7 Critical Mistakes Engineers and Architects Make During Project Negotiation and Execution: Mistake #3

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May 30, 2017
Author: Melissa Brumback

Author: Melissa Dewey Brumback is an AV-rated partner in the Raleigh, North Carolina law firm of Ragsdale Liggett, where she concentrates her practice on complex construction, commercial, and business litigation. For more information: https://constructionlawnc.com/contact-information/

Mistake #3 Not Choosing The Proper Dispute Resolution Method

Generally, there are a few distinct options if you do need to fight about a construction dispute:  arbitration or trial.  The arbitration can be voluntary, or it can be mandatory.  The trial can be a bench trial or a jury trial.  Which is best?  Ask 10 lawyers and you will get 11 opinions.  This is something you should discuss with your lawyer prior to signing on the dotted line.   

The default is litigation before a jury.  However, many standard forms default to arbitration, usually American Arbitration Association (AAA)
arbitration.  There are pros and cons to both, depending on where the case would be heard, the amount of damages in dispute, and how, whether, or not, the underlying claim is complex.

Many lawyers are reluctant to trust a jury with a construction case, although the vast majority of such cases do settle prior to ever getting to a jury because the stakes are so high.  However, juries generally take their job very seriously and can often be a good dispute resolution method, depending on the facts and the venue.   

If you decide to forego a trial and contract for arbitration, you must decide whether it will be private arbitration or arbitration through one of the major arbitration organizations (e.g., the AAA).   If you opt for private arbitration, you also need to decide whether it will be single or three-panel arbitration.  A single arbitrator is usually faster and definitely cheaper; however, you run a greater risk of unintentionally using a poor arbitrator.  

In a three-person panel, even if one is poor, there usually are fail-safes represented
by the other two panel members.

These discussions are not easy, and there is no one-size-fits-all solution.  Still, the main mistake made here is in not thinking about the dispute method up front.  What may be the preferred method in one type of project may not be best for a different type of project.  Do not just assume the default; have the discussion up front.

Mistake #1 Not Treating The Contract Seriously
Mistake #2 Allowing Unfair Or One-Sided Contract Terms To Persist
Mistake #3 Not Choosing The Proper Dispute Resolution Method
Mistake #4 Failing To Have Good Change Order and/or Failing to Have a Good Request for Information Processes
Mistake #5 Failing To Have A Quality Document Retention System
Mistake #6 Failing To Respond Properly To Claims Of Errors & Omission
Mistake #7 Failing To Involve Insurance Company & Lawyer At First Time Of Trouble

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