While I have been practicing construction law for 33 years, I subscribe to the theory that
One is never too old to learn.”
Here is my personal list of lessons learned in 2015:
1. Lawyers Need To Spend More Time On Damages.
On a traditional complicated construction claim it is not unusual to spend 90% of your time proving entitlement/liability, with only 10% of your case explaining how damages were incurred and calculated. While this approach may ensure that your client’s story about being impacted through little or no fault of their own is heard, and understood, that does not automatically convert into damages your client expects to receive. Often the fact-finder will scrutinize those damages as much or more than the underlying facts supporting liability.
Therefore, I am starting to learn that wise practitioners should spend much more time – from early on in the claim process to the final argument – thinking about, explaining and justifying the calculation of damages.
2. Subs In Certain Key Trades Are Regaining Leverage.
For many years following the great downturn in the construction industry, subcontractors pursuing too little work were forced to accept extraordinary risk and bad contract terms – just to secure enough work to keep the company afloat. Now that the same numbers of firms are pursuing an increasing volume of work, many subtrades are finding that the increased demand for their qualified workforce has returned leverage to their “side of the table” in bidding and contracting work.
Many subtrades (i.e. concrete) are finding that they are now in a position to name their terms, and call their price, so long as they can deliver a skilled labor force in a timely fashion on complex, fast-moving jobs.
3. Contractors Are Too Slow To Spend Legal Fees.
Contractors, who were never eager to spend money on legal fees in the best of times, were even more reluctant to do so as they cut costs during the Great Recession. Many of those habits continue even as margins improve.
As a result of this reluctance to contact counsel, contractors are often “penny wise and pound foolish” in that they wait too long to protect their contractual rights after they start losing money through the actions of others. Rights are lost under strict contract language only fully appreciated when sophisticated counsel is consulted. Contractors then spend huge amounts of fees later, fighting about notice and other issues that would not have been a problem if counsel had been involved earlier in the process.
4. Public Owners Are Too Slow To Settle Claims.
One maxim is increasingly vindicated in case after case. Construction disputes never get cheaper to resolve the longer they persist. Over time damages are recalculated, legal fees are incurred and new issues are raised. All of these factors combine to increase the amount in controversy.
And yet many public owners fail to recognize this reality and spend far too much time and money defending claims that could be resolved more efficiently at much lower costs before the other side invests a fortune in legal fees and positions harden. They are missing a great opportunity to identify and resolve claims “early on” in the process, when their budgets could be rewarded with a reasonable and timely settlement.
5. Mediated Settlements Are The New Normal.
While mediation is not new and the process has been eagerly adopted by the construction industry for many years, it is rare these days for mediation not to be tried at least once in every significant construction dispute. And a very high percentage of these disputes resolve at, or shortly after, a mediation – saving the protagonists vast sums of time and treasure.
Only about 1½% of all civil disputes result in a trial. And probably an even lower percentage of significant construction disputes get tried. So if almost all construction disputes are going to settle – sooner or later – at mediation, all involved in the industry would be well-served by learning and implementing the strategies and tactics necessary to be successful in the new world of mediation outside the courtroom.