2008 Legal Firms Story

Attorneys in California say that how you handle disputes
is key to avoiding litigation

By Joe Florkowski

Most attorneys will agree that construction disputes can’t be avoided, and no matter the job, there will be something that someone disagrees about.
It is how the two parties handle that dispute that is the key to avoiding a protracted legal battle.

Claims can be inevitable on large projects, but often the two parties in dispute can work things out if they choose to, says Ken Curtis, an Irvine-based partner and chairman of the construction law practice group for Allen Matkins.

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“You need two willing and reasonable parties who will compromise rather than pursue litigation,” Curtis says. But as the economy continues to falter, that may become more difficult, he adds.

In fact, Curtis, who has practiced construction law for 15 years, says he is as busy as he’s ever been because companies are watching their dollars more closely.

“The biggest issue is getting paid,” Curtis says. “There are more lawsuits, more collection action.”

During the construction boom times, firms did not have to worry as much about small claims because they had other construction jobs to work on, he says.

Now, “there’s not always that next job,” Curtis says. “Contractors don’t have that same backlog of work.”

John Yacovelle, practice group leader for the construction/real estate group of Los Angeles-based  Sheppard Mullin, agrees that the current economic situation makes firms more likely to fight for claims.

“As the money gets tight, people are less willing to leave money on the table,” Yacovelle says.

The attorneys interviewed for this story – which is being published with California Construction’s second-annual legal firms directory – say there are many things architects, contractors and owners can do to avoid costly litigation, claims and other disputes.

And a simple way to avoid legal disputes is to do the little things right – for instance, read and know your contract, Yacovelle says.

“It all starts with the contract – everyone needs to read it,” Yacovelle adds. “You have to document your work.”

Firms also have to be careful about the size and scope of the projects they take on, Yacovelle says. Some firms will run into problems because they take on a project that is too big or they have too many ongoing projects, he says.

Yacovelle also cautions that whether you are an owner, architect, contractor or subcontractor, know the firms you are working with.

“Who am I dealing with? Do they have the money to pay me at the end of the day?” he says.

Perhaps one of the simplest ways to prevent minor disputes from blowing up into major issues is to address problems as soon as they arise, says Will Lichtig, an attorney and shareholder for McDonough Holland & Allen of Sacramento.

“Keep it on the front burner and make it a priority to be resolved as soon as possible,” Lichtig says. “Are you always going to have some issues? Yes. The question is: How is the team constructed to handle those issues?”

But even as the industry tries to avoid legal entanglements whenever possible, there are a host of new and emerging legal issues that will arise as construction projects shift to nontraditional methods of construction, such as green building and the use of BIM.

As the construction industry shifts from a 2D world to a 3D world, some problems on construction projects will be eliminated, but others will arise, Lichtig says.

Because of alternative project delivery methods, projects can be planned using BIM and costs can be brought down.

For instance, it saves contractors money by fabricating offsite rather than onsite. Using BIM, a contractor can have ducts manufactured and brought onto the jobsite and, because of the 3D modeling, can have the pieces fit perfectly with the rest of the project.

But firms using BIM need to understand their contracts and understand who is responsible for what 3D model technology is being used, Lichtig says.

At the same time, as green building increases in popularity, new legal issues can arise.

Some attorneys caution that as construction shifts to more green building, architects and builders need to understand the products they are using.

For instance, an architect choosing a particular product for a green building needs to understand that product and what it can do, says William Coggshall, a senior associate in the construction litigation group with Walnut Creek-based Archer Norris.
“It’s going to fall upon the architect because the owner does not have the expertise,” he says.

Curtis with Allen Matkins also says that green building issues will come up more in construction disputes.

“You have to explore the risks of green building,” he says. “I think the contracts are going to be a little different.”

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