By Mario Nicholas
Whether you are an owner, contractor or design professional, construction disputes are unfortunately inevitable. Here are some tips to help avoid potential pitfalls and resolve disputes as efficiently as possible, whether before or after formal litigation (or arbitration) commences.
Limit your project file to your actual project file
Before saving documents to a project file — that folder almost every party has on its computer system to manage documents for each individual project — ask yourself two questions. First, is everything in the folder related to this project? And second, is everything in the folder truly a “project file” document? The goal is to have a project file that is truly representative of the project and not a folder where stray documents are saved randomly (such as the PowerPoint presentation prepared for last year’s company retreat titled “2019 Top Screwups: Let’s Improve!”).
Another angle is to consider whether only “project file” documents are being saved. If the case ends up in litigation, you can be assured the other side will ask for a complete copy of your project file. Some personnel routinely download their entire email file (.pst file) to the project file or use the project file as a “desktop” equivalent for the time period that they’re working on the project. While you may be allowed to withhold certain documents in the event of litigation, avoidance of these types of practices should minimize future land mines in the project file.
Be (super) organized
In the film “Office Space,” fictional boss Bill Lumbergh confronts programmer Peter Gibbons: “Uh . . . we have sort of a problem here. Yeah. You apparently didn’t put one of the new cover sheets on your TPS reports.” Though Peter swiftly apologies, stick with Bill here — use the new cover sheet. The better organized and more consistent you are in your documentation, the easier it will be for you to quickly educate yourself, your team, your lawyer, the opposing party, your surety and all other involved parties. Staying organized is one of the best things you can do to avoid or minimize disputes.
Don’t destroy your electronic data
While every company and jurisdiction is slightly different in its approach, you can be assured that mistakenly or deliberately “losing” electronically stored information is potentially disastrous. Periodically review your document retention schedule to ensure your schedule is up to date with current requirements and that you are doing what you say you are doing. Too often, years pass after retention schedules are prepared and somebody changes something without properly documenting the change — and before you know it, you are out of compliance with your own protocol. Don’t learn this lesson in the middle of a lawsuit.
Some companies purge records when their “computer is full,” which can also lead to problems. Referred to as “spoliation of evidence,” negligently or deliberately destroying records can lead to sanctions; dismissal of claims (in part or entirely); negative inferences, such as the presumption that the deleted files were harmful to the deleting party; or the inability to raise certain arguments or defenses.
Pick up the phone
Parties in the construction industry are notoriously studious in documenting just about everything. That should be celebrated. But there are times when you and your project team members, from top to bottom, should instead consider picking up the phone. This is especially true in moments of frustration or when there is a question that merits input from your in-house or external lawyer. Before you send a “*#%!” email or make that note in your daily report, walk around the block and consider whether you should instead discuss the issue. It might not be as immediately satisfying, but that email or note will not read well years later when projected in a 72-point font in a courtroom.
Prepare for tomorrow, through today’s contract
This topic merits a separate entry, but one of the best ways to prepare for disputes is by knowing what is in your contract and having the right terms included. One way to keep these issues top of mind is to have a template checklist that provides an overview of key dispute-related terms for any given project (e.g., notice requirements, dispute resolution provisions such as pre-dispute meeting(s) or mediation or arbitration or litigation, consolidation procedures and right to recover attorneys’ fees). In the context of arbitration, parties can also agree up front on discovery procedures and potentially limit (or expand) certain discovery obligations per their preferences.
You never quite know where a dispute will take you, but the more rigorous you are in maintaining good daily habits, the better chance you have of reaching a favorable resolution.
Mario Nicholas is an attorney in the construction and design practice group at Stoel Rives in Portland, Oregon.