We often assist clients with collecting accounts that are past due. Those clients often want to know if they can recover their attorneys’ fees. The answer we often give clients is that it depends. In the state of North Carolina, it has long been upheld by the courts that unless a statute specifically awards attorneys’ fees, each party is responsible for its own attorneys’ fees.

Some clients come to us with lien claims. The good news for those clients is that attorneys’ fees are allowed by statue. Pursuant to N.C. Gen. Stat. § 44A-35, “the presiding judge may allow a reasonable attorneys’ fee to the . . . prevailing party . . . upon a finding that there was an unreasonable refusal by the losing party to fully resolve the matter [.]” N.C. Gen. Stat. § 44A-35.

However, many of our clients come to us with issues that are either not related to lien claims, or we are unable to file a lien for various reasons. The question a lot of our clients pose to us is how can we recover attorneys’ fees? That question is reviewed on a case-by-case basis, but often the best way to increase your odds of recovering attorneys’ fees is to be proactive before the collections matter even becomes an issue. The question is: how can you be proactive in ensuring that your reasonable attorneys’ fees are covered?

Ensuring that your contracts allow for the recovery of reasonable attorneys' fees in the even legal action has to be taken is a great method. Pursuant to N.C. Gen. Stat. § 6-21.2, “[o]bligations to pay attorneys’ fees upon any note, conditional sales contract or other evidence of indebtedness . . . shall be valid and enforceable up to but not in excess of fifteen percent (15%) of said ‘outstanding balance’ owing.” This means that in the event you are seeking $100,000.00 that remains unpaid on a note or subcontract agreement, you are able to recover up to $15,000.00 for attorneys’ fees, which may be more or less than your actual attorneys’ fees. In this scenario, in the event your actual attorneys’ fees are $10,000.00, the judge may grant you a judgment against the opposing party for $15,000.00 in attorneys’ fees. It may also be the case that your actual attorneys’ fees are more than $15,000.00, but you may only be able to recover up to $15,000.00 in attorneys’ fees. However, the decision of whether or not to award attorneys’ fees is ultimately at the discretion of the judge.

Whether you are a supplier, a general contractor, a subcontractor or a lender, the attorneys at Vann Attorneys, PLLC can assist you with drafting new agreements to contain an appropriate attorneys’ fees provision or review existing agreements to see if your interests are properly protected in the event of a collections matter. We assist our clients, especially subcontractors, by reviewing proposed agreements and drafting proposed changes to the agreement to offer to the general contractor, to give our clients the best chance to recover their reasonable attorneys' fees in the event they have to file suit as part of the collections process. We also recommend that on any invoices that our clients send out to purchasers, that there be small print on a section of the invoice which states that the debtor shall be responsible for all collections costs, including reasonable attorneys’ fees and court cost, in the event legal action to collect on the debt commences. While we cannot guarantee that you will be able to recover all or even a portion of your attorneys' fees, creating contractual attorneys, fees provisions in agreements gives you the best chance of recovering at least a portion of your actual attorneys' fees, than you would have otherwise had.