Harrison Law Group September 2019

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virtue of fewer projects worked, and, thus, less material and labor required. But the 30% reduction of expenses needs to extend to the home office as well. Monthly or yearly expenses, and especially payroll for home office employees, need to contract apace with revenue contraction. Obviously, this can lead to some very uncomfortable decisions about what to “cut,” but, at least to my mind, there is not another way to move through a recession without surplus risk or deeply cutting profits. Lesson 3: ‘There’s Always Money in the Banana Stand!’ Forgive the “Arrested Development” reference, but the point is that even in the depths of a recession, there are consistent sources of funding to pay you for construction work. First, even if the general contractor you are working for (or the subcontractor working for you) experiences financial distress sufficient to disrupt a project, a surety bond can protect you. In the aftermath of the last recession, I sued more bonds than contractors and collected a lot of money that otherwise would have been uncollectible.

Second, people still pay taxes during a recession, meaning that government projects are still likely to be funded and paying contractors normally. Ramping up to add a measure of state or federal work to your rotation when you are worried about a recession is probably worth the attendant hassle (such as slow pays, REA nonsense, and endless regulations). Third, you can always file a mechanic’s lien for nonpayment. Regardless of whether the general contractor (or even the owner) is out of money, there likely is still significant value in the construction project itself. With a mechanic’s lien, you can have that project sold at auction to pay your bills. If indeed the doom-and-gloomers are correct, now may be a good time to: 1) confirm your qualifications for state or federal work; 2) start asking up front for bonds on new projects; and 3) become familiar with the mechanic’s lien deadlines for the states in which you work.

If you want to learn more skills and tips about avoiding construction claim pitfalls, you can receive a free copy of my book, “The Subcontractor’s Roadmap to Getting Paid for Extra Work” by emailing me at jwyatt@harrisonlawgroup.com.

-Jeremy Wyatt



(410) 832-0000


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