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Lawyers and Construction...
Are they just an extra expense or do
you really need them?
First, are you a proactive
problem solver? Or a reactive
problem solver? You decide. It does make significant
difference on what type of legal strategy is needed
for each approach to handling problems.
To expand on this; when would you
consult with an attorney?
A.
Before you sign a contract?
or
B. After you have project or pay problems?
or
C. Never
A.
Before you sign a contract? The best
time to get your attorney involved is before you sign
the contract – and well before you start the project.
It’s as simple as that, and in the long run, it
will probably be an inexpensive investment. All too
often you are forced to sign a contract at the last
minute so you can start work – and little time
or thought is given for negotiating the oppressive provisions.
You may end up agreeing to the terms just to get started
– or worse – just so that you can get your
first progress payment. You are being proactive and
are able to anticipate problems before they actually
become problems. This is all pretty simple and does
not require very much attorney time doing damage control
or preparing for any battles.
B. After you have problems?
Take care of problems only when they become problems.
After all, you don't want to spend any money until you
need to. You are being reactive.
You know you are having problems
when any of the following start to occur:
o You are not getting any cooperation
o The project is behind schedule and they say it is
your fault
o The scope of work has changed
o The plans are inadequate.
o There seems to be a communication breakdown
o Everything seems to be going wrong, and
o The project is starting to cost you a lot of money
o You aren’t getting paid
C. Never
If you have never required the services of a legal advisor,
consider yourself very lucky. The longer you are involved
in the construction industry, the greater the chances
are that someday you will need a good construction attorney.
When you do need one, give us a call.
Can
you avoid bringing in the legal muscle?
Often, it is not a matter of if, but a matter
of when, that you will encounter a
serious construction dispute that requires the assistance
of an attorney. Many times, the problems you encounter
during construction could have been anticipated or avoided
if you had a good construction attorney help you negotiate
a fair contract before any work was commenced. If you
find yourself in this situation, it is much costlier
to recover, and it is extremely important that your
lawyer has an in-depth understanding of your situation,
and the project environment in general. It is too late
to cut corners on an inexperienced legal advisor at
this point. Even if you find yourself in a difficult
position, instead of working without pay and carrying
the brunt of the project costs, an experienced construction
attorney can advise you of the best way to assert your
rights.
There are some aspects of construction
that require legal expertise to get the job done. Even
though it is not a requirement to have an attorney,
our legal system makes it nearly impossible to handle
all legal matters without the help of attorney –
why take the risk without one? Unless you are absolutely
sure you know every aspect of the law and how every
clause of the contract documents will affect you, you
are probably being penny wise and pound foolish by not
seeking advice from a competent attorney.
Even if you have a strong aversion
to “getting the lawyers involved”, you still
may have to use the courts to assert or defend your
rights. Some construction decisions that require filing
a lawsuit are
• Timely foreclosing on mechanics’ liens
(this is not the same as filing a mechanics’ lien)
• Expunging a false lien
• Enforcement of a stop notice
• Challenging the validity of a stop notice
• Challenging a bid protest decision for public
works projects
What benefit does an
attorney really provide on a construction project?
During any project there may be times where some of
the terms and conditions are not clear or did not anticipate
a particular event. Early on in the process such as
during contract negotiations a good attorney can be
an invaluable tool. The attorney will be your communicator
to clear up misunderstandings and protect your interests.
Calling in the attorneys as a last ditch attempt to
salvage a bad situation will probably only inflame the
situation and make cooperation more difficult. Use attorneys
to help prevent the project from going bad in the first
place. If the other project contractors or subcontractors
know you have your attorney monitoring (or believing
that your attorney is monitoring) the progress, there
may be less chance that you will be abused when it comes
to late payments or unwarranted blame for problems.
What kind of advice should
you expect from your construction attorney?
As a bare minimum, your attorney should be able to give
you advice for the following situations:
• Before you sign a contract,
and
• After you have problems
• Potential impact any actions
may have on your business
The type of advice for each situation
will be vastly different, and will require a different
type of legal analysis. To better understand why this
important, read on.
Before
you sign a contract
•Keep
it Profitable-Always keep in mind that
you are in the construction industry to be a successful
(profitable) business, and decisions should always be
based on this. Just because you may have a legal right
to something does not always mean that is your best business
option. You may spend more money trying to prove a point
rather than making a prudent business decision. Your attorney
should be able to present the pros and cons of all options.
•Identifying
Risk- First and foremost, a construction
attorney should be able to identify the areas where
you have an exposure to risk. What does this really
mean? In any project, there is risk, both financial
risk and physical risk. What we are primarily concerned
with is financial risk, or in simpler terms, where do
you run the chance of losing money on the project, and
how much of the project are you going to be responsible
for if things go wrong?
•Unfair
Contracts-Terms and conditions that
are oppressive, unrealistic or impossible to enforce.
You need to be able to spot these immediately. No contract
is perfect for both sides, but terms and conditions
should be ones that both sides can live with. Some terms
may actually be in violation of State laws. If you don’t
know which ones they are, then your attorney should
be able to point them out and get them eliminated from
the contract.
•Managing
Risk- Sometimes, it just isn’t
possible to eliminate the “unfair” terms
and conditions, and in order to get the work, you must
be willing to accept a certain amount of risk (usually
disproportionate amount of the project liability). Your
attorney should be able to identify these areas, and
provide a plan for protecting your position and managing
the increased liability. Risk that you have not control
over is the most dangerous.
Some examples of risks that are
NOT within your control:
Differing site conditions
Delays
by others
Interference by other trades
Design deficiencies
Timely payments from owner or GC
After
you have problems
Once the project starts to take a turn for the worse,
you need to prepare for a legal battle. Even if it is
not your fault, you must do everything with the expectation
of either being sued, or having to file suit in order
to resolve problems. You must have proper documentation,
you must follow proper procedures and create and keep
evidence of all activities related to the project. You
cannot have too much supporting documentation. Ideally,
you should be doing this from the beginning of the project
(and keep it up throughout the course of the project),
but this needs to be done well in advance of any potential
legal action. Your attorney will know what steps you need
to take at this stage. •Understanding
the construction process-an
attorney that knows legal procedure may not know anything
about construction. How does this hurt you? This is
very important to your survival.
•Knowledge
of construction. Well, first off, you
shouldn’t be paying your attorney while educating
them on how the construction business operates. A good
construction attorney should already know how a construction
project evolves from beginning to end and all that can
happen before, in the middle, and at completion.
•Ask
the right questions. To be effective,
a good construction attorney will know what questions
to ask to get the most information. This is extremely
important once a lawsuit is pending. What the attorney
doesn’t know to ask can hurt you in the long run,
but it may be too late.
•Scope of Work.
If your attorney does not really have a grasp of the
scope of work you contracted for, or what constitutes
a material change, he cannot effectively defend your
position in the dispute. The attorney needs to really
understand how each party from the architect down to
the material suppliers all interact.
•Project
Schedule. Critical path delays, concurrent
delays or even float; if your attorney does not analyze
the project schedule, or more importantly, if he does
not analyze changes to the project schedule
properly, valuable information could go unused.
•Contract
terms and conditions. Understanding
the contract. As simple as this should be for an attorney,
having a clear understanding of the interrelationships
between the parties, the risks, the expectations and
the procedures can be daunting even for an experienced
attorney. Don't take it for granted that an attorney
really knows the terms.
Business
Advice
•Is
taking on the project a good business decision?-
There is no point in entering into a contract that may
restrict your ability to take on additional work, or
overextend your bonding ability or credit status. If
the requirements of the project cripple your ability
to go after new business, it probably isn’t a
good business decision.
•Use
your own contracts- If at all possible
try to use your own contracts. This way your attorney
will have drafted a contract that will be in your favor,
and the terms and conditions will be completely under
your control. Unless you are the developer, you may
not have this luxury. AIA and AGC contracts will serve
as a good starting point, but are not always the best
option for you.
If you have read this far, you
obviously realize that there are some distinct advantages
to getting an attorney on-board for construction matters.
If the additional cost is your only objection, you should
carefully re-evaluate your understanding of the risk
you are about to expose yourself to if you sign a contract.
Back to the original question: When should you consult
with an attorney?
A. Get
an attorney involved early. before you
sign any contracts, your "investment" in attorney
fees will be minimal. This is actually the least expensive
way to manage a project. This is a
smart business decision.
B.
Get an attorney involved after you have
problems . Your project and
working relationships have gone downhill and you are
just trying to salvage a potentially bad situation.
You will probably end up paying more in attorney fees
than you would have if you were proactive and got an
attorney involved early. You may possibly end up paying
more for the project than you anticipated, cutting into
your profit, or worse, going into the red. You are now
putting out fires and doing damage control. All is not
lost though, a good construction law firm that knows
what they are doing may be able to do an outstanding
job of helping you get what you are entitled to.
C. Never
use an attorney. This is the way things
are supposed to be, but most of the time it isn't within
your power to prevent getting dragged into someone's
dispute. How many projects actually go to completion
without any problems at all? We are just being realistic,
but if you have been able to dodge the litigation bullet,
congratulations.
How
we can help by getting involved early.
We know that having an attorney involved in all aspects
of a construction project will vastly improve the chances
that the project will be successful. We therefore highly
recommend that you have a competent construction attorney
review your contracts before you are legally committed.
This firm has negotiated construction contracts in the
realm of $150 million total cumulative value, so we
are very familiar with construction contracts.
How
we help by getting involved after you are having problems.
Scholefield Associates, is uniquely qualified to handle
major and minor construction disputes, ranging from
strategic legal decisions, effective dispute resolution
(without resorting to a trial), to project delay and
schedule analyses. Our technical experience and training
directly related to construction allow us to work swiftly
and efficiently. We can confidently say that there are
only a handful of law firms nationwide that have licensed
professional engineers, licensed general contractors
and experienced large industrial project managers on
staff to serve you. We know the law, we know construction
and we can prove it.
As a construction law firm, we
know that there some essential skills that are necessary
to be effective and efficient. These should not be mutually
exclusive concepts. Unfortunately, none of the skills
that make a law firm effective or efficient in construction
are those that are taught in law school. Skills like
engineering, or project management have to be taught
or gained from actual experience. What we can handle
in-house, many other firms often have to hire outside
experts at your expense.
We pride ourselves on being able
to handle numerous support tasks in-house, such as high
speed scanning, document conversion and electronic Bates
numbering. What is commonplace at most firms is an electronic
document management system. We are not different in
that we keep thousands of documents organized and searchable
at an instant. We also have portable high speed scanners
just for document acquisition. We have an all digital
in-house professional video editing facility, on-location
video production equipment, and on-location professional
audio equipment. We use the most current award winning
trial presentation software and have a high definition
capable courtroom projector specifically for this purpose.
We also know how to use the equipment, and know when
the use of the equipment may be overkill or ineffective.
What does all this do for you? It helps you get results
and it saves you money. What does it do for us? It makes
our job easier.
Lawyers and construction...are they just an extra expense
or do you really need them? If you do not choose your
firm wisely, they may be just that, an extra expense.
You decide.
Call our offices to discuss how we can help you: 619-544-0086
To go to the homepage CLICK HERE
Important Questions to Help You
Click on the question to get some
important answers
1. How do you get paid without
resorting mechanics' liens?
2. What
are killer contract clauses?
3.
What to ask an attorney to determine if they can help
you?
4. What qualifications
and skills malke a good construction law firm?
5. How
do you save money using an attorney?
To go to the homepage CLICK HERE
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