With Construction, Compromise is Always an Option (guest post)

Chris Hill, attorney, construction law.

Chris Hill, attorney, construction law.

Today, we have a guest post from one of our favorite  Virginia lawyers- Chris Hill. 

As always, he knocks it out of the park with another worthy post explaining why biting the bullet and settling your claim sometimes is the way to go. 

Here is Chris’s official bio:  Christopher G. Hill, LEED AP is Virginia Supreme Court certified mediator, construction lawyer and owner of the Richmond, VA firm, The Law Office of Christopher G. Hill, PC.  Chris 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. 

Without further adieu, take it away Chris!

As always, thanks to Melissa for letting a Blue Devil invade her blog. I always enjoy the opportunity. Now, on with the post.

I know, you read a title like this and your first thought is “I’ll never have to compromise, if I get into trouble, I’ll be in the right!” You followed your friendly construction attorney’s advice, drafted a great contract (using a “belt and suspenders” approach) and do good work! What could possibly go wrong?

Well, among other things: 1. An owner may not pay the general contractor that you subcontracted to, 2. Weather could cause delays beyond your control, or 3. (yes, I’ll say it here) the architect may not like your work and what you did with his or her masterpiece of design. [Editor’s note: architectural plans exist for a reason, people!]. These three were just off the top of my head. Given that “Murphy was an optimist,” there are many other things totally beyond your control as a construction pro that can and likely will go wrong. The question is how to make the best of that bad situation.

Lets skip the easy points and head straight for the title of the post. You’ve already done all you can to “fix” the situation: increased manpower, shuffled your workforce, and gotten the work done as soon as possible. The party that should be paying you has decided not to do so. You decide that you need to do something besides beg for your money.

At this point you have a couple of options (not mutually exclusive): Mediation or Litigation/Arbitration. The second option is the “nuclear” option and to be used as a last resort. Remember, this is a zero sum game with no winners once the lawyers start filing papers. You will spend money that you didn’t plan to spend and take focus away from your business.

The first option is where you compromise. While you may not get the result that you may get by going to the mat in litigation, namely a judgment for everything that you would have gotten had you been paid in full, mediation has its advantages.

What are they? 1. The big one is control. With litigation or arbitration, you are turning your fate (and possibly the fate of your business) over to a third party. In mediation, you get some control and get to creatively determine the best way to solve the problem. 2. After anywhere from a few hours to a day, the dispute is resolved. Compare this to the several months to several years of litigation and you see where this would help. 3. It cuts off the attorney fee spigot much sooner than the alternative. While I as a construction attorney don’t mind being paid, you can’t run a business profitably with a monthly legal bill.

While a compromise is never the ideal, it is in most cases far better than the alternative.

Thanks, Chris!  It is a tough message to hear when you are in the thick of battle, proving that you are right, but the economic realities should always be considered before starting down the long path toward a court trial. 

Now it is your turn.  Have you settled or mediated a claim purely to put the economic pain of litigation to rest?  Do you regret that decision, or feel it was for the best?  Share in the comment section below.

PS:  Final reminder to VOTE for this blog in the “Best Legal Blog” competition. TODAY IS THE LAST DAY!  It takes, literally, about 1 second, and does not require your name, email, or anything else.  (It tracks IP numbers only).  THANK YOU for your vote!!!!!


Why Everything You Learned from Law & Order won’t help you win your professional malpractice case!

Secret confession time here:  I *love* my Law & Order.  And while I’ve been known to suffer through SVU or, God forbid, Criminal Intent, it’s the original Law & Order (with uber-cool Detective Lennie Briscoe and the always wild-eyebrow of Jack McCoy) that really makes my day. 

Some clients wonder why I like to watch a legal show on television after a day of practicing law.  The answer is because the real world of law is nothing like that on shown on TV.  Things happen so fast and so amazingly on the show, it is fun way to wind down the day. 

On Law & Order, a subpoena is issued for bank documents, and, faster than you can say, “cha-chunk”, the documents are rolling through the office.  Court cases are wrapped up in neat tidy 60 minute packages (including time for discovering the real killer).  The lawyers get to ask unfair questions—make self-serving testimony and arguments to the jury—and it doesn’t matter, because they are on the side of truth, justice, and the American way.  Law & Order is many things, but an accurate representation of a court case, it is not.

What does this have to do with YOUR court case?  Everything.  Sure, you expect your construction case will be different from a “sexy” homicide case, but are you really prepared for just how different it will be?  How long it will take?  The delays, stalling, and prevarication the other side will be allowed?   Probably not.  Until now.

Over the next several weeks, I plan to walk you through a “typical” construction defect lawsuit—from the first initial phone call from the project manager that something might be amiss, to the dreaded yellow paperwork delivered by the Sheriff (if you are really lucky), the famed “courthouse steps” settlement discussions, and even the angst-producing knock on the jury room door announcing a verdict.  Stay tuned for Part 1 of the new series:  Law & Order: Hard Hat files, starting next Tuesday.  [And Dick Wolfe, if you steal my title for your next television series, please give me credit and a cut!] 

If you haven’t already, be sure to sign up for email delivery of blog posts direct to your inbox.

Something to Hang Your Hat On… (Limitation of Liability clauses) (law note)

hat rackIn the past on this blog, I have pointed out the benefits of Limitations of Liability clauses.  These are the clauses that state that the most damages that your Firm can be responsible for is capped at a certain dollar amount or your contracted fee. 

Do you have a limitations of liability clause in your professional services contract?  You should.  Best practice would be to have such a clause that limits damages against you to a set amount.  For example:

Engineer’s liability to Client for any and all injuries, claims, losses, expenses, damages or claim expenses arising out of this agreement, from any cause or causes, shall not exceed the total amount of $50,000 or the amount of Engineer’s fee, whichever is greater.

While best practice is to have such a provision, it is not always enforced.  In a case arising out of the Western District of North Carolina, the court noted that such provisions will not be enforced where the result would be unconscionable and “elicit a profound sense of injustice.” See  Performance Sales & Mktg., LLC v. Lowe’s Companies, Inc.,2010 WL 2294323 (W.D.N.C. June 4, 2010).

What does this mean in practical terms?  It means that you should endeavor to include a limitation of liability clause, but don’t necessarily think that if you have that you’ve capped your risk.  A court can always decide that the clause is unconscionable.  But, such a limitation is one more thing to “hang your hat on” if and when you find yourself staring down the barrel of litigation*.

* If, however, you are facing litigation, make sure you sign up for regular blog updates.  Starting next week, I am writing a new series on the anatomy of a construction lawsuit, so stick around! 


Photo:  (c) BabbNet via CC.

5 Reasons Why You Need Arbitration for a Construction Dispute (Guest Post)

Today we welcome another guest author to the blog– Jonathan Newby.  Jonathan is in the brokerage business, and runs a website relating to brokerage fees.  Thanks Jonathan for your sharing your thoughts today.

5 signArbitration may be a better alternative to some construction disputes, assuming that you use a qualified and skilled arbitrator or arbitration panel.  Here are five benefits for using arbitration over litigation:

  1. Arbitration means that the decision maker is an experienced industry professional instead of a lay jury.
  2. Arbitration can provide better protection for your assets by minimizing your risk of large losses sometimes seen with jury verdicts.
  3. Arbitration can provide flexibility in scheduling, versus court where you are told when and where to show up without much room to negotiate.
  4. Arbitration can put an end to your case faster.  The time taken by an arbitrator is usually less than that to get a case to court to resolve a construction dispute.
  5. Arbitration costs can be much less when compared to the one charged during any other legal process like litigation.

These are five reasons why arbitration may be better for your construction dispute, so consider using an arbitration provision in your next construction contract.

Editor’s Note:  As I’ve previously noted, there are pros and cons to arbitration in lieu of trial.  The better venue is in part based on the type and size of contract, as well as numerous other subjective considerations.  Discuss whether arbitration is appropriate for you with your construction law attorney.

Thoughts, comments, or questions?  Drop Jonathan or me a note in the comments section, below. 

Photo (c) freefoto.com.



Pick Up the Phone! (Tues Tip)

phoneToday’s Tip is a simple one: Pick up the phone to ensure good communications on the construction project.  Too many of us naturally default to email or text message when communicating on the fly.  Without the tone of voice, however, many times things get misconstrued or taken out of context. 

I’m sure you’ve had the experience of emailing someone, and later learning they are mad or offended at something you said.  You thought the comment was innocuous.  They took it the wrong way.  Apologies were necessary; feelings were hurt.

While telephoning the other party can take more time, it keeps things on an even keel.  Tones can be “read” and misunderstandings can be cleared up right away. 

The next time you need to have a substantive communication with the Owner or Contractor, try the telephone.  You know, that email-checking/text-enabling device that is always with you?  It can telephone folks too.  Try it.

This post was in no way inspired by any misunderstood emails involving the author.  (Am I serious, or kidding? Hard to tell, isn’t it?).


Photo:  (c) Victor Manuel via Creative Commons license.



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