As a subcontractor or supplier on a construction project, you may feel like you are fighting a losing battle when you have a payment dispute with a larger, better-funded owner or GC. This is especially so when you’ve done the work or supplied the materials per your contract but haven’t gotten paid for it. Your expenses don’t stop accumulating simply because someone who owes you money isn’t paying, and the cost to assert your rights adds merely another layer of expense on top of everything else you have to deal with. There are steps you can take, however, to improve your position. At Emalfarb Law, we call this the Negotiation Equation.
The Negotiation Equation
The Negotiation Equation is simple to understand but more difficult to apply. Here it is in its most basic form:
Transaction + Power = Payment
Here’s what we mean by this equation:
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- Transaction. This represents the agreement you have in place with your GC, or whoever your contract is with. The value or strength of the Transaction variable depends on the terms of this agreement. The more rights you have retained or secured in that agreement, the more valuable it is to help you get paid. On the other hand, if you’ve given up too many rights, the Transaction component of the Negotiation Equation won’t be as helpful, and your chances of arriving at Payment will be reduced.
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- Power. This symbolizes your legal right to collect money from the party that owes it to you. Depending on where the job is located, who the owner is, and how the job is structured, you may have to file one or more notices, liens, or lawsuits – or sometimes a combination – to assert those legal rights. The key to maximizing the Power variable is ensuring you know what you have to do to preserve your legal rights, how you have to preserve them, and when you must take certain steps.
- Payment. Okay, this one may be obvious, but the general idea is that you’re more likely to get paid if you have a strong agreement and preserve your rights.
How to Use the Negotiation Equation
The negotiation equation helps you focus on what you need to do to put yourself in a position to get paid, particularly when you’ve worked with someone who doesn’t seem to want to do so. The end game here is to be able to sit across the table during a negotiation or mediation session and know you have a stronger hand. In our experience, that gets you paid sooner, with less aggravation, and, in most cases, without having to move forward with expensive, time-consuming litigation.
Emalfarb Law Can Help You Maximize Your Negotiation Equation
At Emalfarb Law, we’ve helped construction industry clients negotiate strong and effective contracts that preserve their rights to get paid for their work or the materials they supply. We also help our clients implement compliance programs to keep track of what kinds of notices they need to file, with whom, and when so that they preserve their legal rights to file mechanics liens or lawsuits to collect unpaid amounts that they’re owed.
We’ve helped thousands of clients collect late payments all across the US. Learn more about how Emalfarb Law can help maximize your Negotiation Equation by using our online reservation form to schedule a confidential consultation.
Hal Emalfarb talks more about the Negotiation Equation in the Emalfarb Law video presentation, “Learn How to Perfect Your Construction Lien and Get Paid on Every Project.”