While we would all prefer that every project runs smoothly, the reality is that sometimes, construction disputes occur between general contractors and subcontractors. There are several different mechanisms available to resolve these issues, with varying complexity and costs. However, the first step should always be a thorough contract review with an experienced construction law professional. It’s important to remember that you likely have a contract with the other party that states how the dispute should be handled.
NEGOTIATION
Negotiation, the simplest option, involves either one party talking to the other party, or a representative
such as an attorney talking to the other party’s attorney to try and come to a resolution. This typically
involves preparing supporting paperwork to back up your story.
Many conflicts can be dealt with efficiently when both parties dialogue through the issues.
NLB has a winning formula to help Subs and suppliers negotiate with optimal leverage. An NLB lien
seminar helps you plan and prepare for negotiations.
You should always have a strategy that favors recognizing your strengths and your customer’s strengths
and weaknesses as well.
MEDIATION
Most jurisdictions including federal court now require mediation of disputes before trial.
This generally involves a third party, often an expert in construction law, who listens to both sides of the
argument and works towards a resolution upon which both sides will accept. Mediation is conducted
over the course of a day, often with both sides presenting basic evidence and experts to explain their
position. Mediation is faster and relatively less expensive than going to trial since it is a dispute
resolution process, not a win/lose process. The key to a successful mediation is hiring experienced and
qualified mediators. NLB relies upon its independent legal Construction law network for the names of
effective mediators. The main factor in mediation success is attitude. Be prepared to compromise.
To find the names of recommended construction mediators click here
ARBITRATION
Closer to trial than mediation, in arbitration, both sides present their arguments to the arbitrator, often an expert in resolving construction disputes, and he or she makes a ruling on the situation. Many businesses are starting to prefer arbitration as it is faster, allows for privacy, and ensures an expert decision-maker. When the arbitration is non-binding, the parties still have the right to take their case to trial. Unlike mediation and non-binding arbitration, binding arbitration “binds you” to whatever decision the arbitrator makes and, in most cases, lose your right to appeal. However, businesses still choose to engage in arbitration in situations where a dispute needs a quick resolution. Many construction contracts stipulate binding arbitration as the dispute resolution method of choice.
LITIGATION/TRIAL
Trial is the most time consuming and costly resolution method, but many people prefer the option of
taking their case to court and having a judge or jury of local citizens hear the dispute and issue a ruling.
Smaller value disputes can be resolved in the local jurisdiction’s magistrate’s court or compulsory
mediation while larger value cases or certain types of disputes go to a higher court in some jurisdictions.
In a trial, the rules of evidence and civil procedure ensure a full and fair hearing for both sides of the
matter. There is a right to appeal any issues of law when properly pursued.
CLAIM STRATEGY
The team at National Lien & Bond is experienced with drafting construction contracts, negotiating
resolutions to construction disputes, and representing parties in litigation and other forms of dispute
resolution. A high percentage of claims settle before trial.
If you need help and support during this time, and advice for avoiding conflicts in the future, reach out
to our team to schedule one of our lien seminars today.
This blog is for educational purposes only and not intended for legal advice.