To start our week off right, today we have another important article from guest blogger Christopher G. Hill, LEED AP. Chris is a Virginia Supreme Court certified mediator, construction lawyer and owner of the Richmond, VA firm, The Law Office of Christopher G. Hill, PC. He authors the Construction Law Musings blog where he discusses legal and policy issues relevant to construction professionals. His practice concentrates on mechanic’s liens, contract review and consulting, occupational safety issues (VOSH and OSHA), and risk management for construction professionals. [His blog was also one of the first construction law blogs I found and followed, even if he is a Duke alum!] Take it away, Chris!
First and foremost, thanks to Melissa for inviting me back to post here at her great blog. She continues to invite me back despite my being a Blue Devil (and I try not to hold her Tar Heel status against her).
So much of discussion relating to construction law and construction lawyers centers on the litigation of disputes. This discussion comes in many forms from avoidance of such litigation through the early intervention of good counsel prior to getting into a project to what sort of resolution mechanism to use. Another branch of this discussion is essentially the right way to pursue your claim (or as some may read it start the dispute ball rolling). Sometimes a payment bond claim is the best method while others a straight up contractual suit is the best way to go.
Of course, all of this discussion presumes that there will be disputes. While I agree to some degree that in the Murphy’s Law riddled world of commercial construction, problems will arise. These problems need not rise to the level of a dispute that requires outside (read court or arbitrator) intervention. A few tips that are easy to write, but admittedly hard to practice at times can hopefully keep problems from blossoming into disputes. I’ve listed a three big ones here:
- Use “in house counsel.” Yes, I know that most of you engineers, architects, commercial general contractors and subcontractors out there aren’t big enough to either want or need a full time attorney on the payroll. What I mean by this is that when problems occur (or preferably before doing so), give your friendly local construction lawyer a call. As I learned from my dad, an ounce of prevention and all that. That 10 minute phone call may help avoid many hours of time and bills from your attorney later down the road.
- Build Relationships. This seems like more of a marketing tip, but it is also a risk prevention strategy. I have seen many a potential dispute get resolved with minimal or no intervention on my part simply because the general and subcontractor had a good working relationship. With the right team oriented approach and communication many a jobsite problem can be resolved in the pre-dispute stage. If the two companies don’t know each other, this is less likely to occur.
- Communicate Up Front. I know, I beat this drum a lot. Why? Because it’s a big deal. Setting the right expectations through proper communication and negotiation on the front end will set the terms of the “deal” and give all involved a guide for how to deal with problems as they occur.
Following these three tips will help you avoid construction disputes and the hefty attorney fees that come with the prosecution of those disputes.
Can you think of other tips that we can add to the list? Let Melissa and me know.
Thanks Chris! As always, you hit the nail on the head (pun intended). For those that don’t already follow Chris’ blog (and why don’t you???), do check it out and show him some blog love. You’ll learn a lot, and be glad you did.
Yesterday evening, I had the privilege of attending the Triangle USGBC’s “Talk & Walk” at the Wake County Justice Center. The 576,996 square foot Justice Center was completed 6 months early and over 30 million under budget. (The final cost, including soft costs, came in at ~$141,000,000). Now that’s what I call a LEED project done right!
Interestingly, the County did not endeavor for a LEED Silver rating– the plan was to aim for a Certification. However, as the process unfolded, the Team kept meeting the goals and points for a Silver certification without any appreciable additional costs.
The end result? An “iconic but energy efficient building,” according to Tim Ashby, current Wake County Facilities Project Manager. Tim was initially involved in the Project while working at O’Brien Atkins, which served as the architecture firm for the Project under the direction of Architect Andrew Zwiacher.
The Project was a Construction Manager at Risk project, involving a joint venture between Balfour Beatty Construction and Barnhill Contracting Company. Did the contract type contribute to the success of the Project? According to Project representatives, it likely was responsible for the 6 month early completion due to the high level of coordination.
Energy efficiency in the Building comes from the low flow plumbing (total water savings of 45%, 15% more than LEED requires), programmable and natural daylighting, and almost 98% construction waste diversion.
Another interesting legal factoid: BIM (Building Information Modeling) was utilized. Through BIM, a conflict was discovered in the space allocated for the air handling units versus the planned size of those units. This discovery enabled a change to the AHU units (to make them wider and shorter) prior to manufacturer, saving untold delays in time and increases in cost. We’ll talk more later about the pros (and cons) of BIM, but suffice it to say it worked very well on this Project.
If you haven’t been by to see the Justice Center yet, please do. It’s a great design (17 elevators!), and a great change from the old Courthouse across the street.
Have you seen the Justice Center yet? Thoughts on the design? Share in the comments below.
My husband often travels the back roads between Chapel Hill and Fuquay Varina to visit friends. En route (a circuitous route that goes past Sharon Harris Nuclear Power Plant, among other places), he passes by the “Friendly Grocery”. For those who haven’t had the pleasure, here is a photo of the side of the building in all its glory.
In case you cannot read the list of forbidden activities, I’m re-printed them here (complete with spelling error):
I’m not sure which is the “friendly” part of that sign. In fact, the sign seems to be the antithesis of friendly.
What does this have to do with your construction contracts? Sometimes, in an effort to please the client and/or secure the project, architects and engineers have the habit of being too friendly in their contract language. That is, you make promises or proposals that may promise too much of a good thing for the client. This can cause big problems. Bigger than being towed away from a rural grocery store in the middle of nowhere. You could be putting your insurance coverage at risk.
Have you ever promised to use “best efforts” in your design or plans? Promised to design to a specific LEED standard? Guaranteed 100% satisfaction? You might be putting your errors & omission coverage at issue. By warrantying or guaranteeing something, you are assuming a level of liability well beyond the standard of care required by law. By law, you only need to conform to the standard of care, and your insurance will only provide coverage up to that standard of care. In other words, if you make guarantees or promise “best efforts,” you are contracting to something that will *not* be insured. If something goes wrong, you will be without the benefit of your professional liability coverage.
Instead, make sure that your contracts, and proposals, are not too friendly to the client. Sure, agree to work in accordance with the standard of care of professional architects/engineers. But don’t make guarantees, or promise “best” efforts. In fact, you might want to educate your client on why you cannot make such guarantees, and why anyone who does (i.e., your competition) is putting their insurance coverage at risk. Owners want and need you to stay within the bounds of your coverage. You need to, also. Maybe the owner of the Friendly Grocery was on to something there.
Your turn. Have you ever used language that jeopardized your insurance protection? Uncertain if you have? Drop me a line and we can talk.
Anyone recognize the photo to the left? If you are of the Millennial generation, this is a quaint thing called a public pay phone. They used to be everywhere. Imagine, not having a cell phone to keep you in constant contact with Big Brother…………. [the good old days].
As you may be able to tell from the fact that the receiver is hanging down, this phone has seen better days.
What does this have to do with construction? Everything. Just because something is done one way– even for years, or decades– doesn’t mean it should stay that way. Just as you learn new technical skills and change your designs, you should also update and modernize your office practices.
What do I mean by office practices? How you open a project. Whether or not you get a contract in writing (you should). How you keep and store project files both during and after project completion. You should also modernize and update your contracts. Still using 1997 AIA documents? Maybe it’s time to step it up to the 2007 forms. Have a custom “terms and conditions” contract? When was the last time you reviewed it with your lawyer? Laws change just as construction techniques change.
A little planning now could save you in legal fees and headaches later on, in the dreaded discovery phase of a lawsuit. Just because you’ve always done things a certain way, doesn’t mean you should always keep them the same. After all, when was the last time you saw a public pay phone?
Your turn. What are your standard operating procedures? Do you know how your project files and emails are saved by each employee? Do you know if your employees know your SOP? And, you do have a written contract, right?
Phone booth in the Countryside by Melissa Brumback.
Have you ever signed a contract that was “under seal”? You probably have, and you probably have done so without really understanding what it means. In North Carolina, a contract “under seal” means that the contract can be enforced for ten (10) years instead of the usual three. In other jurisdictions, the contract can be enforced for even longer periods of time. [For example, in Delaware, a contract under seal extends the time for brining a claim to twenty (20) years!] Since a sealed contract extends your liability significantly, it is not something you should do lightly.
The phrase “under seal” comes from the old tradition of using a unique wax symbol (such as an engraved signet ring) to identify the owner signing the contract. Today, however, you sign under seal when the words “under seal” or even just “[Seal]” is printed next to your signature, like this:______________ [SEAL] Melissa Dewey Brumback
While it is good to know about seals in general, construction professionals should be more concerned than ever about sealed contracts following a recent North Carolina Court of Appeals decision, Davis v. Woodlake Partners. The Court in Davis held that in a contract to purchase improved property, signed “under seal,” extended the statute of limitations to the ten year statute as authorized by N.C. Gen. Stat. 1-47(2). This is despite the fact that there is a six year statute of repose in North Carolina. In the case, the lawsuit was brought within the 6 years, but outside of the 3 year statute of limitations for ordinary contracts. The Court found the action was timely because of the “sealed” nature of the contract.
What does this mean for construction contracts? You could find yourself liable on a construction contract longer than you intended. Does this case apply in a situation where the 6 year statute of repose was violated? The Court was not faced with that issue, so it’s too soon to tell. The case was a divided opinion, so the state Supreme Court may be weighing in on the issue. Stay tuned.
In the meantime, consider striking through any “seals” on your construction contracts.
Your turn. Take a look at the last contract you were asked to sign. Was it “under seal”? Did you know what that meant when you signed it? Share below.
Photo (c) Losinpun.