Paperwork, and more paperwork–Discovery in the construction lawsuit (Law & Order: Hard Hat files Part 4)
As I mentioned at the start of this series, one of the reasons that I like watching Law & Order is that things happen fast, and there is always a smoking gun paper to be found by the lawyers over a night of eating cold Chinese food. Yes, well- about that. In the construction world -not so much.
Depending on the size of the project, there may be massive amounts of paperwork involved. Think about every email, of every employee who touched the project, from initial proposal through final punch list. Add in the change order logs, pay applications (with backup), submittals, shop drawings, project correspondence, drawings, specifications, diaries, meeting minutes, daily reports, site inspections, etc—and you can begin to visualize the problems that the magnitude of documentation creates. Naturally, in the age of electronic data, digital cameras, and cloud computers, the issue of quantity is even more magnified.
Now, let’s discuss the discovery process in a construction lawsuit—that is, what the other side can ask for, what you must give, and how the process works. Then I’ll detail a few recommended practices to put your firm in the best position possible if and when it has to deal with the information overload of a construction lawsuit.
What is “discovery” in the legal world?
Discovery is the all-encompassing term for means and methods to get information necessary to prosecute or defend a lawsuit. The main written discovery consists of interrogatories and requests for production of documents. Interrogatories are written questions that you (with the help of your lawyer) must answer about the project. Requests for production, on the other hand, are requests made for documents that may, or may not, be relevant or admissible. Inevitably, in one form or another, your entire project files need will likely need to be produced to the other side.
Be aware: things that you may not consider part of your firm’s project files may still be demanded.
- Does anyone at your company keep an old-fashioned pocket calendar, filled with a mixture of both business items and personal information? It can be demanded in the discovery process.
- Does your company conduct internal post-mortem meetings to discuss ways to improve on future problems and what went wrong on this one? Discoverable.
- Does one of your employees have a personal relationship with an employee of the general contractor, such that they send good-natured barbs and sarcastic comments about the project or project personnel to one another? Yep- you guessed it—discoverable.
Each and every document, paper, back of envelope note, or personal diary entry can be demanded. Scary prospect, right?
What can you do to limit the embarrassment and lessen the pain?
To lessen the pain, be sure to adopt some best management project and personnel practices, including:
- Consistent intake methods. Every employee who brings in work should know to find, modify, and use the Firm’s contract and/or form proposals. Educate both your employees and your clients on the importance of having good, written contracts and proposals, and procure them in a uniform and systematic way. There should also be a follow up procedure in place, in case a signed contract or proposal is not obtained. One suggestion I have made previously: do not open a new client or matter number to bill against until the contract is in place.
- Management of rogue employees. Ideally, don’t let any employees only use their hard drive. If you can’t achieve that level of cooperation, at least insist that documents be copied over to the Firm’s computer system on a regular basis, and at least weekly.
- Decide on Firm-wide file management. Everyone on your staff should be filing everything the same way, whether in paper records or in email folders. As noted in my post on how to smartly handle project documents, all communications should be in one place, preferably in a chronological order. Failing that, a master chronological file could be kept for future reference. You also must decide whether and which emails need to be printed and/or saved, and institute a standard policy Firm-wide for those as well.
- Create a Problem file(s). If problems in certain areas arise, maintain a separate file and/or e-folder for all documents relating to that area. Who knows, one of those may end up being the smoking gun that makes your case.
- Use a separate Legal file, if necessary. Related to the problem file, if you get any legal help or help from your insurance company, create a new ”Legal” file for legal issues, communications, and the like. Do NOT keep this file with the other project files. Ideally, all legal files should be kept in a different location/drawer/desk/office to prevent inadvertent disclosure in a lawsuit.
And, the #1 Rule relating to document best practices?
- Follow the Grandma/Newspaper rule. That is, instruct your employees to be careful in what they say in any forum– website, newsgroup, email, etc. Before sending off any questionable communications, each employee should ask himself:
How would my grandma feel if she read my message in the newspaper?
If he feels comfortable that the message wouldn’t make Grandma hold her head in shame, then and only then should he press ”send”.
While you don’t need to know all the details of how to answer discovery unless and until you’ve been sued, if you follow these document best practices, you will be far ahead of the curve should you have to defend yourself in court.
Questions, comments, observations? Share in the comments below or shoot me an email.
Next in our series: Being deposed—not just for dictators! Depositions in the construction lawsuit
Photo (c) Veronica Robbins via CC.
You have the right to an attorney (but one will not be appointed for your construction lawsuit) (Law & Order: Hard Hat files Part 3)
Every criminal worth his salt knows that he has the right to an attorney. What about in construction law? Not so much. You do have the *right* to an attorney; however, you do not get one for free. Do you *need* an attorney? Not necessarily. Then again, I prefer not to pull my own bad teeth, but hire a professional to do it for me. Maybe you prefer the string-tied-to-a-doorknob method. Not me.
In some situations, actually, you *do* need an attorney. Any natural person can represent himself in court, fool or not. However, if your company or professional association is sued, a company employee cannot represent that company pro se. That is, unless you have a licensed attorney on staff, you must hire a lawyer to represent your company.
There are two general ways that attorneys can be retained to defend you in the construction lawsuit—either your insurance carrier can hire them, or you can. This is one of many, many reasons to have errors & omissions insurance.
If you have E&O insurance and are sued for professional malpractice or negligence, then your attorney will be hired and paid for by the insurance company. You simply report the claim to your agent, and the insurance company will tell you who it has hired to represent you. Nice, yes?
If you do not have insurance, then you must hire your own attorney. How do you figure out who to hire? The simple answer, of course, is to simply hire me! (kidding). You will want to do some due diligence - ask for referrals, find out what types of attorneys in your area handle construction disputes, and talk with some potential attorneys. Important questions to consider include:
- Experience in construction disputes. You don’t want a personal injury attorney who “dabbles” in construction – you want someone who does a lot of it. In some states, there may be special certifications of construction lawyers; however, in North Carolina there is not any such designation at this time. But the attorney should make construction law a regular part of his/her practice.
- Knowledge of the design professional’s role. Some lawyers and law firms mostly represent subcontractors in lien claims. Others represent owners & bankers. Some focus on general contractors. And yes, others (including yours truly) tend to represent design professionals. All things being equal, it is helpful to have someone in your corner who understands your industry, your industry’s jargon, and your industry’s practices.
- Defense mindset. Often, if you have found someone who meets the first two criteria, you will have found someone that has a defense mindset. However, this is not always the case. Some lawyers and firms tend to consider themselves plaintiff’s law firms; others consider themselves defense law firms. If you have been sued, you obviously want someone who is of the defense mindset. You can usually tell who these lawyers are based on their affiliations—for example, they tend to be members of their state civil defense attorneys network (in NC, the NC Association of Defense Attorneys), or they are members of a national network such as the Defense Research Institute. In contrast, a plaintiff’s attorney will more likely be a member of the Academy of Trial Lawyers, Advocates for Justice, or the like.
If you already have a lawyer who you feel confident in, and who is qualified, can you get your insurance company to pay for him/her to defend you? Sometimes. You usually have some say in who is retained to represent you—for example, the right to request new counsel if you don’t like “the buffoon” they hired on your behalf.
If you have a lawyer preference, you can ask (but not demand) that the insurance company retain your lawyer in the lawsuit against you. Your lawyer may need to agree to certain compensation, reporting, and other rules to be considered by the insurance company. After all, they will be footing the bill.
Sometimes, you may find that your preferred attorney is already on the “qualifying” or “panel” counsel list of the insurance company, which makes it easy, and much more likely, that the insurance company will grant your request. Remember, though, Jack McCoy and Lennie Briscoe didn’t ask to get to work together, they were just assigned to do so. So it may be with you. Regardless of who is your lawyer, read (or re-read) this excellent article on how to be an effective construction client.
Regardless of who represents you and/or your company, keep in mind that your attorney is your attorney, regardless of who is paying. Anything you say to your lawyer must be held in confidence, and your lawyer is there to represent your interests. Be honest with your lawyer, respond to his/her communications promptly, and work together. Construction lawsuits are usually messy, but at least there is no funeral to deal with!
Next week in the series: Paperwork, and more Paperwork….Discovery in the construction lawsuit. Be sure to bookmark the blog, or sign up for email or the RSS feed, because you won’t want to miss any blog posts.
Photo (c) Dawn Hudson.
Think most business lawsuits effect the “big guys”? Not according to the folks at Bolt Insuarnce. According to them, 57% of lawsuits effect companies making less than $1 million in revenue. Did you know that 1 in 3 small business owners are sued or threatened with a law suit?SOME CURRENT SCARY FACTS:
- $100 billion: How much small businesses spend on legal action in the U.S. annually
- 25%: Number of harassment claims has risen since 2006
- $404 Million: Price to settle discrimination related law suits each year
- 104 Billion: Annual cost to settle tort liability
Check out the neat infographic below to learn Five Ways to Protect Your Firm.
What about you, blog readers? Have YOU had the occasion to be threatened with a lawsuit? Learn any good lessons to share? If so, drop a note below.
Infograph: BOLT Insurance
The police are at the door! Service of the construction lawsuit on your company (Law & Order: Hard Hat files Part 2)
The police? Yes, that’s right. If you are sued, at least in North Carolina, you may find Mr. Policeman (or Ms. Policewoman) at your door. There are several ways that you may find out you or your company are being sued, but undoubtedly seeing the Sheriff at the door is the most nerve-racking. Heck, we have Sheriffs in our law office occasionally to serve papers, and the sight never fails to startle me. So be forewarned—the first you find out that there is a lawsuit may be when Johnny Law himself comes knocking.
While unnerving (as it is often meant to be by the party suing you), rest assured that all the Sheriff will be doing is identifying you and handing you papers showing you’ve been sued. The Sheriff doesn’t actually have to hand you the papers personally- in fact, depending on if and how you are incorporated, he may be handing them to your spouse, another adult that resides in your house, your business partner, or an officer or manager of your professional association. While the Sheriff is not supposed to leave papers with a mere employee, that can and does happen as well.
The Sheriff is not the only way you can be sued. You can also get a certified mail package—you know, the type that requires you to go sign for it at the post office. Or, you may get a Fed Ex package. If you are being sued in federal court, or you know the lawsuit is coming, you may not get anything, as it may all come to your lawyer instead.
What should you do if you do get the lawsuit (called the Complaint)? First, run, do not walk, to your insurance carrier and/or lawyer. Do not pass go. This should be the first thing you do. If you don’t have a lawyer, but you have insurance, your agent should be able to help you report the claim, and a lawyer will be assigned to you by the insurance company. If you have a lawyer, you can report to him/her, and ask the lawyer to make the claim on your behalf to your insurance company.
Remember, however, that you need to report it as soon as you can. In state actions in North Carolina, you have 30 days from receipt to respond. In federal actions, you have 20 days. There are certain rules concerning weekends and governmental holidays that change these deadlines at times. But the important thing to remember is that you must respond, timely, or you can end up with a judgment entered against you in default. So, when you report the lawsuit, the first thing your agent or lawyer will want to know is the date you (or someone connected with you) first received the Complaint.
If you report the claim and do not hear back? Follow up. Never assume that an email went through or that the person you called isn’t on vacation or in the hospital. Make sure that you speak with your agent and/or lawyer personally and that they know when you were served.
Questions? Comments? Have you ever been sued? Do you now know something you wish you knew then? Drop me a line or comment below.
Next week in our series: You have the right to an attorney! (but one will not be appointed for your construction lawsuit)
Photo (c) freefoto.com
Now that the waters are receding, and while the recovery work progresses, thought I’d share an interesting article I came across on the many and varied records that Hurricane Sandy broke, including:
1. Strongest Hurricane to Make Landfall North of Cape Hatteras
With a record low barometric pressure of 27.76, Sandy was the strongest hurricane north of Cape Hatteras to ever make landfall. Although Hurricane Gladys of 1977 holds the overall record for the region at 27.73, she remained off the U.S. coast.
2. Largest Atlantic Hurricane on Record
She was a big girl. Sandy made the record books as the largest hurricane to have formed in the Atlantic Basin, according to the National Hurricane Center, reaching a truly impressive gale diameter of 1,000 miles.
3. Highest Storm Surge
The storm surge for New York City was expected to be around 8-10 feet, yet Sandy’s strength and unusual angle worked to create a surge far surpassing estimates. The surge level at Battery Park was a whopping 13.88 feet at 9:24 p.m. Monday, out-surging Donna’s efforts of 10.02 feet in 1960.
There are 9 more here, although some of the categories (most photoshopped disaster photos, anyone?) are not as impressive as others.
Want to Help?
Want to give to help the victims of Sandy’s massive impact? The American Red Cross is accepting monetary donations in any amount through their website.
However, they do not accept donated goods directly, as noted here:
The American Red Cross does not accept or solicit small quantities of individual donations of items for emergency relief purposes. Items such as collections of food, used clothing, and shoes often must be cleaned, sorted, and repackaged which impedes the valuable resources of money, time, and personnel that are needed for other aspects of our relief operation.
The Red Cross, in partnership with other agencies, suggests that the best use for those types of donations is to support needy agencies within donors’ local communities.
The best way to help a disaster victim is through a financial donation to the Red Cross. Financial contributions allow the Red Cross to purchase exactly what is needed for the disaster relief operation. Monetary donations also enable the Red Cross to purchase relief supplies close to the disaster site which avoids delays and transportation costs in getting basic necessities to disaster victims. Because the affected area has generally experienced significant economic loss, purchasing relief supplies in or close to the disaster site also helps to stimulate the weakened local economy.
While the impact of Sandy will be felt for some time, the sheer size of the “perfect storm” is something to behold!
Photo: (c) NASA Goddard Space Flight Center via CC.