Craig Martin’s Construction Contract Advisor blog won the 2014 Best Construction Blog competition, and its quality continues to make it a contender in 2015. The Nebraska-based lawyer, of course, writes about legal issues with a focus on Nebraska rules — but he has designed the blog/message so that it is relevant to readers far away from the state where he works.
Consider, for example, this post, where he cites Cordell Parvin in Top 10 lessons learned from a construction attorney. I think this advice is relevant for any contractor or subtrade/supplier, at any stage of the construction process, because it sets out a roadmap of what to expect, and what to avoid, when things go wrong.
- Contracts and owners are not all alike. Some are fairer than others. Some create greater risks of making the budget if we encounter changes, delays and impacts. We should appreciate the risks before bidding and not underestimate indirect costs of staff to deal with these situations.
- It is important to have a thorough understanding of the Contract Administration requirements of complex contracts. Identifying specifically what must be done when changes, delays and differing site conditions are encountered is one way to establish the understanding.
- If a project ever ends up in court, every letter, note, e-mail and memo is evidence and will be taken out of context by the opposing lawyer. Recording every mistake, miscalculation, problem or lesson learned during construction of the project will come back to haunt you.
- The owner’s project management and upper management may make promises or representations their lawyers will later not let them keep.
- It is easy to grossly underestimate or forget about the time and cost “impacts” on original contract work caused by design defects and changes made by the owner to correct them. Failing to include these costs in change orders makes it far more difficult to recover the costs later.
- When preparing a complex claim or request for equitable adjustment, it is important to have a clear understanding of legal entitlement, the main themes and what will cause the owner to make a fair settlement. Otherwise, a great deal of time and wasted effort will be expended.
- Many owners on difficult projects do not think as contractors do. Therefore, it is difficult to negotiate with them as we would with another contractor. Time may mean nothing to them; the cost of litigation may mean little to them; the fairness or logic of a situation may mean less. Because contractors are asking for additional money from owners, owners may have more leverage. They may wear contractors down and use liquidated damages or other set-offs to reduce the amount of a fair settlement.
- If the owner is reasonable, it is important to make best efforts at a fair settlement of a claim before filing a lawsuit. At the same time, it is unlikely a settlement will be reached if we appear too anxious or if we negotiate against ourselves. If the owner is unwilling to be reasonable, there is no choice other than filing suit or demanding arbitration. The sooner that action is taken, the sooner the matter will be settled or otherwise resolved because the pressure of trial will promote resolution. Once the lawsuit is filed, be prepared for it to be terribly expensive and to lose some control of the schedule and resolution.
- Jurors see the claim/case far differently than we do. Similar to a television western from the 50s, they will seek to determine who are the good guys and who are the bad guys. Once determined, they will tend to ignore anything inconsistent with their earlier formed opinion. Presentation to jurors is different from the presentation to the owner. It must be made in terms the jurors understand. A detailed description of the project will only serve to confuse them.
- As much as we would prefer to never actually try the case/claim in court, owners fear the trial even more. Most claims that are litigated are settled on the courthouse steps just before trial.
All of these ideas ring true. Although I’ve fortunately encountered serious litigation issues once in my business career, against a well-funded competitor, the first point resonates as 100 per cent true. My opponent, while successful in business and quite adept at keeping a clean reputation if you tried a public records search, certainly wasn’t above playing dirty. The sinking feeling I experienced when the process-server delivered the writ grew even more when I discovered that the plaintiff had selected the best-known (and respected) lawyer in town within the litigation specialty.
Fortunately, I found my own lawyer who knew what to do. After a brief gathering of the facts, he said: “You have a good case — I usually deal with clients who aren’t so clearly in the right.” Then he explained the concept of “contract interference” and my right to fight back in this situation. The judge, thankfully, agreed, throwing the case out at an injunction hearing and awarding costs to my favour. Of course, I still needed to pay about $20,000 in out-of-pocket legal fees even after my then-co-defendant (whose case was certainly not as good) ended up coughing up a hunk of cash to contribute to my legal bills.
I’ve seen plenty of other situations where contractors get messed up with owners who aren’t quite ethical or right and end up burning themselves out with litigation and nasty stuff. The contract wording, in many cases, only goes so far — the character of the players in the story certainly counts for much more.
Regardless, Martin’s blog is a worthy contender in this year’s competition.
You can vote for this blog and others here.