Sunday, March 29, 2009

10 Things You Must Put in Your Next House

This is a reprint from the Builder magazine :
website:http://www.builderonline.com/products/10-things-you-must-put-in-your-new-house.aspx?page=1

From: BUILDER 2008 Posted on: December 15, 2008 8:44:00 AM

Add these features to boost the value of your homes with your buyers.Americans love getting a deal, which might begin to explain why so many consumers flock to shopping malls on Black Friday. Of course, they aren't always ending up with a real bargain, but sometimes this doesn't matter. As long as an item or service has a high perceived value to people, there’s a good chance they’ll choose to buy it.This concept can be applied to selling homes. Create high perceived value, and you stand a better chance of closing the deal with buyers. One way to do this is to offer high value at a low cost. If your cool-looking kitchen was inexpensive to build, but it looks like it cost tons of money to do, you’ve hit a home run for your business and your buyers.With that in mind, here are 10 items to put in your next home to create real and perceived value for your buyers.

Radiant-heated bathroom floors: Forget fancy water-filled tubes embedded in concrete. You can now buy simple mesh-and-wire mats that install fast and easy under ceramic tiles. They cost as low as $10 a square foot and come with a variety of thermostats. Put a toasty floor in your homes' bathrooms and watch your buyers melt.

Butcher block countertops: Wood is the original solid surface. Used as an island or a bar, it holds nostalgic memories for older buyers and offers a fresh natural look for younger customers. It traditionally comes in maple, but butcher block is available in other species such as cherry and birch. An 8-foot-long top measuring 1.5 inches thick and 25 inches wide can be had for as little as $189.

Glass tiles: Yes, glass is cool. And yes, it’s pricey. But used sparingly as a kitchen or bath backsplash, glass can’t be beat. It reflects light, shimmers with color, and is virtually maintenance-free. If you shop carefully, you can buy it for as little as $7 a square foot.

Dual flush toilet: One can only imagine the perceived value of a dual-flush toilet installed in a powder room, which will cost about $250. That is about $100 more than a standard toilet, but it can save a family of four up to 6,000 gallons of water per year.

Low-flow showerheads: There’s a chance you’ve used a new low-flow showerhead and don’t even know it. And that’s the point. These units use air to deliver the same robust performance as a traditional showerhead, but with a flow rate of 1 gallon per minute as opposed to 3.5 gallons a minute.

On-demand water heater: Depending on your climate, an on-demand (or tankless) water heater is an excellent choice. It does cost more, but instead of heating water at a constant temperature 24 hours a day, the energy-saving unit only activates when there is a need. Plus, it installs on a wall (inside or outside) and frees up space, which is especially important in the smaller, lower-priced homes that buyers appear to prefer in the current economy.

Water re-circulator: If a tankless water heater is a little too edgy (and costly), you can still give your home buyers instant hot water by using a high-efficiency conventional heater and a water re-circulator. With the push of a button, the device circulates ambient-temperature water from the line so hot water is instant and nothing is wasted down the drain.

Folding patio-door: In 2007, four out of the most popular 10 products among BUILDER readers were folding patio-door systems. Here's why: When closed, these doors look like any other, but they fold up like an accordion to provide access to the great outdoors. Full-wall installations are pricey, but you can reduce cost with a two-panel system.

Central vacuum: A central vacuum cleaner is a built-in system consisting of a power unit, collection canister, and hose. Connected by special pipes installed within interior walls, the system collects dust and deposits it in the centrally located canister. Five times more powerful than an upright, it’s quiet and efficient. Plus, an entry-level system can cost as little as $800.

Excellent insulation: Insulation isn’t sexy, but when it’s 95 degrees in the summer or the mercury dips below freezing in the winter, your buyers will thank you for this, even if they didn't see the perceived or real value when they first signed the sales contract. Forget the entry-level insulation, and go for something that will really stuff the wall and the roof. While you’re at it, don’t forget the attic.

Nigel Maynard is senior editor, products, at BUILDER magazine.

Thursday, March 26, 2009

Thoughts on Green Building

Although the concept of Green Construction has been around for quite some time, there seems to have been more discussion recently about using the technology to reduce heating costs, benefit the environment and as a marketing angle. I belong to a builder's association, and there have been more courses offered in green construction and LEEDS certification. I am not going to pretend to be an expert in this area, but I am trying to learn more about the "green" movement and how I can offer advice to my clients in this arena. For example, I learned about LEEDS-AP certification which a limited number of lawyers in Massachusetts have obtained.

The National Association of Home Builders offers a Certified Green Professional designation. The requirements for LEEDS is changing as of March 30, 2009, and for that reason, I am looking into getting my CGP.

So, what does this mean for you?
  • Educate yourself about options and take continuing education classes.
  • Learn about the pros and cons of green products and determine which ones to offer to your clients.
  • Include clauses in your contracts when introducing green options and be wary of making claims or promises about results.
  • Familiarize yourself with government rebates that could benefit your clients.
  • Pay attention to what may happen with the new administration.
  • Distinguish yourself by marketing and taking advantage of the green movement by advertising real credentials, knowledge and experience.
  • Don't get caught up in green for green's sake..
  • Consider the true costs of going green.
  • Allow your values to play a part in your decisions.

The green movement is both exciting and daunting. It seems that everyone is hopping on the green train and none of us want to be left behind. At the same time, this area is ripe with the potential for fraud, false claims, and over-enthusiastic hype. It is important for builders to cut through the information that is being presented and determine which products and processes will provide real benefits in terms of cost savings and contributions to preserving our environment. I look forward to our learning together.

Tuesday, March 24, 2009

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.

When Contractors Fail to Pay Subcontractors

In most construction contracts, the contractor serves as the general contractor (GC) and hires the subcontractors to do various aspects of the job. It is understood that it is the owner's duty to pay the contractor, and the GC then pays the subs. At least, that is how it is supposed to work.

One of the most upsetting experiences for an owner is when a subcontractor knocks at his door or walks off the job stating that he has not been paid. It is even worse when a sub files a lien on the property. The owners are caught off guard and frequently between a rock and a hard place.

They face a difficult choice: Should they re-pay the subs in order to get the work done, or rigorously defend against subcontractors' claims? In Massachusetts, if the sub's contract is with the contractor, he cannot prevail legally against the for payment. However, this is no consolation for an owner who is defending against a lawsuit, or living in an unfinished house or building.

The reality is that one has to weigh the cost of paying the subs, the likelihood of success in collecting against the GC, the cost of defending against a lawsuit and the consequences of have a lien on one's property, in order to decide what to do. That said, the best remedy is really prevention.

There are two ways to prevent claims from subs. One is to insist on lien waivers as the subs finish their work. This will immediately put the owner on notice if there is a refusal to provide the waiver . The other is for the owners to check in on a regular basis with the subs and ask them directly if they are getting paid. If not, they can immediately confront the GC and nip the problem in the bud. The owner can also cut joint checks to the GC and the subs.

In any event, it is a nasty surprise for owners when they discover that the subcontractors are not being paid. That is why they need to be vigilant and make sure that the situation does not get out of hand.

Monday, March 23, 2009

Getting Rid of a Mechanic's Lien

Before I say anything, I want to remind builders that mechanic's lien law is state specific. I only know how they work in Massachusetts.

It is not easy to follow the mechanic's lien process properly. For contractors, it can be complicated, and it is very easy to make a mistake. Many attorneys do not get it right. So, there are opportunities along the way for a lien to be subject to being dissolved. The problem is, they do not self-extinguish. A document has to be filed with the registry of deeds to put the public on notice that the lien is no longer valid.

The simplest way to dissolve a lien is by agreement. The parties come up with a way to resolve their dispute, and a Notice of Dissolution is filed by the contractor.

The next "easiest" is for the owner to post a bond. The reason I put "easiest" in quotes is because this can be quite expensive. So, although the process is easy, the price is not. The fee I have encountered is about 10% of the value of the lien.

If the lien is not perfected, that is it has not been filed properly, or the contractor has failed to file suit on time, or file an attested copy of the complaint with the registry of deeds, then the homeowner can file an action in court to have the lien removed.

Here's the process in Massachusetts:

Chapter 254: Section 15A. Application to court for order ruling on or discharging lien

Section 15A. If any person in interest, including but not limited to an owner, contractor, or mortgage holder, claims (a) that any person who has provided labor or materials or has agreed to provide funding, financing or payment for labor or materials, refuses to continue to provide such funding, financing or payments of labor or materials solely because of the filing or recording of a notice of contract pursuant to section two or a statement of claim referencing a lien under section one, or (b) it appears from the notice of contract or a statement of account that the claimant has no valid lien by reason of the character of, or the contract for, the labor or materials or rental equipment, appliances or tools furnished and for which a lien is claimed, or (c) that a notice or other instrument has not been filed or recorded in accordance with the applicable provisions of this chapter, or (d) that for any other reason a claimed lien is invalid by reason of failure to comply with any provision of this chapter, or (e) that any party’s rights are foreclosed by a judgment or release, or (f) that any party wrongfully refuses to execute a notice of completion as required by section two A or improperly files or records a notice of termination under section two B, such person may apply to the superior court for the county where such land lies or in the district court in the judicial district where such land lies, for an order (i) ruling on the matter involved or (ii) summarily discharging of record the alleged lien or notice as the case may be. The holder of any recorded mortgage upon the affected property shall receive notice of and be entitled to appear and be heard in any proceeding brought under this section. An order of notice to appear and show cause why the relief demanded in the complaint should not be granted shall be served upon the necessary parties no later than seven days prior to the date of the scheduled hearing. If the necessary parties cannot be found, such service may be made as the court shall direct. The application shall be made upon a verified complaint accompanied by other written proof of the facts upon which the application is made. Upon granting or denying the application, the court shall enter a final judgment on the matter involved or expeditiously order such further proceedings as are just. Chapter 254: Section 15A. Application to court for order ruling on or discharging lien

So, the owner has to file a lawsuit, notify the mortgage holder and serve all the parties, and attend a hearing. This is not an inexpensive process, but may be necessary if the owner is trying to refinance, obtain a mortgage or sell the property.

It is always less expensive to try to resolve disputes in order to remove a lien from one's property. However, when necessary, there are other options that will obtain the same result.

A Good Time to Start a Home Renovation

I imagine that some of you will say it's crazy to start a home renovation project in this economy. However, there are many reasons to consider doing one now, and here are a few:

1. Contractors are no longer busy. The days are gone when contractors could afford to disappear from your project because they were working on others. It is in their best interest to do a good job and keep the homeowner happy. Now, more than ever.

2. The bad contractors are closing shop. I know so many contractors who are going out of business. This is very sad, but it is also serving to retain the good ones who have treated their clients well and maintained a good reputation. It is more likely that someone who has stayed in business is a "good" contractor. In my mind, that means there is a greater likelihood of a successful renovation project.

3. You will get a fair price. See #1 above.

4. The homeowner might have more time to devote to the project. My work is not as busy, and most people I know have more time for other things. It is better if the homeowners can pay attention (not micro-manage!) their project.

5. Mortgage rates are low. I am looking into refinancing. It might be a good time to refinance and take some money out to do a renovation.

6. There are sales on everything. You can probably negotiate for better pricing for materials since everything is on sale these days and everyone is hurting.

7. Think green. The options for green building just keep increasing. Educate yourself and choose construction methods and materials that will help the environment and reduce costs down the road.

8. Do your bit for the economy. If you can afford it, why not try to give people work?

9. Increase the value of your real estate. This is always a good reason to renovate, as long as you do not greatly exceed comparable values on your street. Speak to a real estate broker about how to add value to your home.

6. There is no time like the present. I know people who have put off renovations for so long that they lost out on the opportunity to enjoy them. If you can afford it, why not do it know? Kids grow up pretty quickly and then leave home, so give your family the benefit of that family room now.

Sunday, March 22, 2009

Construction Associations Provide Great Support to Builders

There are a number of different construction organizations in Massachusetts, and it is certainly worth your while to investigate them and attend some meetings. I, for one, belong to BAGB (Builders Association of Greater Boston), and I have been surprised by the amount of value I have received by being a member so far.

This is what I have found:

1. Members tend to be more sophisticated and committed to their profession. Most who I have spoken with say they have never been sued and have good relationships with their clients.

2. The Association is dedicated to providing educational opportunities to its members and makes every effort to stay current on law and developments in building (for example, there is a committee on green construction).

3. Aside from the obvious hope for members to get business from each other, the membership is extremely diverse and consists of tradespeople and associates in insurance, design, banking, accounting, you name it.

4. The group is incredibly welcoming to women. Even though construction is a male-dominated field, I have never felt even a hint of discrimination or prejudice towards women.

5. The members like to have fun together and have created a sense of community.

6. Members frequently hail from other professions (there are a number of former lawyers, for example) and are generally pretty interesting people.

7. BAGB makes the world of construction a bit smaller. I am starting to know people from the group and have run into them at other events, like the Traditional Builders Show.

8. People are supportive. With the downturn in the economy, it has been encouraging to spend time with others whose business has suffered and speak to them about what they are doing to plan for the recovery.

9. Membership also provides membership in NAHB, the National Association of Home Builders.

10. Membership allows me to provide additional value to my clients. I can introduce them to others I have met from the Association, bring them to meetings and work on creating connections.

Isn't that what networking is all about?

Problem with Chinese Drywall

There is a problem with Chinese drywall in Florida. It is emitting fumes that smell like sulfur and causing headaches, as well as destroying appliances and copper wiring.

Read more about it here: http://www.tampabay.com/news/business/realestate/article985827.ece

You can learn more about this issue by going to the Wolfe Law Group blog by Scott Wolfe, Jr.:

http://www.chinesedrywallblog.com/

For further developments:

http://www.heraldtribune.com/article/20090218/ARTICLE/902180349

Saturday, March 21, 2009

Who Can File a Mechanic's Lien in Massachusetts?

Under Massachusett law,

A mechanic's lien is a statutory lien on real property for the payment of a sum owed on a project by an owner of the liened real property to a contractor or subcontractor or material person for labor and/or materials furnished for improvements to the liened real property during the course of construction. See, Nat'l Lumber Co. v. Le Francois Constr. Corp., No. 97WAD021, 1998 WL 787547, at *2 (Mass. App. Div. Oct. 28, 1998), aff'd, 430 Mass. 663, 723 N.E.2d 10 (2000).

This means that contractors, subcontractors and suppliers, as well as landscapers, driveway installers, septic tank repair companies and subs of subcontractors can file liens. In addition, "a person or his assignee, agent, authorized representative or third party beneficiary, to whom amounts are due or for whose benefit amounts are computed and due for, or on the basis of, the personal labor of such person, may file a lien to secure the payment of such unpaid amounts including interest and agreed penalties for failure to pay the same."

However, in order to file a lien workers must have a written contract with the owner or "or with any person acting for, on behalf of, or with the consent of such owner,"or "with a contractor, or with a subcontractor of such contractor."

A written contract is defined as, "any written contract enforceable under the laws of the commonwealth." A written contract is defined as, "a writing or series of writings, taken together, must contain the essential terms of a contract, such as price, quantity, and type of materials or services. Cf Harris v. Moynihan Lumber of Beverly, Inc., 999 Mass. App. Div. 113 (finding that a series of detailed documents taken together constituted a contract for purposes of the statute).

An important requirement to keep in mind is that a sub of a subcontractor must file a Notice of Identification under section 4 of the statute, or he can only collect to the extent that money is owed to the subcontractor, "If the person claiming a lien under this section has no direct contractual relationship with the original contractor, except for liens for labor by persons defined in section one of this chapter, the amount of such lien shall not exceed the amount due or to become due under the subcontract between the original contractor and the subcontractor whose work includes the work of the person claiming the lien as of the date such person files his notice of contract, unless the person claiming such lien has, within thirty days of commencement of his performance, given written notice of identification by certified mail return receipt requested to the original contractor in substantially the following form..."

So, the mechanic's lien statute broadly defines who may file a lien, but it is important to define the entity that is filing in order to know which section of the statute to file under, and if other actions are required.

I would like to credit The Massachusetts Mechanic's Lien Law Chapter 3, by Robert V. Lizza for help in writing this post.

Thursday, March 19, 2009

The Difference Between Mechanic's Liens and Real Estate Attachments

Someone recently searched the web about the difference between mechanic's liens and real estate attachments. The effect of both is the same. The lien or attachment gives the holder a secured interest in property that protects the party if a judgment is obtained. The difference, however, is the means used to obtain the lien.

A mechanic's lien is an automatic right that a contractor has that is afforded by statute. As long as a contractor who has worked at a property complies with the procedure, the lien can be filed on the property for the amount owed.

A real estate attachment is not automatic. In Massachusetts, a party must demonstrate a likelihood of success on the merits of his or her case, and show that the defendant does not have liability insurance to satisfy a potential judgment against him. If the attachment is obtained "ex parte," without notice to the other side, then he must show that there is a likelihood that the property is going to be conveyed or the property is beyond the jurisdiction of the court.

So, mechanic's liens are much easier to obtain than real estate attachments. From the perspective of the property owner, however, the result is exactly the same. More on liens to come...

Tuesday, March 17, 2009

Filing Mechanic's Liens in Massachusetts-How to Avoid Mistakes

Mechanic's liens are definitely "traps for the unwary," which is an expression used in law. It is very easy to make a mistake when filing and perfecting liens, and unfortunately, most mistakes cannot not be remedied. Although there are many steps that contractors can take in their businesses to protect themselves legally, I would not recommend that they file mechanic's liens themselves.

The steps for filing a lien are as follows:

1. File a Notice of Contract at the Registry of Deeds. The Notice of Contract must be filed under the appropriate section of the Mechanic's Lien Statute, M.G.L. c. 254.

Section 2 applies to general contractors:

Such person may file or record the notice of contract at any time after execution of the written contract whether or not the date for performance stated in such written contract has passed and whether or not the work under such written contract has been performed, but not later than the earliest of: (i) sixty days after filing or recording of the notice of substantial completion under section two A; or (ii) ninety days after filing or recording of the notice of termination under section two B; or (iii) ninety days after such person or any person by, through or under him last performed or furnished labor or materials or both labor and materials.

Section 4 applies to subcontractors:

Such person may file or record the notice of contract at any time after execution of the written contract whether or not the date for performance stated in such written contract has passed and whether or not the work under such contract has been performed, but not later than the earliest of: (i) sixty days after filing or recording the notice of substantial completion under section two A; or (ii) ninety days after filing or recording of the notice of termination under section two B; or (iii) ninety days after the last day a person entitled to enforce a lien under section two or anyone claiming by, through or under him performed or furnished labor or materials or both labor and materials to the project or furnished rental equipment, appliances or tools.

The subcontractor must give actual notice to the Owner of the Notice of Contract.

Notice to the Owner is required for the subcontractor, but it is not required for the General Contractor under Section 2.

This alone provides an opportunity for mistakes in the filing of the lien.

The filing is finished by filing a Statement of Account under Section 8.

Liens under sections two and four shall be dissolved unless the contractor, subcontractor, or some person claiming by, through or under them, shall, not later than the earliest of: (i) ninety days after the filing or recording of the notice of substantial completion under section two A; (ii) one hundred and twenty days after the filing or recording of the notice of termination under section two B; or (iii) one hundred and twenty days after the last day a person, entitled to enforce a lien under section two or anyone claiming by, through or under him, performed or furnished labor or material or both labor and materials or furnished rental equipment, appliances or tools, file or record in the registry of deeds in the county or district where the land lies a statement, giving a just and true account of the amount due or to become due him, with all just credits, a brief description of the property, and the names of the owners set forth in the notice of contract.

In order to enforce the lien under Section 5, a suit must be filed within ninety days of the filing of the Statement of Account under Section 8. Then, an attested copy of the Complaint (lawsuit) must be filed at the Registry of Deeds within thirty days of filing the lawsuit.

If you miss any of these steps, then your lien will not be perfected (meaning it is not valid).

In addition, if you are a sub of a sub, you have to file a Notice of Identification under Section 4, within thirty days of the commencement of work:

If the person claiming a lien under this section has no direct contractual relationship with the original contractor, except for liens for labor by persons defined in section one of this chapter, the amount of such lien shall not exceed the amount due or to become due under the subcontract between the original contractor and the subcontractor whose work includes the work of the person claiming the lien as of the date such person files his notice of contract, unless the person claiming such lien has, within thirty days of commencement of his performance, given written notice of identification by certified mail return receipt requested to the original contractor in substantially the following form:

If this all sounds like too much legalese, it is! Liens are a powerful tool for contractors, but quite honestly, they are best left in the hands of professionals. Although I don't like to say this, that way, if there is an error, at least you will have recourse against your lawyer's malpractice insurance.

Biohazard Clean-up Company Can File Mechanic's Lien in Indiana

http://www.constructionlawnews.com/BlogEntry.aspx?_entry=9cf195f7-9d36-403f-9647-150677aabc3a&RSS=true

Monday, March 16, 2009

Why Contractors Should Incorporate

A thoughtful post from my colleague, Christopher Hill, at his blog, Construction Law Musings:

http://constructionlawva.com/2009/03/why-contractors-should-incorporate.html

To learn about incorporation in Massachusetts, go to the Secretary of the Commonwealth, Corporations Division website:

http://www.sec.state.ma.us/cor/coridx.htm

Is the LEED program a fraud?

An interesting post that talks about whether LEED for commercial buildings actually delivers:

http://finehomebuilding.taunton.com/item/5872/is-the-leed-program-a-fraud

The Strength of a Mechanic's Lien

The first in a series of posts on mechanic's liens:

One of my readers asked a very good question in response to a recent blog post. Is the mechanic's lien a stronger item in Massachusetts? The answer to that question is yes, a mechanic's lien is a very effective means for a contractor to put someone on notice of his claim. It will also put a "cloud" on the title of the property, meaning that most real estate conveyances cannot take place once a lien has been filed.

Over the past few years, mechanic's liens I have filed have prevented progress payments for new constructions projects, prevented the sale of houses, and forced others to come to the table and try to settle the dispute.

The only way for a property owner to dissolve a lien without going to court is to post a bond, and as some of my clients have found out, posting a bond can be quite expensive (usually 10% more than the amount of the lien).

Even if the lien is not done properly, one still has to file an action in court to dissolve it, which requires paying legal fees that are frequently not recoverable.

So, in order for a contractor to protect his or her interests, she should file the necessary documents for a mechanic's lien. It is much less costly than filing suit and a very effective means of pursuing payment.

Sunday, March 15, 2009

My New Blog-Massachusetts Builders Blog

Welcome to the Massachusetts Builders Blog. I have had another blog, Homeowner vs. Home Contractor, that deals exclusively with the renovation process for two years. There have been many topics that I have wanted to cover concerning the construction industry, but they did not fall within the purview of a blog about remodeling. This blog will be much broader, and cover such topics as mechanic's liens, construction contracts, general contractor-subcontractor relations, green construction, etc. I hope to have guest bloggers speak about land use issues, zoning, OSHA, construction accidents and accident prevention, as well as insurance coverage and the bidding process. Please feel free to comment and ask questions. I would like to see this blog develop as an ongoing conversation about construction in Massachusetts.

Wednesday, March 04, 2009

Moving Away from the Billable Hour in Construction Law

I am going to tell you a secret. Most lawyers hate the billable hour. It is hard for us to keep track of our time, even with all of the latest software and technology. Most clients do not understand why some activities take so much of our time. They don't understand the value we provide. That is why more and more lawyers are trying to change the way they charge and use flat fees and other means to bill their clients.

The other day, I had an epiphany. As a lawyer who works mostly in the construction industry, I should bill like contractors. I could prepare a proposal and scope of the work, and notify the client in advance what I would charge. If things changed dramatically, we would execute a written change order that would be signed by the parties. Everyone would be on the same page, and there would be no surprises.

This is easier to do in some areas than others. I pretty much know how much time it takes me to draft a contract, write a demand letter or file a mechanic's lien. The trickiest area is in litigation. The minute you file suit, you have no control over the process. The other side can make it quick, or drag the lawsuit out and make it incredibly time consuming and expensive.

However, I am doing research and trying to figure it out. I have never been comfortable with the fact that the first time I write a motion, it will take much longer and cost the client more money than the tenth time I write it. The billable hour does not encourage efficiency, and I am very efficient. I do not want my clients to be afraid to call me because they believe it will be costing them extra money to speak with me. Those conversations can frequently prevent problems and save money in the long run. So, look for some changes in the way I practice. They are coming soon.