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5 Steps Construction Executives Should Take to Avoid Litigation

If you are in construction, you will undoubtedly find yourself in the claims business. 77% of all construction owners have been involved in a claim or dispute in the last 5 years. The question is, what can you do to stop a claim before the advocates engage and the fees skyrocket? Listen to the five-step plan followed by these parties to resolve their complex $3.85M dispute without the involvement of outside counsel, experts, mediators, arbitrators, or courts.

Step 1:

Take control out of the hands of the project personnel

Many claims can be resolved at the project level. But, for the ones that can’t, construction executives need to put in place procedures that ensure that business decisions do not get made by those closest to the detail, and those most emotionally and financially attached to the outcome. In this matter, each company had a procedure in place that forced significant claim issues up to in-house counsel. Following this procedure was instrumental in ensuring that the horses did not get out of the barn.

Step 2:

Engage with your counterpart of the opposing party

Parties often speak to each other through their outside counsel, who are trained in the art of positioning. In this case, in-house counsel for the claimant reached out to their counterpart at the defendant, who had a large counterclaim. By doing so, the emotional dispute was immediately transformed into a business challenge, which business people are very equipped to handle.

Step 3:

Engage a neutral party to resolve major points of disagreement

In this matter, in-house counsel vetted and engaged a non-binding working neutral with expertise in delay, constructibility, and productivity loss issues. Each party agreed that a working neutral – who could roll up their sleeves and analyze the data over a fixed duration – would enable them to entrench themselves in an objective view of the issues.

Step 4:

Keep your outside lawyers and experts on the sidelines

Persuasive attorneys and experts can further ingrain parties in their positions, making early resolution difficult. They can also make the process more expensive than it needs to be at this stage. During this claim, in-house counsel were both armed with outside counsel – with whom they had long-standing relationships – but asked them to stand down while the neutral performed their work.

Step 5:

Don’t let the battle for inches stop you from gaining yards

Everyone wins with early resolution, but early resolution does not happen if parties fight for every inch. During this claim, the project participants did not fully agree with the neutral analysis, and could have spent days arguing over the inches. In-house counsel wisely took control out of the hands of the project personnel, focused
on gaining the yards, and reached resolution based on the
neutral analysis.

Did you know

77% of all construction owners have been involved in a claim or dispute in the last 5 years.

The Facts

Based on our empirical data, we estimate that combined fees of over $1.5M were avoided. That's a big win for all parties involved!

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