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Dispute Resolution Best Practices in Construction Law

Construction projects often involve disputes. Inevitably, there is a disagreement about how work is handled, and it turns into a situation where the contractor and a subcontractor are at odds over the work. Resolving that dispute is a critical problem since both parties have a stake in the outcome. It may even result in a lien against the property. Fortunately, simple methods of problem resolution can be effective at fixing most disputes. Many disputes are also avoidable with proper planning and execution. 

There are many ways to resolve a construction dispute with different advantages and disadvantages to every method, and this article will go over dispute resolution best practices in construction law. If you find yourself embroiled in a construction dispute and unsure about which method is best to resolve it, consult one of the Nashville construction attorneys from Cotney Construction Law. 

Related: 5 Ways to Avoid Construction Disputes

Plan Ahead

The most important best practice for resolving construction disputes is to plan ahead. Having an established method ready when you need it makes it easy to resolve problems. Do your research to determine which method is appropriate for your company, then include it in your contracts so that all parties are aware of how disputes will be handled before they are brought onto the project. 

This can go a long way toward making sure that you can resolve issues in a timely manner. Having clauses in contracts that stipulate how you will resolve issues is actually a fairly common practice. Construction companies regularly have lawyers create contracts with clauses for arbitration, mediation, or another form of dispute resolution so that they can have more control over how issues are resolved. If you want to use a similar method, contact a Nashville contractor attorney for contract writing services. 

Related: Essential Contract Clauses to Prevent and Resolve Construction Disputes

Try Simple Alternatives First

A widely-accepted practice is to try alternatives to hard legal action first as a means of de-escalating the situation and working together to find a solution. When disputes arise in a construction project, the attitude of the involved parties may become confrontational. If this happens, there is little hope for a simple and amicable solution. Instead of jumping straight to legal action, you should first try to find a way to work out the problem between the two parties. Not only does this help preserve the relationship, but it also helps both parties avoid serious and expensive legal processes. Generally speaking, it also provides a much faster resolution to the problem than taking legal action, which can drag on for a long time.

In some cases, taking legal action could slow down or halt the project entirely. This is expensive for everyone involved and can create a lot of problems for the rest of the project. Resolving disputes without legal action can be simple. Both parties can agree to sit down and discuss the problem in a semi-formal meeting and, thus, give themselves a chance to air their grievances and work together to find a solution.

Some companies use mediation as the first step in resolving a dispute. This is because a mediator can be an invaluable tool in helping both parties discuss their position on a particular dispute. They specialize in helping groups discuss complicated problems and find better solutions. Involving a mediator can also be an informal or formal process, depending on how it is structured.


Related: 3 Tips for Successfully Mediating Your Construction Dispute

Mediation and Arbitration Are Leading Options

Because of the confrontational nature of disputes, many construction companies worry about hurting relationships with their business partners. This is a valid concern as it could lead to the end of a working relationship if not handled properly. As a result, many companies turn to mediation and arbitration as effective ways to handle disputes without severing relationships.

Mediation and arbitration both involve bringing in a neutral third party to help negotiate a resolution between the two parties and have proven effective at resolving disputes in a way that most companies can get behind. Because of the influence of the neutral third-party as well as both parties being involved in the selection of the mediator, there are few problems with the results of mediations or arbitrations.

These processes are more than just semi-formal ways of dealing with a problem. In some states, mediation has been established as a primary process for resolving disputes, and in other states, there are laws governing how they can be managed. Specifically, some states have laws that require any final decisions from the mediation process to be approved by a government agency to ensure that it is fair to both parties. If you think that you will end up with an arbitration or mediation process to resolve the dispute, discuss your case with a Nashville construction lien lawyer to get a better understanding of how arbitration and mediation work.

Trying to resolve disputes can be stressful, but you can do it successfully without ruining your relationship with the other party. Above all else, remain professional and cordial so that you can maintain your business relationships regardless of the decision. If you have questions about how to resolve disputes with or without legal action, contact one of the Nashville construction attorneys from Cotney Construction Law.

If you would like to speak with a Nashville mechanics lien law attorney, please contact us today.

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.