Construction law is inextricably linked to the construction business. Sooner or later, you’re going to encounter something that is going to force you to bring in some legal resources to manage. And so, yes, construction lawyers do indeed exist. And when it comes to the construction industry, many of the areas in which you see significant legal involvement tend to be pretty important, like claims, employment and labor issues, OSHA, insurance issues, even bankruptcy. (Lawyers even have their own clubs, though as Groucho Marx famously said, it’s not entirely clear why anyone would want to join). In this article we’re only going to deal with the legal issues surrounding payment disputes and contracts, and we’re going to do it rather briefly at that, pausing only to inject a few lawyer jokes to keep your spirits up and your attention engaged. But while we like to give our lawyer friends a hard time (though it needs to be said that lawyers are very near and dear to zlien‘s heart: our Founder and CEO Scott Wolfe is an attorney himself), they do perform a valuable service and can in fact be quite indispensable. And so, to show some love to our lawyers, we want to lead off with a lawyer joke that illustrates just how valuable a lawyer can be:
If you think lawyer jokes are funny,
try calling a comedian the next time
you end up in jail.
Construction Law Is All About the Contract
As anyone reading this surely knows, the construction business is very complex. A single construction project will typically include several different companies that all exist on different tiers, linked together by a loose “payment chain” as the money flows through each tier from the top down (see illustration, below right). The further down the chain you are, the higher your risk of non-payment. And so all of the companies participating on the same project are loosely tied together by the work they perform, and the money that flows from the top down to pay them, and what else? That ‘what else’ is construction law. And there is nothing more important in construction law than the contract.
Question: What’s the difference between an accountant and a lawyer?
Answer: An accountant knows they’re boring.
In a guest post published on Chris Hill’s Construction Law Musings, practicing construction attorney Greg Shelton writes that “contract law…occupies the center of the construction law universe.” Attorneys specializing in construction are renowned for their contract law acumen. According to one of Hill’s first-year law professors, “if you want a lawyer who understands contracts, hire a construction lawyer.” A good contract contains many many elements – provisions, protections, and obligations, for both parties – but take a second to think about not what is in a contract, but when a contract comes into play. A contract will of course remain in place for the duration of the term defined within it, but the most important work that goes into drafting your contract should take place long before the project starts. As Donald Rumsfeld once said, “you go to war with the army you have.” You go to work with the contract you have.
You go to work with the contract you have.
Therefore, when it comes to hiring a construction lawyer, we have 2 suggestions:
- the best time to hire a lawyer is before any actual work on the project has started
- the single most valuable thing that lawyer can do for you is to help you draft a thorough and legally sound contract template for you to manage all of your business relationships on future projects
Client: Will it really cost me $250.00 for you to just answer 2 questions?
Lawyer: Yes, and what is your second question?
Benjamin Franklin was absolutely correct when he said that “an ounce of prevention is worth a pound of cure.” And the metaphor is apt when it comes to the legal fees, since it’s almost certain that the one-time legal bill for a attorney’s consultation to proactively help to draft your contract on the front end will pale in comparison to the cost of having to hire an attorney to manage an expensive lawsuit due to a project dispute that occurs once that project is already under way.
Coming Up in the Next Post…
In Part 2, we’ll discuss some hypothetical construction payment scenarios where you might want to hire an attorney. Plus, we’ll briefly discuss affordability, a few ways to help lower your legal expenses, and how using legal resources can help you get paid.