White Paper

General Contractors (and their Subs) Beware – Lesson Learned in Private Arbitration


Typically, in a cost-plus compensation model, an owner pays a general contractor for all of its allowed costs, and an additional percentage for profit.

Within those costs, there are usually insurance costs and subcontractor costs. Subcontractor costs also often include insurance costs, whether the subcontractor provides that level of detail in their billing or not. At the time of the billing, no one disputes that these are valid costs under the cost-plus contract. However, general contractors and subcontractors may be vulnerable to claims from project owners when those contractors utilize some form of self-insurance or large-deductible insurance coverage on a cost-plus contract project.



Justin L. Carley

Snell & Wilmer L.L.P.

Justin L. Carley is a Partner at Snell & Wilmer. Mr. Carley's practice is concentrated in commercial litigation with an emphasis on contract disputes that are typically related to construction, property ownership/tenancy, entity control, business conflicts and a variety of other topics. His practice is diverse, but frequently involves litigating over construction contracts, real property sales and leases, other business asset transfers of various types and investments gone wrong. This often involves hostile take-overs and internal shareholder or other ownership disputes. Justin is experienced in federal and state litigation, AAA and other private arbitration and a variety of forms of mediation and alternative dispute resolution. His experience includes prosecuting and defending actions seeking monetary damages, injunctive relief, declaratory relief, appointment of receivers, deficiency judgments and other remedies, both before and after judgment and including appeal.

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