The average cost and length of a North American construction dispute are $16.3 million and 15 months, respectively. It’s no wonder that industry professionals are doing everything in their power to preempt disputes to avoid exorbitant legal fees. In this article, a Portland construction attorney with Cotney Construction Law discusses five tips you can follow to keep disputes out of court. By following these tips, you may be able to maintain business relationships, meet project deadlines, and remain profitable in this boom-or-bust industry.
1. Draft a Demand Letter
A demand letter drafted by an attorney is the perfect tool for getting your point across without bringing emotions into the mix. Too often, impassioned contractors go to great pains to resolve conflict in person or over the phone when a well-drafted demand letter informing the recipient of impending legal action was all that was needed to resolve the issue. When owners realize that legal action is a very real possibility, they tend to come to their senses. As the adage goes: the pen is mightier than the sword.
The truth is that no one wants to go to court unless they absolutely have to. Like you, most owners will do anything to avoid a legal dispute. This is especially true when $10,000 or less is in dispute. The reason for this is that, even if an owner prevails, their legal fees will far outweigh the disputed amount. The demand letter should be your first step in resolving any dispute. In the event that a demand letter is met with silence, it may be time to break out your construction contract.
2. Review Your Contract
As we’ve covered previously, a construction contract is the most important indicator of how a dispute will play out. It stipulates project expectations, timelines, and payment methods — it names the players and sets the stage. Of importance, it likely includes a clause that informs what should be done in the event of a construction dispute. We always recommend having your contracts drafted in advance by an experienced Portland construction lawyer, but if a dispute has already emerged, you may be limited in the dispute resolution services you can employ.
3. Explore Alternative Dispute Resolution
Alternative dispute resolution (ADR) refers to a number of services that can be used to resolve your dispute in both a timely and favorable manner. ADR centers around cooperation and finding a solution that works for everyone. Two of the most popular ADR methods, mediation and arbitration, have been invaluable in helping construction companies maintain privacy and avoid costly litigation.
This is a time for all parties to present evidence, convey grievances, and share their version of events with a mediator, an impartial third party, who will work with them to find a mutually beneficial agreement. Mediations are non-binding and cannot be upheld in a court of law. If no resolution can be found, arbitration can be explored before litigation commences.
An arbitrator hears each side and issues a decision based on the arguments presented. Unlike mediation, this process can be legally binding, depending on previously agreed-upon terms. While more formal than mediation, arbitration can still result in a swift, private, and more practical resolution than what would result from a trial.
There are a number of other forms of ADR, including negotiation, mini-trial, and summary jury trial, that may also be appropriate and helpful to your cause. Consult one of our Portland contractor lawyers to discuss the ADR service that’s right for you.
4. Compromise When You Can
Remember, ADR services are only effective when both parties approach with the goal of finding a solution. This can be a difficult concept in the construction industry, where staying competitive can mean the difference between success and failure, but you must be open to hearing the other side if you are to prevail. This can be crucial for maintaining business relationships that may come through for you at a later date. In order to safeguard your reputation and business network, you should have an experienced ally on your side who can inform you when it’s appropriate to back off and when it’s time to press on.
5. Consult an Experienced Construction Attorney
At Cotney Construction Law, we routinely represent contractors, subcontractors, architects, engineers, suppliers, manufacturers, developers, and others in disputes of all kinds. We have the skill to draft comprehensive contracts and demand letters as well as the candor to sit down with all parties to find a worthy solution. For an attorney who can draft your demand letters, review your contracts, represent you in a dispute, or mediate your disputes, partner with the team of attorneys at Cotney Construction Law.
Disclaimer: The information contained in this article is for general educational information only. This information does not constitute legal advice, is not intended to constitute legal advice, nor should it be relied upon as legal advice for your specific factual pattern or situation.