Construction Lawyer: Problem or Problem Solver? The Need for Cost-Effective Dispute Resolution in the Construction Industry
The Construction Lawyer October 1, 2013
Construction industry participants tend to seek out the most efficient means of resolving their disputes.1 Minimal profit margins, harsh competition and overburdened work schedules make it paramount for construction contractors, design professionals, and owners alike to resolve disputes in a timely and cost-effective manner before working relationships are negatively impacted. Indeed, these concerns have been a major driving force behind the construction industry’s widespread use of alternative forms of dispute resolution.2
The industry’s recent movement towards newer forms of ADR, designed to remove attorneys from the dispute resolution process as much as possible to facilitate quick and inexpensive settlements, is driven at least partially by a perception in the construction industry that lawyers, especially in their capacity as litigators, only get in the way of efficient settlement. The use of partnering agreements, dispute resolutions boards, and mediation has become routine in the industry.3 Wary of being the proverbial fish between two cats4, construction industry participants have adopted ADR mechanisms that potentially minimize the lawyer’s role, and, insofar as it is possible, keep the dispute in the hands of the involved parties with less reliance on outside counsel.5
Even with this movement toward using ADR processes to resolve disputes, many in the construction industry still see construction attorneys as more of the problem than anything else. Indeed many believe that lawyers, trained more in the art of litigation than that of construction, have driven dispute resolution mechanisms towards formalistic processes that are not always the most efficient or most effective means of resolving conflicts. For example, a disgruntled professional engineer recently wrote:
By their reluctant embrace of that attorney-driven process over the years, architects and engineers have unwittingly transferred their traditional control of the construction process to their attorneys—so much so that, today, they dare not make a move without them.6
The concern is not so much with the currently used processes – mediation, dispute resolution boards, and partnering agreements are widely used across the industry with much success.7 Rather, some construction industry participants have become disenchanted with the legal profession’s ability to guide a dispute towards efficient settlement. Instead of desired “problem-solvers,” construction attorneys are viewed by some as “profit eaters” or “unneccesary overhead” as legal fees eat up steadily decreasing profit margins industry-wide.
Consequentially, an interesting tension has heightened between construction players and construction attorneys. On one hand, many construction attorneys remain focused on their roles as trusted advisors of their clients. These attorneys see their role as a “problem-solver” on behalf of their clients and, with considerable force, strive to achieve their clients objectives on their projects. These attorneys are naturally driven by their desire to provide quality results to their construction clients, which can often lead to significant costs for clients in legal fees. However, those legal fees seem justified in the minds of these “problem-solvers” who believe their clients benefit from their high-priced assistance rather than weathering the legal pitfalls of the industry on their own.
A good construction lawyer, immersed in the industry for the long haul, appreciates that prompt and cost-effective dispute resolution is what builds reputations and keeps clients coming back for years. Often this means that behind the scenes they are working to help clients get past their emotional reactions and instead focus on practical solutions . . . By training and experience, a good construction lawyer brings unique skills to a construction project that can meaningfully contribute to project success. And that is precisely what most of us find most rewarding about our job, just like other professionals in the construction industry.8
On the other hand, construction industry participants may see lawyers as much more of the problem than a part of the solution. These parties often reminisce of the “good-ole’-days” where an entire floor could be added to a building without the need of a formal change order. Contractors fondly relate stories about when contracts were written on cocktail napkins and the aid of an attorney was thought to be somewhat of a last resort. Now parties are faced with detailed, and, in many cases, inequitable and technical contract language readily churned out by the latest computer. This aversion to the legal process has likely been a strong force behind the industry’s recent movement towards novel forms of alternative dispute resolution which minimize the role of the attorney.9 Even then, however, some still view ADR processes as being overly driven by construction attorneys. Though they may recognize that the “good-ole’-days” are essentially over, many do not see the transformation towards a more lawyer-guided and legally-driven process as a good thing.
At the same time, many construction attorneys are worried. Increased use of ADR processes designed to help disputants resolve their differences without resort to attorneys—principally by reducing the formalities typically seen in litigation10—not only seems adverse to the natural desire of these attorneys to maintain quality (which often equates to high billable hours), but also cuts at the very utility of the construction lawyer. If construction lawyers are only thought of as problem-creators, it seems likely attorneys will be increasingly cut out of the process as the industry moves forward.11 Though some may view this shift as a good thing, it is important to think critically about what may be lost in such a transformation. While industry participants have little interest in subsidizing their attorney’s salaries, it is beyond question that the contractor, engineer or owner is keenly interested in the resolution of any dispute. Though the parties may represent themselves in newer forms of ADR, should they? Do industry participants stand to lose more by minimizing or removing the role of the attorney in the dispute resolution process than what they potentially save in “representing themselves”?12 Though settlements may come at a lower initial cost, a general desire to remove lawyers from the dispute resolution process entirely may be ill advised.13
This article emphasizes the importance of lawyers in any dispute resolution process, and attempts to legitimize the lawyer’s oft-criticized costs by highlighting the important role a lawyer plays in any dispute. While short-term gains both in time and money may be realized by minimizing legal involvement in some disputes, completely removing attorneys from the dispute resolution process comes with many significant consequences. This article defends the importance of the construction bar’s role in the construction industry.
Though the implications of this article likely apply to a number of industries, the concerns here are particularly relevant to construction lawyers who are likely to see a smorgasbord14 of dispute resolution processes throughout their career.15 Indeed, traditional construction litigation has dramatically declined as ADR processes such as mediation have gained favor.16 Today’s construction attorney must be aware of the newest forms of ADR and know how to best serve clients in this less-traditional field of resolving disputes. Ultimately, construction lawyers need to re-define their role in construction-related disputes with a heavy emphasis on ADR and cost-effective advocacy.
ADR has been around in the construction industry virtually since the industry came into existence. Indeed, there is nearly a half century of AAA arbitration in the industry.[xvii] The construction industry has always presented an interesting opportunity for up-and-coming ADR mechanisms to be put to the test. At the “cutting edge of experience with dispute resolution processes”[xviii] and at the “spearhead of experimentation with mechanisms aimed at avoiding disputes by addressing roots of controversy,”[xix] construction participants have always tinkered with the various means by which disputes in the industry can be resolved.[xx] In recent years, “real-time” ADR processes such as Partnering and Dispute Resolution Boards (DRBs) have continued to gain widespread use.[xxi] These processes have been featured in many standard industry contracts. Along with maintaining congenial working relationships between industry participants, the main impetus of this movement towards new forms of ADR processes has been a desire to keep costs as low as possible.[xxii] ADR processes are seen as a means of reducing dispute-related costs.
There is a perception (that many share) in the construction industry that lawyers only get in the way of efficient resolution of disputes.23 For one, the use of attorneys is often thought of as being too expensive.24 Formal litigation is thought to be anathematic to the goal of most construction participants: to do the most amount of work in the shortest amount of time possible. In a recent survey conducted by the Associated General Contractors of America (AGC), a strong majority of American contractors reported their litigation costs as either “significant” or “very significant” business expenses.25 Efforts to minimize these costs are a major driving force behind the industry’s desire to develop alternative means of resolving disputes.
Retaining an attorney can also be detrimental to the construction participant’s business relationships. For instance, hiring an attorney can often be seen as a sign of intransigence.26 There is a significant amount of concern that lawyers–trained in legal reasoning and the law–are narrowly fixated in their approach to resolving disputes.27 What may be more readily handled by the parties themselves quickly transforms into countless motions and incessant posturing, both often destructive to resolving a dispute in a quick and low-cost fashion.28 Moreover, hostile negotiation tactics or tough bargaining can cause damage to long-term contracting relationships.29 The construction industry is known for its relational contracting,30 thus, maintaining good business relations is particularly important. The effective use of ADR processes to maintain goodwill between contractor, owner and architect can mean the difference between a successful and unsuccessful project.
For these reasons, the construction industry, like many other facets of American society31, has been increasingly focused on finding new forms of resolving disputes in a cost-effective and timely manner.32 Over the years, this quest towards efficiency has progressed through many different forms of ADR.
Traditionally there were two means of resolving construction disputes without resort to litigation: adjudication with the project architect or design engineer acting as the ultimate decision maker; or binding arbitration.33
In the first of these two traditional forms, the project architect often exercised near “dictatorial” authority over contract matters, making quick and (presumably) informed determinations with respect to disputes between the owner and contractor.34 It was thought that the architect, heavily involved in the contract- and plan-drafting portions of the construction process, was in an optimal position to make objective and informed decisions regarding certain performance issues.35
Over time, however, resolving disputes through the project’s design professional determinations became controversial. This is primarily because of the architect’s dual role as both designer of the project and agent of the owner. Acting as the owner’s agent on the construction project created an inherent conflict of interests36 that left the architect seemingly unable to produce objective, unbiased, rulings on matters in dispute between the owner and other contractees.37 Adding to the problem was the fact that the design professional has a liability risk for design defects or other errors in the construction documents.38
Because of these conflicts of interest, the design professional’s opinion, at least in some cases, could be viewed—understandably—as nothing more than “meaningless charades which contribute[d] little to the prospect of settlement and merely postpone[d] binding adjudication in some other form.”39 Nonetheless, adjudication through the design professional remained a viable option for many construction disputants, primarily because of its low cost.40 Only now that many other ADR processes without these same inherent conflicts of interest have gained greater use is the adjudicatory role of design professionals thought to be somewhat outdated.
Another traditional method of resolving disputes in the construction industry is binding arbitration.41 For decades, binding arbitration was thought to offer several key advantages to construction disputants: “limited process, a relatively prompt hearing, privacy, informality, and, above all, informed judgment which could soften the hard edges of the law within the elastic bounds of arbitral discretion.”42 Despite those advantages, many difficult questions have grown out of the continued use of arbitration. Discontent among design professionals, contractors and owners alike recently prompted the American Institute of Architects (AIA) to delete a mandatory binding arbitration clause from its standard form contracts.43 Removing the binding arbitration clause presumably returns litigation to the default means of resolving construction-related disputes44 -- illustrating the level of discontent in the construction industry with binding arbitration.
Binding arbitration has been widely criticized by construction disputants because of its increasing resemblance to traditional litigation, without the benefit of appeal.45 One author calls this synthesis (of arbitration and litigation) the “isomorphism” of construction arbitration.46 “Isomorphism” is thought to be driven by lawyers, transforming binding arbitration from what it once was—an informal mechanism designed to provide quick resolutions of disputes—into something that looks a lot more like traditional, costly, litigation.47 Indeed, in the eyes of many, construction arbitration has become too costly as an alternative form of resolving disputes.48 Concerns about the “quality of construction arbitrators, the effectiveness of the arbitrator selection process, and the completeness of biographical information provided to the parties regarding perspective arbitrators” also deter further use of binding arbitration in the industry.49
Instead of these more formal, traditional, types of ADR, industry participants have continued to seek out less formal, less costly, and, often times, more effective means of resolving construction disputes.50
Particularly over the past fifteen to twenty years, construction industry disputants have been increasingly focused on finding efficient and useful means to resolve disputes with their counterparts.51 Consensual early intervention (or “rapid resolution”) ADR methods with litigation remaining the ultimate default option are now the industry standard.52 This result has stemmed from a long history of participation in various forms of ADR.53
Among the many lessons learned from the “quest for the right ADR process” is that no one mechanism can be a cure-all for all disputes.54 Indeed, “there is no single perfect process.”55 A broad study of construction industry participants, including architects, engineers, contractors, and construction attorneys, was conducted in 1994 to study the overall sentiment of industry participants involved in the then-occurring ADR revolution in the construction industry.56 By that time, the word was out. Survey data made it clear that mediation and mini-trials, along with other newer forms of ADR (list these), were quickly becoming the favored means of resolving construction industry disputes.57 Binding arbitration, litigation, and adjudication with the project design professional serving as neutral appeared to be losing favor.58
Indeed, this movement away from traditional forms of dispute resolution has only hastened over time.59 The latest forms of dispute resolution in the construction industry focus heavily on resolving disputes as close in time to the underlying events giving rise to the dispute as possible.60 The most used forms of ADR in the construction industry include: mediation, dispute review boards (DRBs) and standing neutrals, the mini-trial and summary jury trial, and partnering agreements coupled with an ADR enforcement mechanism.61 Entities (like AAA) specializing in dispute resolution services have long ago realized the need for quick and efficient modes of dispute resolution in this industry, and have undergone significant reform to try to satisfy that need.62
Rare is the substantial construction dispute that is not mediated at least once.63 The mediation process facilitates candid discussions among those with settlement authority to try and resolve a dispute, preferably at early stages in the dispute. Mediators are called upon to use their experience in the industry and knowledge of the law to instill realistic expectations in the parties and attempt to find middle ground. Though construction-related mediations typically involve attorneys on both sides, the goal is to keep the decision making power in the hands of the client and cut back, as much as it is possible, on unnecessary posturing and other advocacy tactics which often impede settlement.
One of the more innovative forms of ADR used in the construction industry are multi-year alliances or formal “partnering” agreements.64 These agreements focus on strategic project planning and brainstorming at the impetus of the project, with a heavy emphasis on various means and methods of resolving disputes between participants down the road.65 By concentrating on building a “team” to prevent disputes from arising in the long run, project participants use “creative cooperation” to minimize the potential for conflict and to implement procedures to handle inevitable disputes in a quick and effective manner.66
Similarly, dispute resolution boards (DRBs) have been used with high frequency across the construction industry.67 These boards typically include three independent experts whose job it is to supervise the project and employ expertise and impartial judgment to make recommendations to disputing parties on a construction project.68 The success rates of Dispute Resolution Boards are particularly impressive, especially for large and complex projects where disputes are practically inevitable.69 Both partnering and DRBs as ADR processes involve little participation of lawyers, as the contracting parties are encouraged to negotiate and plan for contingencies on their own with their own interests in mind and without outside assistance.70
A considerable amount of research has been done investigating the benefits and disadvantages of employing these ADR processes in place of more traditional forms of ADR or courtroom litigation.71 These newer forms of ADR are thought to “open the channels of communication between the parties to facilitate the resolution of the dispute at an earlier stage in the dispute.”72 The goal is to settle disputes at the lowest project level possible.73 Also, enabling the bargaining and exchange processes that ordinarily underlie relational contracts is thought to be key to efficiently resolving disputes.74 The hope is that by resolving disputes quickly and informally disputes will cause minimal disruption to the project and that long-term relationships will be protected.75 “Real-time” dispute resolution mechanisms have been surprisingly76 effective at achieving cost-effective outcomes.77
Despite the potential consequences, construction attorneys have for the most part supported the movement towards these newer forms of ADR78, often discouraged themselves by binding arbitration’s likeness to litigation and the inefficiencies inherent in more adversarial techniques in the modern world of e-discovery.79 The movement toward ADR has stemmed from the advocacy of industry professionals and trade organizations as well as from legislative and judicial forces.80
Naturally, however, there is some concern–even if it is not discussed publicly–that the construction lawyer’s role will be threatened by the introduction of new ADR methodologies. This is especially true given that these newer methods are focused on obtaining quick and informal settlements shaped by the parties themselves, with minimal resort to lawyers.81 The concern is not so much that the lawyer’s billable hours will be reduced—though that may be present enough concern in and of itself.82 Lawyers are well-aware that clients do not enjoy, and the construction industry doesn’t benefit from, paying excessive attorneys fees. Rather, the concern is that, with these new ADR methodologies, the utility of the construction lawyer will be reduced. When a client handles the dispute themselves, the lawyer loses his or her opportunity to advise the client and guide him or her through the dispute. In turn, the client stands to lose out on the many advantages that come with the experience of a skilled construction attorney.
Despite the fact that newer forms of ADR seem driven by a desire to minimize the role of the attorney, there is a strong argument to be made that concerns about inefficiency and cost downplay the significance of what a lawyer, acting as both counselor and advocate with experience in handling similar types of cases, can add to the dispute resolution process. By bringing perspective and practical solutions, attorneys can play an important role in almost any dispute resolution process.83 Attorneys don’t always add needless cost and often bring real value.84
While certain inefficiencies and costs are unavoidable with the addition of legal counsel, those costs are frequently justified given the tremendous positive effect legal representation can have in the resolution of a dispute. Increasing use of dispute resolution processes in the construction industry may be unavoidable. However, this should not necessarily correlate to a reduction in workload for construction attorneys, some of whom are actively engaged as mediators and other facilitators. The benefits gained by employing experienced and knowledgeable legal counsel to guide a client through a difficult dispute is well worth a reasonable fee.
It is very unlikely to see a shift in the current dispute resolution paradigm, focused on obtaining fast and efficient settlement of construction disputes. Instead, construction lawyers need to understand both the importance of ADR in this industry, and learn how to best adapt their skills to meet the demands of these newer ADR processes. Importantly, this does not mean construction lawyers should be eliminated from dispute resolution processes generally. Rather, the attorney’s role must change to reflect what is most needed by clients in this industry: cost-effective advocacy.
In order to understand the importance of lawyers in the resolution of disputes in the construction industry, it is important to understand why ADR mechanisms are of such great utility in this particular industry. There are six generally accepted reasons ADR—as opposed to litigation—is more suitable to the resolution of most construction related disputes.85
First, construction is by its very nature technologically complex.86 Construction projects involve a wide variety of applied sciences all employed in unique circumstances and geographical locales.87 This results in a large aggregation of various types of businesses, all operating concurrently, in a relatively confined and mostly uncontrolled environment—the “project site.”88 Flexibility is crucial in any dispute resolution mechanism used in the industry, as is a process that can keep up with rapid technological advances. ADR mechanisms provide that flexibility in a way that litigation does not.
ADR works well in the construction industry because it provides that flexibility and is capable of resolving disputes in a timely manner. The months or years it takes to resolve a dispute via litigation are unacceptable in an industry dependent on quick turnover and quick payment.89 ADR can also account for the complexity of the issues that arise in construction related disputes by encouraging parties well-versed in the intricacies of each project to resolve disputes themselves with the advantage that knowledge imparts. It is expensive to educate judges and juries on the details of each case—especially where the case involves complex fact patterns or testimony from expert witnesses. The parties are often better off resolving the dispute themselves or through a single third party neutral, already experienced in construction disputes.
Second, the construction industry is the largest segment of the production sector of the United States economy.90 The number of disputes that arise in this sector is astronomical compared to any other.91 Without ADR processes, the construction industry could not operate. The construction industry demands alternative forms of resolving problems without resort to a court. The use of processes like mediation is not only desirable but necessary as the complexity of the claims, and the numerous parties involved, only further demands quick and informal dispute resolution mechanisms.92
Third, as the construction industry has progressed and become more complex, so has United States law governing construction contracting.93 Construction contracts necessarily involve a large and intricate web of interrelated parties and legal relationships, particularly as more and more specialized subcontractors are being utilized.94 The contract disputes that arise from large projects can be daunting.95 Disputants require means of resolving disputes outside the court system, in order to do business without being weighed down by expensive and lengthy litigation.96 Moreover, the days of simple form contracting are largely over, as more and more companies favor proprietary contracts of their own creation.97 The interpretive issues that arise out of use of differing (and in many cases one-sided) contract terms has resulted in a deluge of cases thereby further increasing the demand for ADR processes.98
Fourth, the complexity of construction litigation often makes the use of expert witnesses necessary.99 Causation and quantification of damages are very difficult issues to work out in construction disputes.100 This is primarily a result of the intricacy of the construction project and the difficulty of determining who “caused” the problem and how to properly measure damages. ADR mechanisms employed by knowledgeable persons can often utilize those individuals’ knowledge and experience in place of detailed expert opinion.101 By reducing the demand for expert witnesses, ADR mechanisms save disputants time and money.
Fifth, maintaining healthy business relationships in the construction industry is of paramount importance.102 Large to medium scale projects often go on for years. For that reason, it is essential to success of any project that parties are able to cooperate and work together throughout its duration. ADR mechanisms work to bring parties together—even within the context of a dispute—to achieve mutually beneficial outcomes. By eliminating the “distinction between victor and vanquished” typically seen in the aftermath of litigation, ADR mechanisms can work wonders in terms of maintaining strong business relationships after the resolution of a dispute.103
Finally, removing disputes from local fact finders can increase the impartiality of dispute outcomes.104 Local biases and prejudices are often perceived as important components in any litigation.105 ADR mechanisms provide an opportunity to place the authority to decide in the hands of independent and impartial neutral parties, thus removing the impression of local biases changing the outcome of the case and hopefully fostering settlement.
Contrary to the construction industry’s prevailing perception (that is that attorneys only get in the way of efficient resolution of disputes) the construction lawyer belongs in these newer forms of dispute resolution. The construction industry’s demand for new alternative means of dispute resolution should correlate to a concurrent increase in the importance of the construction bar. Through his or her knowledge, expertise, experience, and education, the construction attorney is well equipped to handle various forms of ADR as well as to represent clients at virtually any stage in the dispute resolution process. The benefits of obtaining quality legal counsel in an ADR process are many, which extend beyond the expertise in the law that an attorney brings to the table.
A lawyer is more than a litigator,106 and provides more than just knowledge of the law.107 More than anything else, a good lawyer is a trusted advisor and a good problem solver,108 as exemplified by the numerous roles in which attorneys excel including such roles as: “counselor, advisor, intermediary, government official, prosecutor, judge, arbitrator, representative of entities . . . and as individuals” in society.109
More than just a zealous advocate, the best lawyer, particularly through the use of ADR processes, uses his or her role as counselor or advisor to minimize the destructive effects of conflict and to put in place a collaborative process to develop “an integrative (‘win-win’) solution.”110 Abraham Lincoln had it right when he said: “Discourage litigation. Persuade your neighbors to compromise whenever you can. Point out to them how the nominal winner is often the real loser—in fees, expenses and waste of time.” When the lawyer acts as a “consensus builder” rather than simply as a zealous advocate of only the lawyer’s own client’s interests,111 construction industry participants can benefit from their services tremendously, even when accounting for the attorney’s cost.
With respect to ADR in particular, the lawyer serves as a sort of “gatekeeper” in helping his or client select the appropriate ADR mechanism for each dispute while simultaneously decreasing the chances of disputes arising in the future.112 Again, this is particularly beneficial for construction disputants who seek to minimize both cost and future disputes. The best lawyer also understands not only his client’s interests, but also his opponent’s interests, is able to communicate those interests effectively, and is adept at developing options or alternatives that will be amenable to all of the disputing parties.113
Another area the construction lawyer can strive to become more cost-effective is developing processes by which modern electronic document management is simplified and made more expedient for his or her client. In recent times, e-discovery has made the cost of litigation extremely prohibitive,114 likely hastening the movement towards ADR processes. A construction attorney that can adapt his or her practice to modern times in a cost-effective way can provide great value to clients.115
Moving forward, the construction attorney needs to be aware of how he or she can best serve clients interested in participating in newer and more cost-effective forms of alternative dispute resolution.116 To be most effective, lawyers must put to practice more than what they learned in law school.117 The construction bar should put aside the paradigm of being only a zealous advocate of his or her own client and consider a move towards “collaborative lawyering.”118 Lawyers should take advantage of the fact that ADR processes are not only useful but also necessary in the construction given its high volume of complex disputes. More important, construction attorneys should be acutely aware of their clients’ needs, and fully cognizant of the industry’s general need for cost-effective advocacy.
The construction industry will always seek more efficient means of resolving inevitable disputes. Especially in tough economic times, profit margins are so slim that construction industry participants are keen to save costs by any means possible, including paying less for the services of attorneys.
With that in mind, construction lawyers should aim to serve their clients in the way that they need it most: being as cost-effective as possible. Contrary to popular belief, at least in the construction industry, lawyers have an important role to play in all alternative dispute resolution processes. The perception that lawyers only get in the way of the efficient resolution of disputes is misguided at best.
The construction bar can best ensure its importance moving forward by acting as “consensus builders,”119 seeking to resolve disputes with determined deliberation and minimal posturing. Attorneys should work to eliminate as much as possible the things that interfere with an efficient dispute resolution process, including too much legal maneuvering and expense.120 Construction lawyers should look for opportunities to employ technology as an ally in organizing, digesting and effectively presenting positions. At the same time, the attorney must effectively encourage open communication and facilitate creative problem solving.
ADR works well in the construction industry because the construction industry possesses characteristics that maximize the benefit of timely and cost-effective resolution of disputes. The construction bar should take advantage of that connection, and work to be at the forefront of ADR mechanisms in the construction industry into the future with one primary goal in mind: to serve justice and solve problems in an equitable and cost-effective fashion.
- The one consistency in the construction industry is that it is always changing. See John Hinchey & Laurence Schor, The Quest for the Right Questions in the Construction Industry, 57 Dis. Res. J. 8, 10 (AUGUST-OCTOBER 2002) (“no Sector of American Industry is more directly affected by current trends.”). Improvements in technology, modifications in contract law, novel regulation from Congress, or changes in the economy in general all have significant effects on the nature of the construction industry and how industry participants go about doing business. Indeed, the construction industry is the largest industry in the United States in terms of employment and is a significant, if not predominate, factor in the overall business climate. This tendency to change has also been seen in the means by which parties choose to resolve their disputes. Though the construction industry typically employed binding arbitration as its primary ADR mechanism for resolving disputes over the past century, in recent years, a broad array of dispute resolution processes have taken over.
- The construction industry is a hotbed for new and innovative dispute resolution mechanisms. Thomas J. Stipanowich, Reconstructing Construction Law: Reality and Reform in A Transactional System, 1998 Wis. L. Rev. 463, 498 (1998).
- For a detailed discussion of construction disputes and up-and-coming ADR mechanisms used in the industry, see American Bar Association, Essay on Construction Disputes (2012) accessed at http://www.americanbar.org/content/ dam/aba/migrated/dispute/essay/constructiondisputes.authcheckdam.pdf. Lawyers, equipped with an adversarial mindset likely obtained at an early age and only strengthened by time in law school, are generally thought to be “ill-suited to consider non-legal interests and non-adverasial solutions. The fear is lawyers will not prove helpful in ADR and may just mess it up.” Jean R. Sternlight, Lawyerless Dispute Resolution: Rethinking A Paradigm, 37 Fordham Urb. L. J. 381, 391 (2010).
- As Benjamin Franklin once famously said, “A countryman between two lawyers is like a fish between two cats.”
- “Not surprisingly, much of the current trend toward facilitated conflict resolution and project planning is anti-lawyer in spirit.” See Stipanowich, Reconstructing Construction Law, supra note 2, at 498; see also Philip L. Bruner, Rapid Resolution ADR, 31 Constr. Law. 6 (Spring 2011) (“[c]onsensual early intervention rapid resolution ADR methods nor are becoming the industry standard, with litigation remaining the ultimate default option.”).
- Walter J Wells Jr, P.E., Viewpoint: Lawyer as Constructor, ENR.com Engineering-News Record (4/30/2013)
- “While the different providers of mediation services in the United States cite somewhat different success rates, it is clear that there is at least an 80 per cent chance that mediation will reach a settlement. Some cite statistics greater than 90 per cent.” Robert S Peckar, Mediation of International Construction Disputes – Has the Time for US-Style Mediation Arrived?, Who’sWhoLegal, accessed at http://whoswholegal.com/news/features/article/28353/. This same success is seen in the use of Dispute Resolution Boards in the Construction Industry. “60% of projects with a DRB had no disputes . . . 98% of disputes that have been referred to a DRB for hearing result in no subsequent litigation or arbitration. The worldwide use of DRBs is growing in excess of 15% per year, and through the end of 2006 it was estimated that over 2000 projects with a total value in excess of $100 billion had used some form of DRB.” Randy Hafer, Dispute Review Boards and Other Standing Neutrals: Achieving “Real Time” Resolution and Prevention of Disputes, CPR Dispute Prevention Briefing: Construction last accessed at http://www.cpradr.org/ Resources/ALLCPRArticles/tabid/265/ID/640/Construction-Briefing-Dispute-Resolution-Boards-and-Other-Standing-Neutrals.aspx.
- In a response to the ENR article, “Lawyer as Constructor,” Andrew D. Ness emphasized the value that a construction attorney provides to the project, not only in its early phases but also throughout the project’s duration. Andrew D. Ness, Bash All the Lawyers? Not So Fast, ENR.com Engineering News-Record (5/21/2013) accessed at http://enr.construction.com/opinions/ viewpoint/2013/0521-bash-all-the-lawyers-not-so-fast.asp.
- Philip L. Bruner, Rapid Resolution ADR, 31 Constr. Law. 6 (Spring 2011). A 1967 survey of a dispute resolution system that employed binding arbitration with the architect serving as arbitrator, where there was little attorney involvement, hypothesized that “lawyers and courts [would] probably remain relatively unimportant in this sphere of conflict resolution,” given the successes that system had in efficiently resolving disputes.
- Newer ADR processes, such as partnering agreements and DRB, are acutely focused on maintaining informality.
- See Stipanowich, Reconstructing Construction Law, supra note 2, at 498 (“As the construction industry experiences a reformation in its approach to controversy, many construction attorneys are, naturally, alarmed. After decades of expansion, their ranks may be thinning; having devoted their energies to mastering the intricate minutia of construction litigation, their art is imperiled.”).
- Unfortunately, little empirical research exists regarding the usefulness of lawyer representation in ADR processes. See Sternlight, Lawyerless Dispute Resolution, supra note 4, at 385 (“very little empirical work has been done examining attorney’s role and impact in mediation.”).
- It is important to remember that a lawyer is more than just a litigator. The construction lawyer’s purpose extends far beyond that traditional capacity. In other words, the lawyer is more than the traditional “professional with formal legal training who employs law,” but also a professional with other relevant talents and disciplines, including a capacity to “solve human problems and disputes, plan transactions, prepare legal instruments and regulations, and  facilitate and engage in processes designed to accomplish compliance with law and the pursuit of justice as members of society seek to accomplish legitimate aims of individual and social life.” Carrie Menkel-Meadow, The Lawyer As Consensus Builder: Ethics for A New Practice, 70 Tenn. L. Rev. 63, 72 (2002). The Model Professional Rules for attorneys certainly contemplate a broad understanding of the lawyering profession, recognizing such roles as “counselor, advisor, intermediary, government official, prosecutor, former judge, arbitrator, representative of entities, as well as individuals, and as evaluators (with potential liability to third parties who rely on such lawyers’ work or representations.)” Carrie Menkel-Meadow, The Silences of the Restatement of the Law Governing Lawyers: Lawyering As Only Adversary Practice, 10 Geo. J. Legal Ethics 631 (1997) (citing various provisions of the Model Code of Professional Responsibility (1980)).
- Construction participants have learned first-hand that there is no single perfect ADR process. “Instead the rack of ADR ‘tools’ should be selectively applied to the needs and requirements of the parties in particular cases.” Hinchey & Schor (2002) examine the wide-array of dispute resolution processes available to construction lawyers. See Hinchey & Schor, The Quest for the Right Questions in the Construction Industry, supra note 1, at 10 (“the lessons learned over the past decade are that ADR cannot be monolithic in character.”)
- Moreover, participants in the construction industry appear to be particularly wary of using lawyers when they feel they don’t need to. Disputants in the construction industry have always sought out more efficient means of resolving their disputes – often at the direct expense of the litigator. Thomas J. Stipanowich, Beyond Arbitration: Innovation and Evolution in the United States Construction Industry, 31 Wake Forest L. Rev. 65, 68 (1996) (“In light of these realities, it is not surprising that the construction industry is experiencing a sea change in its approach to conflict. Indeed, no sector of American industry is more directly affected by current trends, and no sector has demonstrated more creative zeal in developing and utilizing alternatives to court.”). The perception that attorneys only get in the way of that efficiency is nothing new.
- As the number of cases that reach trial decrease – the so-called “vanishing trial” dilemma – lawyers are concerned that their ranks may be thinning. Recent data has shown that the percentage of civil cases reaching trial dropped from 4.3% in 1990 to 1.1% in 2010. Michael D. Gaffney, The Vanishing Trial Redux, Mediation and the Law of Unintended Consequences, 36 Wyo. Lawyer. No. 3 (June 2013). Given the complexity of construction disputes, and the cost that is associated with trying construction cases, it is likely the decrease in cases that reach trial is even more marked in the construction industry.
- “For nearly half a century, the American Arbitration Association (AAA) has set the standard for alternative dispute resolution (ADR) in the construction industry . . . A trusted partner in the construction industry, the AAA has been named as a provider of mediation and arbitration services in the AIA standard contracts for over 40 years.” Construction, American Arbitration Association, last accessed at http://www.adr.org/aaa/faces/aoe/cre/construction.
- See Stipanowich, Beyond Arbitration: Innovation and Evolution, supra note 11, at 68.
- Id. Disputes arising among the various contracting parties engaged on a construction project has a rich and extended history in the construction industry. This long history has brought the industry to the forefront of creating an experimenting with alternatives to litigation and arbitration. See also Philip L. Bruner, Rapid Resolution ADR, supra note 11 (“For well over a century, the American construction industry has promoted the nationwide use of nonjudicial dispute resolution methods capable of promptly and fairly resolving complex construction disputes.”).
- Informal ADR processes geared toward resolving issues quickly--particularly Dispute Resolution Boards, “partnering” agreements, and mediation--have worked well towards the aim of increasing dispute-related efficiency. International Construction Arbitration Handbook, Chapter 1. International Construction Arbitration – An Overview, Section II. International Construction Arbitration – An Assessment, § 1:27, advocating for a more “organic” form of dispute resolution that resolves disputes as they occur in order to further the goal of obtain efficient dispute resolution processes. “A more organic process is needed, where most disputes are resolved close in time to their origin by persons most knowledgeable about the circumstances.”
- “Throughout its history, true to the relational model, the construction industry has sought out mechanisms aimed at: (1) avoiding or minimizing relational conflict; (2) minimizing the temporal and financial costs of conflict resolution; (3) preserving the working relationship of the parties and ensuring continued performance pending resolution of controversies; and (4) bringing to bear the practical and technical insights of adjudicators and advisors from within the industry.” See Stipanowich, Beyond Arbitration: Innovation and Evolution, supra note 11, at 67.
- The emphasis in recent times is to downplay, insofar as it is possible, the role of the attorneys in job planning, job administration, and the resolution of disputes between industry participants. Decreasing the formalities of the dispute resolution process and keeping the dispute internal both minimize the lawyers role in the process. See Stipanowich, Reconstructing Construction Law, supra note 2, at 502.
- Legal fees are considered “overhead,” for construction participants and are particularly undesirable costs, especially in times of cost pressure or diminishing margins such as what occurred during the economic downturn in the Great Recession. Among other factors, ultimate cost to the client is a chief concern among proponents of reform of the legal system in which construction participants operate. See Stipanowich, Beyond Arbitration: Innovation and Evolution, supra note 11, at 176. “To most job participants, the first goal is to complete the contract in the shortest possible time and maximize profits. In such an environment, formal litigation is an anathema. The best solution is to minimize the root causes of conflict. If that fails, the next solution is to resolve conflict informally and face to face, if necessary with the help of third parties. As a final solution, the preference has been to refer the matters to one or more informed “insiders” for resolution-a sensible course since most disagreements tend to hinge on the quality or scope of performance, matters involving technical questions or applications of industry terms, norms, and standards.”
- Coping with inevitable litigation costs is an important part of being successful in a dispute-ridden industry. See Stipanowich, Reconstructing Construction Law, supra note 2, at 493. The effect was most pronounced among large firms, among specialty contractors (more likely to be subcontractors) and firms reporting high losses. See Id. at 21. Design professionals also spend many of their dollars (and days) with legal professionals. (citing statistics on defense-related and other legal costs for major design firms).
- Negative stereotypes often attach to being represented by an attorney in a dispute. Parties that “lawyer up” or assert “claims” can often be seen as hard to work with. See Judith Resnik, Many Doors? Closing Doors? Alternative Dispute Resolution And Adjudication, 10 Ohio St. J. on Disp. Resol., 211, 240—260 (1995) for a discussion on why use of ADR is more likely to maintain amiable working relationships than is litigation. Using ADR may be more congenial, more efficient, and more fair than litigation.
- There is a concern that attorneys will not prove helpful, even in ADR, because they may “focus on narrow monetary interests, may be overly argumentative, or may discourage the client from addressing opposing disputants directly.” Some jurisdictions have even prohibited attorneys from participating in certain forms of court-annexed ADR altogether. Jean R. Sternlight, Lawyerless Dispute Resolution: Rethinking A Paradigm, 37 Fordham Urb. L. J. 381, 391 (2010). Efforts have recent been made to refocus the lawyer’s mindset on collaborative problem solving and working as a consensus builder rather than merely “winning” the client’s case at any cost. See Carrie Menkel-Meadow, The Lawyer As Consensus Builder: Ethics For A New Practice, 70 Tenn. L. Rev. 63 (2002). However, the perception that an attorney as a mere “zealous advocate” and not a collaborative problem solver is precisely what dampens dispute resolution processes when an attorney is hired by one or both parties to a dispute.
- Litigation is thought to be the “last resort” in the mind of ADR minded academics. Litigation is reserved for those disputants that “have become involved in a conflict that they have not been able to resolve” themselves. Mary J. Mullarkey, ADR in Colorado: A Vision For Restoring Community, 28-JUN Colo. Law. 17 (1999).
- Moving quickly into an adversarial means of resolving the parties’ dispute can be destructive to the overall business relationship. John G. Cameron, Jr., A Construction Litigator's ADR Primer: Be Sure to Know Your Options, 21 Prac. Litigator 37 (July 2010). See also Edward Craig, ADR Client Strategies in the UK: Preparing The Client (And Your Case) In The ADR Process, 2008 WL 5662122 (2008) (“advance of protracted and hostile litigation may also make it easier to preserve a workable relationship.”). ADR processes, particularly mediation, are thought to be especially beneficial where “the parties wish to have an ongoing business relationship after the dispute has been resolved.” Id.
- For a description of how and why relational contracting works on construction projects see Barbara Colledge, Relational Contracting – Creating Value Beyond the Project, 2 Lean Construction Journal 30 (2005) last accessed online on 7/8/2013 at http://www.leanconstruction.org/media/docs/lcj/V2_N1/LCJ_05_002.pdf.
- The emergence of laws demanding use of ADR processes in particular cases is thought to be “directly related to the ever-growing public distaste for high costs and delays of litigation, the perception that current caseload increases will destroy access to justice, and the recognition that some disputes are simply not suited for adversarial adjudication.” Douglas H. Yarn & Gregory Todd Jones, Alternative Dispute Resolution: Practice And Procedure in Georgia, Ga. ADR Prac. & Proc. §15.3 (3rd ed. 2012). See also Stipanowich, Beyond Arbitration: Innovation and Evolution, supra note 11, at 68 (“This phenomenon is most likely a reaction to the curious dichotomy of modern society: while a more mobile populace and enhanced communications systems made the world a smaller place, the concurrent effect was a loss of community and connectedness. The web of personal relationships-familial, social, political, and commercial-which worked in favor of settling disputes has been largely displaced . . . While its wellsprings remain too diverse and its ranks too fragmented to identify this phenomenon as a movement, it is clearly an unprecedented proliferation of efforts-more wide-ranging, more systematic, and more urgent than any heretofore. Now, the pressure of recent legislative, judicial, and administrative developments and increasing awareness of the possibilities of other alternatives is encouraging unprecedented experimentation in the consensual arena. The common thread is the emphasis on avoiding litigation and, if possible, any proceeding in which the disputants' fate is in the hands of a third party. Rather, the goal is to help parties find their own solutions through mediation, minitrial, or other alternatives.” (emphasis added)).
- Empirical studies conducted in the late 1990’s by the American Board of Architects discovered a strong movement in the construction industry towards dispute resolution processes focused on keeping the dispute in the hands of the involved parties, and keeping disputes in forms of ADR that would ensure the lowest costs possible. See Stipanowich, Reconstructing Construction Law, supra note 2, at 498.
- See Stipanowich, Beyond Arbitration: Innovation and Evolution, supra note 11, at 74 (citing “informal adjudication by design professionals” and “binding arbitration” as the two traditional alternatives of resolving disputes in the construction industry).
- “For quick and informed determinations regarding questions of contract interpretation and related claims and controversies between owner and contractor, it was reasoned, the logical source of authority was the design professional responsible for drafting the drawings and specifications.” See Stipanowich, Beyond Arbitration: Innovation and Evolution, supra note 11, at 74.
- “The logic behind the architect being the initial decision-maker stems from the architect's intimate knowledge of the project and its design requirements, and from the architect's general involvement in construction-contract administration.” See Stipanowich, Beyond Arbitration: Innovation and Evolution, supra note 11, at 74.
- Many conflicts arise where parties intimately involved in the construction project are choosen to fulfill the role of a dispute neutral. For instance, there is a conflict between the “obligation to be fair and unbiased” under the AIA docs and fulfilling the role of acting as an owner’s agent. There is also a conflict inherent in remaining unbiased while at the same time protecting the Architect’s or Engineer’s self-interest.
- See Stipanowich, Beyond Arbitration: Innovation and Evolution, supra note 11, at 74-75 (“A major concern is the conflict of interest inherent in the design professional’s concurrent roles as agent and contractee of the owner.”).
- It is hard to imagine that a design professional would make the determination that his or her own company was entirely, or even partially, at fault in a dispute implicating the appropriateness of his design.
- The design professional could not be a truly objective party if his or her livelihood stood in the balance of the underlying dispute. See Stipanowich, Beyond Arbitration: Innovation and Evolution, supra note 11, at 74-75.
- A 1996 ABA study showed that while the design professional’s adjudicatory role was at least somewhat criticized, lawyers, design professionals and contractors still saw it employed in construction disputes on a regular basis. Despite its flaws, use of the process had not dwindled. Indeed, a majority of the professionals suggested that the process continue to be used, but also that the design professional’s determination should not be binding. See Stipanowich, Beyond Arbitration: Innovation and Evolution, supra note 11, at 74-75.
- See Stipanowich, Beyond Arbitration: Innovation and Evolution, supra note 11, at 75-76 (Since colonial times, the industry has referred disputes to private adjudication by panels of experts.,, To contractors and businesspersons, arbitration was (and remains) a latter-day court of chancery, holding out the promise of a different, and potentially superior, kind of justice.”).
- See Stipanowich, Beyond Arbitration: Innovation and Evolution, supra note 11, at 75.
- The American Institute of Architects (AIA) is a professional trade group based in Washington D.C. that has played a prominent role in the construction industry from its formation in 1857. The AIA serves as the “voice of the architecture profession” and commonly sets industry standards and best practices by publishing standard construction documents and contracts that are used throughout the construction industry. See The American Institute of Architects, About the AIA, (last accessed on 3.25.13) at http://www.aia.org/ about/index.htm. Recently, the AIA removed a mandatory binding arbitration clause from all of its standard contracts. This is indicative of the level of discontent in the construction industry with binding arbitration as a means of resolving construction disputes. See Philip L. Bruner, Rapid Resolution ADR, supra note 11, at 7-8 (“In 2007, construction industry dissatisfaction with “judicialized” arbitration reached a “boiling point”, and resulted in binding arbitration – for the first time in over 100 years – being stricken from standard construction industry contract forms as the industry’s contractually-mandated dispute resolution method.”).
- Litigation is typically the default option, but consensual early intervention rapid resolution ADR methods (e.g. partnering & DRBs) are quickly becoming the industry standard. See Philip L. Bruner, Rapid Resolution ADR, supra note 11.
- Binding arbitration is widely perceived as being almost identical to litigation, especially when it comes to cost. This resemblance has also been a major driving force behind the industry’s consistent focus on discovering new means of resolving construction related disputes such as mediation, the mini-trial, dispute resolution boards and partnering agreements. Gordon F. Bell, Resolving International Construction Disputes: Litigation or Arbitration?, Reed Smith LLP, accessed at http://www.reedsmith.com/Resolving-international-construction-disputes--litigation-or-arbitration-10-29-2012/ (“in the last ten years, arbitration has in many respects become so similar to litigation that ADR is now seen as the alternative to both litigation and arbitration”).
- John T. Blankenship, Isomorphism of Construction Arbitration: The Key to Its Prevention and Reversal, 65 Dis. Res. J. 114, 115 (May-October 2010). “Isomorphisim” has occurred as lawyers have seized control over the process of arbitration as construction arbitrators have abdicated the goal of speedy, cost-effective resolution in favor of litigation-type due process.
- See Dr. Penny Brooker & Professor Anthony Lavers, Mediation Outcomes: Lawyers' Experience with Commercial and Construction Mediation in the United Kingdom, 5 Pepp. Dis. Res. L.J. 161, 213 (2005) (citing J. Flood & A. Caiger, Lawyers and Arbitration: The Juridification of Construction Disputes, 56 MOD. L. REV. 412 at 412-414 (1993)); see also Mark Friedlander, Arbitrator-Directed Arbitration: ADR with A Samurai Arbitrator, 6 1 J. of the Am. Coll. of Constr. Lawyers 5.
- See generally Friedlander, Arbitrator-Directed Arbitration: ADR with A Samurai Arbitrator, supra note 38; see also Stipanowich, Beyond Arbitration: Innovation and Evolution, supra note 11, at 77 (unfortunately “arbitration procedures must borrow certain features of civil litigation. This includes, among other things, more extensive discovery, multiparty practice, awards of attorney's fees, and written opinions accompanying awards . . . making arbitration more like litigation will sacrifice the essential virtues of the process-such as economy, efficiency, and finality of judgment.”).
- See Stipanowich, Beyond Arbitration: Innovation and Evolution, supra note 11, at 78.
- See Hinchey & Schor, The Quest for the Right Questions in the Construction Industry, supra note 1, at 10.
- See Hinchey & Schor, The Quest for the Right Questions in the Construction Industry, supra note 1, at 10. It is preferable to resolve construction contract disputes as early as possible, before positions harden, costs mount, and conflict poisons the job environment. Moreover, parties are better off directing mutual efforts toward developing integrative solutions as opposed to defending positions and competing for tactical advantage. See Stipanowich, Beyond Arbitration: Innovation and Evolution, supra note 11, at 80-81.
- See Philip L. Bruner, Rapid Resolution ADR, supra note 11, at 12.
- See Hinchey & Schor, The Quest for the Right Questions in the Construction Industry, supra note 1, at 10.
- See Hinchey & Schor, The Quest for the Right Questions in the Construction Industry, supra note 1, at 10 (ADR cannot be monolithic in character … there is no single perfect process.”).
- See Hinchey & Schor, The Quest for the Right Questions in the Construction Industry, supra note 1, at 10. “Increasingly these efforts seek the same end: creative, flexible responsiveness to conflict within contractual relationships. In the end, however, they are all limited by their ability to tailor the process to the individual dispute; this is the natural result of the practice of designing processes ab initio, at the time of contracting and prior to the emanation of contract-related claims or controversies.” See Stipanowich, Beyond Arbitration: Innovation and Evolution, supra note 11, at 182.
- See generally Stipanowich, Beyond Arbitration: Innovation and Evolution, supra note 11.
- See Hinchey & Schor, The Quest for the Right Questions in the Construction Industry, supra note 1, at 12.
- This is not to say that binding arbitration will be entirely replaced by more novel forms of ADR. As Stipanowich (1996) argued, binding arbitration is still an efficient means of resolving disputes, especially where the amount of controversy is less than a few hundred thousand dollars, because arbitration before a competent tribunal is very likely to result in less costly, more timely, and more informed decisions than would a trial before a judge or jury. See Stipanowich, Reconstructing Construction Law, supra note 2, at 565.
- The ten most widely used construction industry ADR methods are: (1) Informal Discussion/Partnering: The “Hot Tub” Method; (2) Structured Negotiations; (3) Standing Project Neutral; (4) The “Initial Decision Maker; (5) Standing Dispute Review Board; (6) Expert Determination; (7) Mediation; (8) Adjudication; (9) Mini-trials/Mini-Arbitrations; and (10) Arbitration. See Philip L. Bruner, Rapid Resolution ADR, supra note 11, at 14-22.
- Resolving disputes close in time allows parties to resolve disputes quickly and maintain good working relationships with minimal disruption to the project schedule. See John G. Cameron, Jr., A Construction Litigator's Adr Primer Be Sure to Know Your Options, 21 Prac. Litigator 37 (July 2010); see also Stipanowich, Beyond Arbitration: Innovation and Evolution, supra note 11, at 80-81 (“it appeared that an overly adversarial focus might only exacerbate the problem. It is preferable to resolve construction contract disputes as early as possible, before positions harden, costs mount, and conflict poisons the job environment. Moreover, parties are better off directing mutual efforts toward developing integrative solutions as opposed to defending positions and competing for tactical advantage.” (emphasis added)).
- See John G. Cameron, Jr., A Construction Litigator's ADR Primer, supra note 50, at 59-64.
- For example, see American Arbitration Association, Construction Dispute Avoidance and Resolution Services: Conflict Management Solutions for Major Projects, (2013) accessed at http://www.google.com/url?sa=t&rct=j&q=construction%20disputes&source=web&cd=9&ved=0CF8QFjAI&url=http%3A%2F%2Fwww.adr.org%2Fcs%2Fidcplg%3FIdcService%3DGET_FILE%26dDocName%3DADRSTG_010807%26RevisionSelectionMethod%3DLatestReleased&ei=fX5YUYqLN4HM0wH7nYHwDA&usg=AFQjCNEx2ttTV4kkLwFBaLTRhF_6boq65Q&sig2=IhT0_jbVb4WDPjprgxvwhw&bvm=bv.44442042,d.dmQ (AAA pamphlet describing provided services in Partnering, Initial Decision Maker (IDM), Dispute Resolution Board (DRB), and Project Neutral ADR mechanisms).
- Taken from an empirical study of survey data collected from UK construction law practitioners, which analyzed over 1,136 construction-related cases, “[t]here appear to be three key stages at which the parties undertook mediation under their own initiative: during the exchange of pleadings; during or as a result of disclosure; and shortly before trial.” Nicholas Gould & Claire King, et. al., The Use of Mediation in Construction Disputes: Summary Report of Final Results, last accessed at http://www.citydisputespanel.org/media/downloads/Mediation-in-Construction-Disput.pdf. Experience suggests that almost all substantial construction-related disputes enter mediation in at least one of these stages.
- See Stipanowich, Reconstructing Construction Law, supra note 2, at 567.
- Colleen A. Libbey, Working Together While “Waltzing In A Mine Field”: Successful Government Construction Contract Dispute Resolution With Partnering and Dispute Review Boards, 15 Ohio St. J. on Disp. Resol. 825, 835-837 (2000) (partnering is not a dispute resolution procedure per se, rather, it is a dispute prevention process).
- See Colleen A. Libbey, Working Together While “Waltzing In A Mine Field”, supra note 54, at 835-837.
- Collen Libbey (2000) asserts that using Dispute Resolution Boards is the “best way to resolve government construction disputes as they arise if the parties are unable to resolve the dispute informally” because the process is both fast and efficient. See Colleen A. Libbey, Working Together While “Waltzing In A Mine Field”, supra note 54, at 837.
- U.S. Department of Transportation Federal Highway Administration, Construction and Maintenance Fact Sheets, Dispute Review Boards: Resolving Construction Conflicts, (December 2001) access at http://www.fhwa.dot.gov/ construction/fs02009.cfm
- See infra footnote 76.
- Another particularly successful ADR process in the construction industry is mediation. Where parties wish to have an ongoing business relationship after the dispute, mediation is a particularly useful ADR mechanism because it can be both speedy and cost-effective while allowing the parties themselves to get involved and exercise control in the process. Mediation usually encompasses a bit more attorney involvement than Partnering or DRBs. See generally Craig, ADR Client Strategies in the UK, supra note 25.
- See generally Stipanowich, Beyond Arbitration: Innovation and Evolution, supra note 11.
- See John G. Cameron, Jr., A Construction Litigator's ADR Primer, supra note 50, at 59. “Construction contracting exists in a largely adversarial atmosphere where collective needs and interests are either subordinated to individual needs or ignored entirely. The result? Closed lines of communication, mistrust and escalating disputes.” See Colleen A. Libbey, Working Together While “Waltzing In A Mine Field”, supra note 54, at 835.
- See Philip L. Bruner, Rapid Resolution ADR, supra note 11, at 13.
- See Stipanowich, Reconstructing Construction Law, supra note 2, at 562 (stressing the importance of the bargaining and exchange process in relational contracting).
- See Stipanowich, Reconstructing Construction Law, supra note 2, at 562.
- The “surprise” is perhaps limited by the fact that construction industry participants have been involved in disputes of this nature for centuries. Putting the dispute in the hands of the party, or ensuring planning for disputes that are sure to happen down the road, seems like an obvious solution when we think of how successful the construction industry has been, historically speaking.
- “97 percent of construction disputes using DRBs were settled without proceeding to litigation. These disputes involved 757 projects and $39.5 billion.” See U.S. Department of Transportation Federal Highway Administration, Construction and Maintenance Fact Sheets, supra note 57.
- See Dr. Penny Brooker & Professor Anthony Lavers, Mediation Outcomes: Lawyers' Experience with Commercial and Construction Mediation in the United Kingdom, 5 Pepp. Dis. Res. L.J. 161, 213 (2005); see also Mark Friedlander, Arbitrator-Directed Arbitration: ADR with A Samurai Arbitrator, 6 1 J. of the Am. Coll. of Constr. Lawyers 5 (stressing the importance of keeping costs low for clients and doing so by seeking out effective and efficient means of resolving disputes).
- See Stipanowich, Reconstructing Construction Law, supra note 2, at 563; See also Friedlander, Arbitrator-Directed Arbitration: ADR with A Samurai Arbitrator, supra note 38 (discussing problems with binding arbitration in the construction industry and suggesting a novel form of arbitration in which the arbitrator directs disputant’s presentations in an aim to decrease the inefficiencies that often accompany traditional arbitration).
- “More and more, attorneys are confronted with the reality that the alternative to consensus-based out-of-court dispute resolution may be an alternative process mandated by a court or agency.” See Stipanowich, Beyond Arbitration: Innovation and Evolution, supra note 11, at 80-81. See Philip L. Bruner, Rapid Resolution ADR, supra note 11, at 13 (quoting the advice of U.S. Supreme Court Chief Justice Warren E. Burger offered to the American legal profession in 1985: “My overview of the work of the courts from a dozen years on the Court of Appeals and now sixteen in my present position, added to twenty years of private practice, has given me some new perspectives on the problems of arbitration. One thing an appellate judge learns very quickly is that a large part of all litigation in the courts is an exercise in futility and frustration. A large proportion of civil disputes in the courts could be disposed of more satisfactorily in some other way... My own experience persuades me that in terms of cost, time and human wear and tear, arbitration [and all ADR] is vastly better than conventional litigation for many kinds of cases.”).
- Focused primarily on developing mechanisms to resolve construction disputes in a quick and informal manner, the ADR processes of “partnering” or Dispute Resolution Boards (if we make the leap of considering these forms of dispute prevention as ADR mechanisms) entirely remove the lawyer from the dispute resolution process.
- See Stipanowich, Reconstructing Construction Law, supra note 2, at 570 (“after decades of expansion, the construction lawyers ranks may be thinning”).
- See Stipanowich, Reconstructing Construction Law, supra note 2, at 493 (“A growing number of attorneys, tired of being perceived as ‘part of the problem,’ are accepting the necessity for change.”).
- See Carrie J. Menkel-Meadow, When Winning Isn’t Everything: The Lawyer as Problem Solver, 28 Hofstra L. Rev. 905, 909-910 (“Imagine that in addition to the commonly "briefed" questions students pose today in the "IRAC" mode (issue, ruling/reasons, analysis/arguments, conclusions), we also considered the following questions: 1. What brings these parties/clients to a lawyer? What are they trying to accomplish? 2. What are their underlying needs or interests (as they experience them)? As the lawyer will translate them or frame them as "legal problems?" 3. What are the likely/possible needs/interests/concerns of the other parties involved in the matter/case or transaction? (Of the adversaries or third parties affected by the matter?) 4. What is really at stake in the dispute or transaction? (What is the "res" of the dispute--scarce commodities, divisible items (money), reputation, on-going business relations, legal principles, harms or hurts not easily compensable by our legal system?) 5. What are the legal, social, economic, political, psychological, moral, ethical and organizational issues, benefits, and risks implicated in the matter? 6. How might the process chosen to resolve these issues affect them? 7. How will or do the parties feel about the resolutions/solutions/outcomes that are produced? 8. What outcomes are produced by what processes?”).
- See generally Philip L. Bruner, Rapid Resolution ADR, supra note 11.
- See Philip L. Bruner, Rapid Resolution ADR, supra note 11, at 6-7 (“ most projects are unique, built to a unique design, on a unique site, by a unique aggregation of companies, operating without economies of scale in an uncontrolled environment, where productivity is affected by weather, geology, local labor skills and availability, local building codes, and site accessibility.”).
- See Philip L. Bruner, Rapid Resolution ADR, supra note 11, at 7.
- See Philip L. Bruner, Rapid Resolution ADR, supra note 11, at 7; see also Stipanowich, Beyond Arbitration: Innovation and Evolution, supra note 11, at 72 (“The web of relationships that make up this network are uniquely amenable to out-of-court approaches to dispute resolution. A critical path extending over months or years, the interaction of hundreds, perhaps thousands, of people and products, and the vagaries of climate, weather, site conditions, and other contingencies make conflict inevitable and constructive methods for dealing with conflict a necessity.”).
- See Stipanowich, Beyond Arbitration: Innovation and Evolution, supra note 11, at 72 (“the first goal is to complete the contract in the shortest possible time and maximize profits.”).
- See Philip L. Bruner, Rapid Resolution ADR, supra note 11, at 7.
- See Hinchey & Schor, The Quest for the Right Questions in the Construction Industry, supra note 1, at 10; see also Morse/Diesel, Inc. v. Trinity Indus., Inc.,67 F. 3d 435,437 (2d Cir 1995) (observing that “major construction projects generate major litigation” and “the management of either is perilous”).
- See Stipanowich, Beyond Arbitration: Innovation and Evolution, supra note 11, at 72 (“Contemporary industry trends have only enhanced the potential for conflict. Since World War II the industry has moved from a scenario in which work was carried on by a single contractor who employed nearly all tradesmen to a position in which more than 90% of the work is performed by specialty contractors. In addition, there has been a dramatic increase in the use of alternative project delivery systems such as design-build and “CM” (construction management)-facilitated jobs.”).
- See Philip L. Bruner, Rapid Resolution ADR, supra note 11, at 7.
- See Philip L. Bruner, Rapid Resolution ADR, supra note 11, at 7 (“Construction law addresses the complex web of legal relationships between and among the multitude of parties involved in the construction project – owners, architects, engineers, contractors, sub-contractors, material suppliers, sureties, insurers, lenders, code officials. Those specialized relationships in turn invoke a multitude of legal rights and remedies arising out of common disputes, such as (1) express and implied contractual relationships invoking implied “contextual” rights and duties, (2) tort relationships in the absence of contractual privity, (3) equitable principles governing surety subrogation and indemnification rights and contractor quantum meruit recoveries, (4) statutory rights and obligations created by statues governing mechanics liens, claims against surety bonds, sales of goods under the Uniform Commercial Code, and awards of public contracts, (5) public duties created by building codes, licensing laws and health and safety laws, (6) common law principles unique to construction, such as those addressing design errors, implied obligations and impacts of time involving project delay, suspension, acceleration and disruption, and (7) specialized damage concepts unique to construction, such as the doctrines of substantial performance, economic waste, betterment, total cost, and other approaches to damage measurement that recognize construction’s imperfect world.”); see also Stipanowich, Beyond Arbitration: Innovation and Evolution, supra note 11, at 72 (“The web of relationships that make up this network are uniquely amenable to out-of-court approaches to dispute resolution. A critical path extending over months or years, the interaction of hundreds, perhaps thousands, of people and products, and the vagaries of climate, weather, site conditions, and other contingencies make conflict inevitable and constructive methods for dealing with conflict a necessity.”).
- See Philip L. Bruner, Rapid Resolution ADR, supra note 11, at 7.
- Construction companies factor into profit margins the potential for litigation, and success in the industry is often looked on as a product of successful navigation through rounds of litigation.
- See Stipanowich, Beyond Arbitration: Innovation and Evolution, supra note 11, at 73 (“These formal structures, however, have proven inadequate to address the uncertainties built into the process, particularly as budget and time constraints on designers make it more likely that details of the design will be omitted38 and contracting becomes, more than ever, an act of faith. Even under the best of circumstances, competing interests and experiential, educational, and perceptual distinctions among various actors make interpretational questions inevitable. In many minds the increasing emphasis on legal consequences reflected in industry contracts have underlined these divergences and further undermined the relationships among owners, design professionals, contractors, and other members of the building team.”).
- See Stipanowich, Beyond Arbitration: Innovation and Evolution, supra note 11, at 73.
- See Philip L. Bruner, Rapid Resolution ADR, supra note 11, at 7-8.
- Id. at 8.
- See generally Carrie Menkel-Meadow, The Lawyer As Consensus Builder, supra note 10 (discussing the evolving role of an attorney, emphasizing the need for new ethical standards in an ever-evolving profession).
- See Carrie Menkel-Meadow, The Lawyer As Consensus Builder, supra note 10, at 401-404 (discussing the lawyer’s contributions to an ADR process beyond knowledge and skills).
- “Lawyers who serve, not as neutrals, but as representatives of parties in such processes will also have to learn new skills and bodies of knowledge to serve as ‘representatives’ who are not only adversarial advocates, but also wise counselors and problems solvers in processes that call for different kinds of participation in creative thinking, communication facilitation, coordination with clients and others, and jont problem solving with others.” See Carrie Menkel-Meadow, The Lawyer As Consensus Builder, supra note 10, at 83-84.
- See Carrie Menkel-Meadow, The Silences of the Restatement of the Law Governing Lawyers, supra note 11, at 635 (citing various provisions of the Model Code of Professional Responsibility (1980)).
- See Mullarkey, ADR in Colorado: A Vision For Restoring Community, supra note 24, at 18.
- “Consensus building” is a process by which the lawyer acts to facilitate a agreement acceptable to all parties rather than attempts to maximize merely the clients own individual interests. This is done through developing fair procedures designed to make the client’s heard and enabling the client to “hear the other side.” See generally Carrie Menkel-Meadow, The Lawyer As Consensus Builder, supra note 11.
- See Mullarkey, ADR in Colorado: A Vision For Restoring Community, supra note 24, at 18.
- See John Lande & Jean R. Sternlight, Symposium 2009, Teaching and Technology: Teaching ADR and the Future of Dispute System Design, The Potential Contribution of ADR to an Integrated Curriculum: Preparing Law Students for Real World Lawyering, 25 Ohio. St. J. on Disp. Resol. 247, 252 (2010).
- “With electronic discovery consultant fees starting at $275 an hour, and costs of collecting, reviewing and producing a single e-mail running between $2.70 and $4, experts in this market estimate that in 2007, litigants will spend more than $2.4 billion on electronic discovery services, with no end in sight to this growth.” Ann G. Fort, Rising Costs of E-Discovery Requirements Impacting Litigatings, Atkinson Baker Report, last accessed at http://www.depo.com/resources/aa_thediscoveryupdate/rising_costs_ediscovery.html.
- Milberg LLP and Hausfeld LLP, E-Discovery Today: The Fault Lies Not in Our Rules, 2011 Fed. Cts. L. Rev. 1, 3-4 (2011) (“To be sure, discovery can be expensive and time consuming, and the fact that well over 90% of all information is now created and stored electronically is a factor in the expense and complexity of discovery in modern litigation. But the critics have it wrong :e-discovery is not the problem. One cannot simply ignore that most records are electronic, and therefore blame that fact for most of the perceived ills in our discovery system. And similarly, one cannot blame the 2006 rule amendments for recognizing that fact, and for addressing, head-on, issues that will not go away. Rather, attorneys and judges--many of whom admittedly face a steep learning curve--have to throw out the paper playbook and adapt to the digital world in which we live. Boxes are out, gigabytes are in. Highlighters are out, tagging is in. Making dozens of paper duplicates is out, linguistically analyzing email communication is in. Paper solutions will not solve electronic problems. We must use technology to review technology. We must eclipse our proto-digital past, and embrace the reality that discovery is just different now.”).
- Instead of a good litigator, the construction attorney should aspire to be an adept “conflict manager.” See Michael T. Colaterlla Jr., A “Lawyer for All Seasons”: The Lawyer as Conflict Manager, 49 San Diego L. Rev. 93, 96 (“In today's competitive environment, all lawyers would be well advised to develop skills not only in handling litigation but also in assisting clients in preventing, or at least minimizing, unproductive conflicts that may lead to litigation. "Winning" lawsuits and knowing how to keep litigation costs low are only part of good lawyering because clients understand that even successful, well-managed litigation is too frequently a losing endeavor. In the future, lawyers who are able to assist clients in managing their activities more wisely to reduce the incidence of conflict, as well as deftly handle conflicts once they arise, including litigation, will be well positioned to become leaders in their profession as this new era continues to advance. In short, a lawyer must be a conflict manager.”).
- There is a wide body of literature discussing the deficiencies of a law school education with respect to the type of skill-set attorneys need to have before becoming proficient in the art of lawyering. For one perspective on the issue, see Lande & Sternlight, The Potential Contribution of ADR to an Integrated Curriculum: Preparing Law Students for Real World Lawyering, supra note 104, in which the authors criticize law school for poorly coordinating doctrinal, litigation, transactional, and ADR skills and urge greater coordination between the faculty in charge of each department in order to create more well-rounded law students.
- “Collaborative lawyering” is discussed at some length in Zachery Annable, Beyond the Thunderdome – The Search For a New Paradigm of Modern Dispute Resolution: The Advent of Collaborative Lawyering and its Conformity With The Model Rules of Professional Conduct, 29 J. Legal. Prof. 157 (2004). “[C]ollaborative lawyering essentially ‘consists of a team approach to creative problem solving that encompasses elements such as open and honest communication, cooperation, good faith, and willingness to listen.” Id. (citing Kimberlee K. Kovach, New Wine Requires New Wineskins: Transforming Lawyer Ethics for Effective Represenation in a Non-Adversarial Approach to Problem Solving: Mediation, 28 Fordham Urb. L. J. 935, 975 (2001)).
- “By clarifying our purposes and aspirational values, by applying these aspirational principals to actual dilemmas of practice, and by committing ourselves to develop standards for responsible exercise of various skills, we may not only make “new professions” (when our old and conventional ones fail to adapt adequately to change within honored traditions) that link several professional domains, but we can make the practice of our work both more individually fulfilling and social welfare enhancing.” Carrie Menkel-Meadow, The Lawyer As Consensus Builder, supra note 11, at 112.
- The construction attorney should be focused on being a problem solver rather than part of the problem. Andrea Kupfer Schneider, Shattering Negotiation Myths: Empirical Evidence on the Effectiveness of Negotiation Style, 7 Harv. Negotiation L. Rev. 143, 163-164 (2002) (“The problem-solving adjectives encompass several different elements of behavior. The problem-solving negotiator is upstanding (ethical and trustworthy), pleasant (personable, agreeable, sociable) and interested in the other side (fair-minded, communicative, perceptive, helpful). The problem-solver is also flexible (accommodating, adaptable) and prepared (experienced, rational, confident, realistic, astute, poised). The adversarial adjectives stand in strong contrast. The adversarial negotiator is inflexible (stubborn, assertive, demanding, firm, tough, forceful) and self-centered (headstrong, arrogant, egotistical). This negotiator likes to fight (irritating, argumentative, quarrelsome, hostile) and the method of fighting is suspect (suspicious, manipulative, evasive). Only two adjectives appear completely positive - confident and experienced - and these are the only two adjectives also  ascribed to problem-solving negotiators. Thus, two very different approaches to negotiation appear from the descriptors alone.”).