How important is it to analyze all the language in a contract document, and how long should be taken to do so?

Colleen Telling
Manager and Counsel
AIA Contract Documents

Construction executives manage a myriad of project details ranging from materials and labor to cost and schedule. Parties often perceive drafting and reviewing contracts as very time consuming. To save time—and rest assured that all pertinent terms and conditions are addressed—construction executives should use standard form contracts, such as AIA Contract Documents®. They are well organized, eliminate guesswork about the type of information that is important to include in a contract and have been trusted by construction professionals for more than 130 years.

It is important to analyze all contract language to understand the responsibilities and risks assigned to each party. Each provision is important. AIA standard form agreements address the critical topics of time, payment, insurance, rights of termination, notice, claims, disputes and dispute resolution. Knowing and abiding by the content in a contract can guide a construction project to a successful outcome.

There is not a prescribed amount of time to spend analyzing contract language. Manuscript contracts—written by one party or an attorney—can be confusing, often misbalance responsibility and risk, and require significant time to analyze. By contrast, standard form contracts are written to be easily understood, fair and balanced, and apply to multiple projects. Once familiar with the content, construction executives can save time by regularly employing a standard form document on projects.

Investing time upfront to understand a contract reduces questions and misunderstandings during construction and paves the way for a smooth project delivery.

Why is it important for a contractor to have a working relationship with a law firm that specializes in construction law?

Reginald M. Jones
Partner
Fox Rothschild LLP

It’s incredibly important to have a working relationship with a law firm that understands your specific market. Attorneys are most effective when they can provide your company with advice that helps grow revenue, or protect it in the case of a dispute.

To better assist industry clients, we focus on growing a team of military veterans, former federal attorneys and those with niche construction experience. Clients benefit most from counsel with a deep bench that can help implement ethics and compliance programs, challenge and defend contract awards, provide real-time project advice and handle large, complex disputes through trial when no other resolution remains.

A history of collaboration with the federal agencies is as important as keen market knowledge. For example, our strong rapport with the Naval Facilities Engineering Command for Europe, Africa and Southwest Asia allowed us to streamline resolutions of two large requests for equitable adjustments on behalf of an international contractor handling projects in Bahrain and Djibouti.

Joshua Quinter
Associate Managing Principal and Senior Construction Counsel
Offit Kurman

The construction industry is an incredibly fluid environment that calls for an integrated approach. As technology and delivery platforms continue to evolve, new challenges will inevitably result.

Having access to a construction lawyer who thinks like a business owner and understands the industry is invaluable. The right attorney helps you find the way to “yes,” helps mitigate risk and adds to the bottom line.

By navigating around problems at the start, during, and after a project is done, the company is more efficient and minimizes all the dispute-related costs that negatively impact success. In short, good attorneys make it easier for construction leaders to make decisions and lead their company in the right direction.

Marc Furman
Chair Labor & Employment Group
Cohen Seglias Pallas Greenhall & Furman PC

Construction companies face unique challenges and require specialized legal counsel. An experienced construction attorney understands that time is money and that contractors need answers immediately so a project’s schedule is not impacted.

Familiarity with construction contracts and their terms, project management obstacles, insurance and bonding, regulatory issues, and employment concerns allows attorneys to assess problems quickly and assist clients with strategic decision-making. When an attorney is engaged during project conception and planning, he or she can help simplify the construction process, protect the contractor’s rights and minimize the company’s risk.

Prior to practicing law, many of our attorneys worked in the construction industry or earned degrees in construction-related fields such as architecture and engineering. This industry knowledge allows us to be true business partners with our clients, working to not only address the particular issue at hand, but also to fully evaluate their business and ensure that it remains operational.

Aman S. Kahlon
Partner
Bradley Arant Boult Cummings LLP

Like most industries, construction has become more specialized over the years, and it's important to associate with a law firm that has the resources and expertise to address issues unique to the field.

In particular, construction contracts present challenges such as addressing lien waivers, change order rights, subsurface risks, etc., that traditional commercial contract attorneys may not be equipped to address. Experienced construction attorneys are better able to analyze the risks associated with such issues and advise clients on how to proceed.

Similarly, construction attorneys understand how projects are built and can provide guidance on project and claims administration that other attorneys may not be able to offer. For example, if a construction firm is building a federal facility and encounters delays or other government-caused impacts, the company should consider hiring a law firm that has experience with the specific agency procuring the work, is familiar with the change order process under applicable federal regulations, and can advise on how to maximize recovery against the government without resorting to filing a claim. This sort of advice can be essential in avoiding disputes and successfully closing out projects.

Construction companies should be mindful of the experience of the specific attorney they are hiring, as well as that of the attorney's firm as a whole. Attorneys at law firms with large construction practices can leverage institutional knowledge and the wisdom of colleagues to provide comprehensive advice on all stages and types of construction, regardless of locale.

What questions should a contractor ask before retaining a law firm?

Christopher K. LeMieux
Managing Partner
Riess LeMieux, LLC

Above all, a contractor should seek a law firm that has a breadth of knowledge and experience in critical areas of its business, including contract negotiation, insurance coverage, labor and employment, financing, real estate and dispute resolution. Beyond the required technical expertise, does the lawyer speak the contractor’s language and understand the practical, everyday aspects of the client’s business? This knowledge can often help a contractor avoid pitfalls.

The next thing a contractor should look for in a law firm is how it approaches client relations and if the firm is responsive to real-time events. Do you want a law firm who will treat your relationship like a business transaction? Or do you want a law firm that will promptly respond to your questions and provide personal attention? You can learn more about how a law firm handles client relationships by speaking with former or existing clients. Ask the prospective law firm to provide a list of clients who can vouch for the firm.

In today’s rapidly changing world, a contractor should also try to find a law firm that keeps up with construction industry trends and changes in the law. This can often be found on a firm’s website, blog or social media. The best law firms will regularly provide updates that are relevant to your business. A law firm that does not provide this service to its clients free of charge is not offering full value.

What should construction firms take into consideration when considering terminating a party’s right to proceed?

Brian A. Wolf
Partner
Smith, Currie & Hancock LLP

Termination of a subcontractor for cause requires careful contract review and consultation with counsel. First, you must determine whether the subcontractor has committed a material breach of the subcontract or whether the subcontractor has committed a breach that triggers the right to terminate under the subcontract.

Not every subcontractor breach will allow you to terminate your subcontractor. Minor breaches allow the contractor to employ less drastic remedies—such as withholding payment or supplementing work—unless the subcontract specifies the right to terminate.

Second, you must determine whether the subcontract has notice and right to cure provisions. Most standardized subcontracts require notice and the right to cure as a condition precedent to termination. Because most courts enforce notice and right to cure provisions, missing a required notice or not allowing the required opportunity to cure can lead to a legal finding that termination was wrongful.