Litigation-I Win, You Lose vs. Mediation-Win/Win

Image
  Litigation is a zero-sum game.  It destroys relationships and fosters enmity between the parties.  Parties rarely walk away happy.  Even if they win, the expense of litigation is enormous, and collecting on judgments is difficult. Disputes ultimately resolve, but the focus on winning at any cost can lead to prolonged legal battles.  Living with a lawsuit causes ongoing stress, which can distract you from your business and even have an effect on your health. In a courtroom, the final decision lies with a judge or jury who may not fully grasp the complexities of the case. Parties relinquish control over the outcome, potentially leaving them dissatisfied with the final judgment. Mediation has the opposite effect.   Rather than polarizing people, it enables the parties to attack the issues and not each other.     The process promotes open communication, collaboration and problem-solving, which enables parties to actively participate in crafting ...

Contractors-What to do in a Bad Economy

The construction industry is in a terrible state right now, and I know many contractors who are suffering the worst downturn in work in their careers. Now, more than ever, contractors need to protect themselves when they undertake projects and make sure they are operating their businesses correctly.

In my practice I see many distraught owners who want to file claims against contractors. They are now willing to fight over less and less money and their general level of anxiety has risen.

The best contractors recognize that maintaining good client relations is the best way to stay out of trouble, ensure future referrals, and stay in business. Particularly in this economy, this is not the time to ignore phone calls, disappear from the job, hit consumers with unexpected change orders and extra bills and cut corners. Many builders do not realize that their best source of future business is their current clients.

So, keep the following in mind:

1. Keep the lines of communication open at all times. Make sure you manage your clients' expectations. Let them know that the project may go over budget and that they should allocate for that. Address problems early before they accelerate.

2. Make sure you have a good contract that protects you. Include a provision that allows you to collect your attorney's fees if you have to sue a client for payment. Most of the contractors I meet with do not have this clause in their contracts. They are shocked when it costs them two-thirds of their payment in legal fees when they have to sue a client for their fees.

3. Follow the law. Would you drive a car without a license? There are so many contractors who do not have the proper licenses for performing their work. Do this at your peril. It will catch up with you at some point. In addition, make sure you know the requirements of the building code for your state. Code violations provide excellent evidence against you in a lawsuit. I know of a contractor who sued a client for a $7000.00 payment who ended up with a $130,000.00 judgment against him because he did not follow the law.

4. If you run into a dispute with a client, and you have committed a violation of some sort, resolve your disagreement quickly and protect yourself for next time. You may have to "eat" your fee in order to keep from suffering further consequences.

When business is slow, it is time to review your contract, brush up on the building code (Massachusetts recently published the 7th edition of its code), check the status of your licenses, and check in with former and current clients. If you do your housekeeping now, you will greatly reduce your worries when business is booming and you are too busy to pay attention to these important tasks.

Popular posts from this blog

Eligibility Requirements for the LEED Green Associate Exam from Green Building Education and Training

What are the eligibility requirements for the LEED Green Associate exam? http://www.green-buildings.com/content/78626-what-are-eligibility-requirements-leed-green-associate-exam After March 31st, 2009, candidates for the LEED Green Associate (GA) credentials must fulfill eligibility requirements. LEED Green Associate candidates are required to do ONE (1) of the following: Option 1: You must be (or have previously been) employed in a sustainable field of work This is perhaps one of the more nebulous requirements posed by the GBCI, because no definition of a "sustainable field of work" is given. The USGBC does state that the company needs to "relate to environmentalism or the green building industry". If you are in any doubt that your profession would qualify, contact the GBCI at gbci.org or by calling 1-800-795-1746. Option 2: You must be (or have been) involved in a LEED Certification Project To prove eligibility by way of LEED project involvement, you must have bee...
Read more

When the Homeowner is a Bully

I've seen a new trend in contractor disputes lately, and it isn't pretty.  Some homeowners are making unreasonable demands on contractors, and bullying them into doing work without getting paid.  They unreasonably withhold payments, or impose penalties for delays that they cause.  They expect contractors to do all kinds of extra work without being paid or changing the completion date. I have had a series of these recently.  What is a contractor to do? When first meeting with a homeowner, trust your instincts.  If you are sensing red flags, do not take the job. Never let the work get ahead of the money.  If there is a change order, make sure that the payment is contemporaneous with the work. Make sure that all change orders are in writing and reflect any change in the contract price and date of substantial completion. Include a provision in your contract that entitles you to get attorney's fees if you have to go after a client for payment. Make sure t...
Read more

Should a Contractor Have the Homeowner Test for Lead?

I would like to learn more about the advisability of lead testing.  Homeowners might not want their homes tested for lead, because it becomes public record, and may interfere with the sale of a home or the ability to obtain a mortgage or homeowners insurance.  In addition, I strongly advise contractors not to do the testing themselves.  Let the homeowner pay an independent company to do it.  Otherwise if the GC brings a claim against a lead testing company for a false negative, the company might state that the GC did not use the test kit properly.  If the homeowner does have the house tested, consider refusing to do the work unless the homeowner has lead abatement work done.
Read more