirements, including General Obligations Law § 5-327.
A fee clause does not guarantee full recovery or collection of a judgment. Evaluate the amount at issue, available evidence, counterclaims, likely expense and collectability. Keep itemized legal billing records if reimbursement may be sought. Old dollar estimates for litigation and court limits should not drive a current decision.
Kushnick Pallaci PLLC assists clients throughout New York with construction litigation. Contact 631-752-7100 or vtp@kushnicklaw.com.
Attorney Advertising. General information, not legal advice.
I don't think I've ever seen a contract without such a provision. In fact, I was mildly suprised that the default was paying your own fees. As you say, the provision is an "all or nothing" approach, which deserves some consideration before proceeding. It can, however, encourage somebody to go ahead and litigate small matters where the attorney's fees become much more than the dispute (and arguably, thereby provide for access to the court system for judgement where none would have occurred). It also encourages disregard for what attorneys charge; if somebody else pays, who cares? I don't see a good solution, but I think there needs to be one rather than all or nothing.
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