With an estimated 25% of projects ending in dispute, construction is one of the most litigious industries worldwide. Due to the complexities, risks, and the large number of stakeholders involved in these projects, it’s not surprising that litigation is common.
However, implementing strategies to manage risks in construction projects reduces the likelihood of disagreements and claims. Construction litigation attorneys are uniquely poised to assess, mitigate, and manage risks. They facilitate settlements when disputes arise, often outside the courtroom.
This quick read provides insight on disputes, legal remedies, and the vital role of construction litigation attorneys in the process.
Understanding Construction Litigation
Construction litigation is the legal process to settle disputes between contractors, material suppliers, property owners, and other internal and external stakeholders.
While lawsuits are an option, construction litigation attorneys use alternative dispute resolution (ADR) methods such as negotiation, mediation, and arbitration to settle claims while maintaining working relationships between all parties.
Because construction projects have many moving parts, various triggers can cause disputes. While this is not an all-inclusive list, the following are the most common causes of claims:
- Errors and/or omissions in the contract
- Work delays
- Owner-directed changes
- Failure to pay
- Contractor and subcontractor injuries
- Negligence
- Noncompliance with the contract
- Inferior or defective materials
These disputes have serious financial and reputational repercussions for all parties. Those begin with the cost and time it takes to settle legal claims between the stakeholders.
According to the Arcadis Construction Disputes Report 2023, construction disputes cost an average of $42.8 million and took 13.6 months to settle in 2022. Unfortunately, the financial losses continue after the dispute is settled.
Investors and lenders often lose confidence in the stakeholders, making them less willing to back future projects. Unlike other areas of the law, construction litigation is designed to manage these risks.
While other civil attorneys step in after a lawsuit is filed, construction lawyers mitigate and manage risks in construction projects from start to finish to keep clients out of the courtroom.
The Benefits of Hiring a Construction Litigation Attorney
Construction litigation attorneys are well-versed in all aspects of construction law and regulations at the local, state, and federal levels. This, in turn, allows them to help their clients maintain compliance in all areas, from the project specifications to adhering to the contractually stipulated deadlines.
Additionally, attorneys use their in-depth knowledge of best practices to ensure the project meets or exceeds the industry’s standards. The guidance is tailored to each project, and attorneys adjust based on contractual changes.
Since dozens of stakeholders are involved in these projects, disputes can occasionally arise. However, construction litigation attorneys monitor potential issues and intervene early if a problem occurs. Often, this prevents the dispute from escalating allowing the project to continue moving forward.
Risk Mitigation and Management
Risk management is the most effective strategy for avoiding construction claims. With their expertise in the construction industry, laws, and regulations, construction litigation attorneys identify and assess risks in construction projects while implementing policies to proactively prevent claims.
Construction litigation attorneys take a proactive approach to risk mitigation and management, which includes the following:
- Drafting Contracts – Errors and/or omissions in contracts were tied as the number one causes of construction disputes in 2022. Attorneys draft contracts with clear, concise language that covers responsibilities, standards, resolution methods, risk-sharing provisions, and other stipulations.
- Contract negotiation and compliance – Legal counsel also plays a crucial role in negotiating contracts among stakeholders and ensuring that all stipulations of these contracts are met.
- Specification and Constructability Reviews – Addressing ambiguities, inconsistencies, or impracticalities in the specifications and design can reduce delays, budget overruns, and, ultimately, litigation and ensure that a project aligns with industry standards, codes, and regulations.
Effective Dispute Resolution
Unlike construction lawsuits that typically last two or more years, stakeholders can settle disputes within months through mediation, arbitration, and other ADR methods. Additionally, clients benefit from working with mediators and arbitrators who understand the construction industry.
A construction litigation attorney negotiates the mediation and arbitration terms, including who will serve as mediator or arbitrator. The attorney can also present evidence and provide legal guidance during the proceedings.
When using these methods, the parties are able to maintain their privacy easing concerns about damaging their reputation. It’s also effective, with many dispute boards reporting the successful resolution of over 90% of cases when ADR methods are used.
Navigating Complex Contracts
Construction contracts contain language and provisions that dictate each party’s obligations and legal rights. Due to the confusing nature of these documents, it’s vital to have a construction attorney explain the guidelines, conditions, and stipulations and negotiate favorable terms.
Once the contract is in place, the construction litigation attorney ensures compliance across the board.
Cost-Efficiency and Time Savings
It’s estimated that the construction industry spends between $4-$12 billion in transactional costs each year to resolve disputes, mainly due to the high cost of litigation.
By pursuing ADR methods, attorneys are able to reduce costs significantly while limiting work stoppage. In fact, the average length of construction disputes has declined dramatically over the years due to an increase in ADR methods.
Consult With a KPPB Construction Litigation Attorney
Expert guidance in construction litigation can protect your reputation and finances. With the proper legal support, you can manage the risks of construction projects and preserve your reputation.
If you have a legal claim pending, or are considering pursuing a claim, protect your interests by consulting with a construction litigation attorney at KPPB LAW today.
Call 1-678-443-2244 to learn more about managing risks in construction projects.