August 2019
Level With Me By JeremyWyatt
Times When Calling an Attorney Can Save Your Company a Lot of Money
Few construction contractors maintain an attorney on their staff. And many contractors with legal issues, perhaps wary of the cost, wait to call an outside attorney until their legal rights have deteriorated. So how do you know when to call an attorney? In my experience, it’s about knowing when an attorney can bring value to your business. I will be the first to admit that not every situation requires an attorney, but in the construction context, here are some situations in which you should pick up your phone to call an attorney: contract reviews, project changes, and payment disputes. Regardless of your company’s size or specialty, you’re going to need to review and sign contracts. I no longer keep track of how many contracts I have reviewed for clients, but I pay very close attention to what each contract I review means to a client. Here are three types of contracts where attorney involvement is progressively more important. The first category includes contracts that are either small for your company or are with an established customer. These are low-risk contracts where taking a loss on the project may not affect your bottom line much, or where there is already trust and a business relationship with the party on the other side. Nine times out of ten, these contracts don’t need attorney review. What may be helpful, however, is to have an attorney draft a form contract for your smaller projects that protects you and reduces your company’s risk. Contracts
The second category includes contracts that are right in your wheelhouse but are with a new customer, or where something seems “off.” Remember, you’re an expert in your field, and you should trust that little voice that sometimes tells you, “This doesn’t feel right.” For contracts in this category, it’s worth forwarding them to an attorney for a once-over. When I review a contract in this category, I hit the highlights for the client: What are the obligations regarding indemnity, payment disputes, change orders, delay damages, liquidated damages, etc.? If something problematic arises, we can always delve deeper as the client requires. The third category includes contracts that are unusually large for your company or are with a customer that you know to be litigious or generally problematic. These kind of contracts are worth a thorough risk review and revision by an attorney. More than a few talented contractors have gone out of business because they stretched out on a project that was supposed to bring the company to a new level but ended up crushing the company under a mountain of contract damages, bond claims, and project delays.
Change Orders
Most modern construction contracts require contractors to keep working on change order work regardless of whether the parties have agreed on a change order’s pricing. Given the back-and-forth nature of some change order price negotiations, it can be difficult
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jwyatt@harrisonlawgroup.com
www.HarrisonLawGroup.com
(410) 832-0000
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