Philadelphia Construction Law Blog

In the first 2 posts of this series, we talked about why even the best of contracts don’t prevent all litigation and provided some tips on how to manage risk in a way that minimizes the chances of seeing the inside of a courtroom. In reality, the best approach is an integrated one that includes preparing the most appropriate contract possible (understanding there is no such thing as a perfect one), providing good leadership, and managing the risk in the field. It is this last component that is the subject of this final post.

Part 2 of a 3 part series on risk management My previous post in this series addressed the most obvious reason why a construction company’s contract is not keeping it out of court: the contract simply isn’t good enough. It bears repeating that no contract is perfect; and even the best contracts, which allocate risk as opposed to eliminate it, can’t prevent every possible lawsuit. Because the contract itself cannot completely insulate a company from litigation, the next logical question becomes whether there is anything else that can be done.

Part 1 of a 3 part series on risk management In my years as a construction attorney, I have had countless conversations with contractors who are frustrated by the “drag” created by litigation. Many of those with whom I have spoken have expressed confusion over the fact that their contract – perhaps even one prepared by a lawyer – is good and should be keeping them out of Court; and they cannot understand why they still find themselves in costly and time consuming litigation. This 3 part series will endeavor to provide some answers to this dilemma and some ideas about how to cut down on some of that frustration.

There is at least one universal truth in businesses of all kinds: no one likes to work for free. The risk of non-payment in the construction industry can be greater than in others because of the significant financial outlay that is required just to perform the work. Reimbursement for labor and material costs are required just to avoid losing money (not profit) on a job. And we all know what happens to companies that don’t at least break even most of the time.

Reviewing construction contracts is a regular part of my practice as a construction attorney. From limited reviews of specific provisions to preparation of an entire array of form contracts, I have seen many different contract clauses and methodologies to evaluate them. In the end, contracts are about the allocation of risk. While the Rules of Professional Conduct prohibit me from giving legal advice as part of this blog, there are some clauses that commonly draw more attention when time is limited in the contract formation stage. Here are the top 5:

The Federal Claims Court recently ruled against the United States government on claims that it improperly terminated a metal building contractor on a U.S. Coast Guard project. The claim arose when a plethora of problems out of the control of the contractor, K-Con, Inc., caused it to deliver the project late.

It is admittedly rare for the United States Supreme Court to consider a case that implicates construction contracts directly. The Court, in its new term, has just heard oral argument on a construction contract issue that could have a far reaching impact on the construction industry though.