Stay out of court Featured

7:00pm EDT February 24, 2008

Before any business or company hires another entity to build something for it, great pains are taken to spell out what is expected from each side and what the rights are of all the parties involved. Yet, despite contracts that are drawn up and signed before any work begins, oftentimes those parties will find themselves in court, battling over negligence or a perceived breach of contract.

“Although there certainly are statutes and regulations that apply to various aspects of design and construction, the rights of the parties are also defined in the contracts that they sign,” says Richard R. Hardcastle III, an officer for Greensfelder, Hemker & Gale, P.C. in St. Louis.

The law firm won the longest civil jury trial in the history of St. Louis County when it defended the Cross County Collaborative against Metro, the bus and light rail agency, in an $81 million civil damage suit.

“Disagreements over the meaning of those contracts can lead to litigation,” he says.

Smart Business asked Hardcastle what parties on either side of the equation can do to avoid having to go to court.

What steps can both parties take to reduce the chances of ending up in court?

The first step to avoiding litigation is a thorough review of the contract so that our clients know where they stand going into the project. Almost all construction litigation is based on either a claim that somebody breached the contract or a claim of negligence. A big part of our construction practice is devoted to helping our clients avoid the time and expense of litigation. The best way to do that is to work with them upfront with contract reviews, where you can help the clients identify and, perhaps, shift some of the contractual risks or point out problematic or unfair clauses, things of that nature.

Once the client enters into the contract, the next step to avoiding litigation is to have a hands-on working relationship with the client. We stay advised and abreast of all issues as they arise and resolve those issues as the construction or design is proceeding, rather than letting them pile up until the end when there is a greater risk of a blow up. If you tackle the smaller issues as you go instead of waiting for them to accumulate you have a much better chance of avoiding litigation.

While in the process of tackling those small issues you’re also helping the client document their position, making sure they are following their contractual obligations to the letter so that at the end of the job, if it looks like litigation is on the horizon, your client is in the best possible legal position. And frankly, if the other side has not done the same, oftentimes, just by being prepared you can avoid litigation by showing the other side it’s going to be a losing proposition for them going forward.

Sometimes, however, litigation is simply unavoidable; it’s the type of society we live in. When that happens your clients want to be sure they have lawyers who understand the business and the nuances of construction law and who know how to present or defend a claim. One of our strengths is we have a large department of people experienced in construction law who know the law, the business and how to present a case.

With so much spelled out in the contract, what could be left to fight about?

What’s often left are the nuances: What does this word mean or that clause mean in this context? Or, this clause seems to contradict that clause. Believe me, there’s no shortage of things to end up arguing about. The more clearly you can state the obligations in the contract, the less opportunity there is for litigation down the road.

How can a company best cover its clients’ interests?

A couple of ways. We think that a contract that is reasonable, clear and well written is the best service that we can provide for our clients. We also counsel our clients to consult with their lawyer as the project progresses so that simple things like notice letters and things of that nature are not overlooked. There is nothing more discouraging for a client to hear that they may have waived a legitimate claim by having failed to provide the requisite notice or meet the applicable deadline. We help make sure that never happens.

RICHARD R. HARDCASTLE III is an officer for Greensfelder, Hemker & Gale, P.C. in St. Louis. Reach him at (314) 516-2675 or rrh@greensfelder.com.