Tag Archives: risk avoidance

Need some HSW or PDH credit hours? Come here me speak in Chapel Hill on Wednesday!

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For my local readers, if you are looking to earn up to 7.0 HSW contact hours or  7.0 PDHs, come here me this Wednesday at the Halfmoon Seminar on Construction Law in Chapel Hill, North Carolina. 

 I’ll be speaking on “Making Changes and Resolving Disputes During the Construction Process“. 

changes construction sign

Other topics include:

  • Construction Contracting in Traditional and Alternative Project Delivery Systems
  • Entering into Construction Contracts and Subcontracts
  • Accessibility Review and Update
  • Ensuring Environmental Compliance During the Construction Process
  • Protecting Entities Seeking LEED Certification

Registration is here.

If you register, be sure to let me know! Would love to meet more blog readers in person! 

 

Play Nicely in the Sandbox (or, Why GC’s and Subs Should Get Along) (guest post)

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Chris HillToday’s guest post is from Christopher G. Hill, lawyer, Virginia Supreme Court certified General District Court mediator and owner of the Richmond, VA firm, The Law Office of Christopher G. Hill, PC, a LEED AP. Chris authors the Construction Law Musings blog where he discusses legal and policy issues relevant to construction professionals. Additionally, Chris is active in the Associated General Contractors of Virginia and a member of the Board of Governors for the Construction Law and Public Contracts Section of the Virginia State Bar.

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First off, thanks to Melissa for this opportunity to post here at Construction Law in North Carolina. Having co-presented with her and discussed construction contracting from all perspectives, I can safely say she’s good at what she does and shares great insight here at her blog.

Now that the formalities are out of the way, I thought I’d share my thoughts as one who represents many subcontractors and general contractors on the topic of good relationships meaning good business. I am always a bit surprised at the failure of either side of the GC/Sub dynamic to act in a businesslike manner.

Remember, the General Contractor and the subs are in the boat together in many ways. They both have a job to do and, ultimately, an owner at the top of the payment food chain that is looking to get a project done on time. Ultimately, they both have an architect/engineer representing the owner that may or may not be up on the job (sorry Melissa) and may not be trained in project management. If the general and its subs aren’t “playing well in the sandbox” together, the relationships up and down the project chain get all out of whack and cause delays in completion and importantly in payment.

Another phenomenon that happens more frequently than I would like is the general contractor “burning” good subcontractors in an area through making payment (particularly final payment) difficult to receive. While this type of activity occurs on what I am sure is the minority of projects (and fully acknowledging that my practice makes me think that Murphy was an optimist) I am always flabbergasted by this sort of treatment given to a subcontractor that should be helping pull the boat.

While it is obvious that subs need to play nice with GC’s because they have the money, it may seem less obvious how the above can hurt a general contractor. The short answer (and don’t worry I won’t be going into the long one) is that burning good subs eventually means that good subs won’t work with you. Subs talk to each other. Your reputation will precede you. Eventually the economy will improve and you won’t be the only game in town. Not to mention that such actions are the stuff of which claims are made.

In short, getting along costs your local construction lawyer money because he or she doesn’t get to go to court for you. It is almost always less expensive to get along, finish the job and work out payment than to get we attorneys involved in the construction claims process.

To make a long story somewhat less long, GC’s work with the subs and subs, play nice with the GC’s. It’s the best way to a lower stress project and a higher monetary payoff.

Thanks, Chris, for your insights from the contractor’s side of things.  Even if you did (politely) slam the hard-working design professionals.  Reader, now it’s your turn.  Share your thoughts, comments, or questions with Chris or me in the comment section, below.

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

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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.

Who is Working for You? Consider These Three Items Before Hiring in your A/E Firm (guest post)

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black shadow of a womanToday, a tale of caution before you make your next hire, from guest blogger Jane Smith.  Jane is very familiar with personal information screenings and online background checks, and regularly writes about these topics in her blogs. Feel free to send her comments at [email protected] or leave a note in the comments section, below.

 

I watched my parents build a small landscaping store into a bustling business for over twenty-five years. Though the rewards were great, my mother and father worked tirelessly every day of the week. I often wondered if it was really worth all the anxiety and stress they carried around with them.

I once overheard my father saying, ‘It’s not the work that’s tricky. That’s always been easy. It’s managing the fifty employees that gets me.’ For years, I never understood what he meant. Whenever I visited them at their company, everybody seemed to be busy as a bee causing no trouble. I later learned that my parents always had one or two employees they had to keep their eye on. It sounds easy, given that two out of fifty is hardly anything. Yet, as I later learned through my own career, even one person can derail an entire successful operation.

Knowing who works for you is a vital part of running any business. If you don’t know who is stepping on the job each day, you may find yourself in a bind, a liability – or worst of all – a lawsuit. As I’ve learned through my own work experiences, it’s vital to know who you are hiring before you bring them on the job. Consider these three items before hiring anyone to join your staff:

Word-Of-Mouth-Referrals are the Best

As the old saying goes, “It’s all about who you know.” It may seem unfair, but it’s true: It’s best to go with somebody you know as opposed to a random person who walks through the door looking for a job. Whenever you are hunting for new talent to join your team, ask those you trust most – fellow employees, family members, business colleagues, etc. – to help you track down your next hire. I’m not saying that an unknown applicant is unacceptable; however, searching through a web of referrals is usually the best way people find astute, reliable employees. Sticking to this formula will help you in transitioning a new employee to your team.

Run a Background Check – Always

It would be wonderful to think that every person who came to work for you was a saint with no problems, no past, and no trouble. Unfortunately, we don’t live in such a world. It’s best to have your guard up, especially when hiring new people. A background check reveals a lot about a person: their past, their problems, and, likely, what they are capable of doing. If a person comes to you with poor credit and an extensive criminal record, what does that say about the person? I’m not saying that the world isn’t full of second chances, but you need to ask yourself what this person is capable of doing to your business. Are you willing to take a risk on that? That’s up for you to decide.

If it Smells Fishy, It Probably is

Let’s say you’ve hired a new employee and things seem to be going great, but then all of the sudden job materials start disappearing. The first one or two don’t really bother you, but the third and fourth burn. What’s going on? Well, here’s the unfortunate truth: If stuff starts to turn up missing and it didn’t before there was a new employee in the ranks, you might have a problem on your hands. No, don’t accuse anyone of anything without hard evidence, but keep your eye out for more occurrences. I give you this wisdom because I watched this very thing happen to my parents. They hired someone to manage their business on the weekends and one day $400 turned up missing from the register. My father quietly looked into his new employee’s past and discovered that he had stolen money from a number of businesses. You can imagine how much longer he was employed after that.

Hiring new employees can be an exciting process, but it’s always best to proceed with caution. If you find yourself needing some extra help, consider these three tips when hiring anyone and everyone.

Thanks Jane!  Questions, comments, stories to share of your own hiring problems?  Leave a note below.

Should You Guaranty Performance on a Green Project? (Law note)

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guarantee sealBy now, I hope you know me well enough to know that I’d never, ever say you should make a guaranty of performance, period, let alone guaranty the green performance for a new building.  However, sometimes caution has to be thrown to the wind to get the job– at least in the case of a recent GSA design-build project in Seattle.

There, the design-build team agreed that the GSA could withhold 0.5% of the original contract amount, or $330,000, pending the achievement of energy goals.  As writer Suzanne H. Harness, J.D., AIA, noted recently:

The GSA’s approach is diametrically opposed to the recommendations of the American Institute of Architects, which advises both architects and contractors not to guarantee or warrant the achievement of a sustainability goal.  The AIA’s 2011 Sustainability Guide explains the obvious:  contractors and architects can design and construct a building, but the owner operates it, and the owner’s actions are beyond the control of the design and construction team. If the owner operates the building differently from the assumptions used during design, performance goals will likely not be met, even if the building is perfectly constructed. [Emphasis added].

Ms. Harness also correctly noted that professional liability insurance would not cover such a guarantee of performance.  So beware to the design team who takes such a project on: they can be held contractually liable, but there will not be insurance to cushion the fall out from any lawsuit.

Just DON’T do it!