FEATURE ARTICLE
The Cost When Things Go Wrong...
Nowadays, it seems like people are unwilling to take
responsibility for their own mistakes. For example,
recently the Ohio Department of Transportation oversaw
the re-construction of the West Third Street Lift
Bridge, spanning the width of the Cuyahoga River in
Cleveland. It was a $20 million dollar project that was
to culminate with the late winter installation of a
2.1-million-pound bridge deck that had to be floated up
the river, pushed by two tugboats normally accustomed to
guiding iron ore carriers to the steel mills upriver.
With the road already closed due to the bridge
reconstruction, and with the United States Coast Guard
on hand to close the river to traffic, the 217-foot deck
was put into position with assistance of cranes and the
64 cables that would lift the bridge for decades to come
were attached to the counterweights on the 130-foot
towers on either bank of the river.
The installation was just about complete when it was
realized that all the cables were three feet too short.
This was a problem.
With ships stacked up waiting for clear passage, the
Coast Guard anxious to re-open the river and motorists
tired of lengthy detours around the river that bisects
Cleveland, it began: the finger pointing. Practically
everyone involved in the project blamed someone else for
this mistake. The project was delayed for months and the
costs have yet to be totaled. Lawsuits will, no doubt,
be filed.
All too often, litigation is the finale of a
construction project. Everyone who has ever been
involved in construction knows that no project ever ends
up exactly as it was intended or planned. Unforeseen
circumstances occur. Design changes are made. In the
vernacular of the jobsite, stuff happens. How people
react to the bumps in road is not only a true test of
professionalism, but is frequently the best barometer of
profitability.
Litigation can be (and often is) expensive,
time-consuming and unsatisfying. If the parties involved
fail to listen to each other and fail to focus on the
details of the project, they can expect a long and
costly trip to the courtroom.
Let the litigation process begin
When a lawsuit is filed, either on behalf of an
owner/developer or a contractor, the ability to control
the destiny of the dispute is automatically withdrawn
from the parties’ hands and placed in the hands of
high-priced lawyers and overburdened judges.
The first issues fought over by the parties usually
pertain to jurisdiction issues. Is the case in the right
court? The right state, even? Is there a mandatory
arbitration clause in the contract? Have the parties
waived it? What if one party wants to waive it and the
others do not? Often times, this wrangling can take
months to work through. If the case gets routed to
mandatory arbitration, it can take even longer as the
parties will now have to go through the process of
selecting the arbitration panel. A year could elapse
before the case could proceed.
Once the initial issues are resolved, discovery occurs.
The discovery process involves the exchange of
information between the parties. Often times, documents
are the first items exchanged. This usually means all
the job files, bids, contracts, letters and the like. It
also means electronic material as well, including
e-mails, Web sites, online programs such as project
networks, and hard drives. This is also known as
e-discovery. If the stakes are big enough, parties will
want to obtain exact copies (called images) of all the
hard drives, servers and back-up tapes used by the other
parties.
The reason for this is to look for incriminating data,
the 21st century’s version of the smoking
gun. Because computers do not actually remove data files
from the hard drives when deletion occurs, outside
vendors are hired by high-priced lawyers who can
reconstruct or reclaim files deleted long ago. Often
times, fairly damaging evidence exists in those deleted
files. This process is not inexpensive (it costs about
$4,000 to thoroughly examine just one hard drive – then
multiply that by the number of computers on the
project), but it can recover some very useful
information. Of course, there are additional costs
involved in having the lawyers review and interpret the
wealth of information obtained during e-discovery.
After documents are exchanged, depositions typically
occur. These require intensive preparation for the
lawyers who must synthesize all the information obtained
to date and use it in a manner that is most advantageous
to their respective clients. It also involves a loss of
productivity for the clients as their employees are
taken out of the office or off the jobsite to sit and
discuss the case, over and over, with the lawyers –
either in preparation for the deposition or in the
deposition itself.
At this juncture in the process, experts usually come
into play. Because no jury could be expected to
understand the intricacies of the construction industry
and most judges do not have the time to become experts,
it falls upon a party’s expert witnesses to explain, in
layman’s terms, why a particular party is right in its
position. Expect to require the services of multiple
experts to address multiple areas of expertise. Some
attorneys will even insist on redundant experts (two or
more experts on one particular subject) to prevent
against problems if one expert does a poor job or is
prohibited from testifying by the court.
What has not been addressed yet is what happens when
problems occur in the process. Just as in construction,
no litigation ever goes as planned and, inevitably, one
party or one set of attorneys will do something that
throws a wrench in the works. This usually involves
arguing over what documents should or should not be
produced in discovery, or just how difficult (or,
conversely, cooperative) the parties will make the
e-discovery process.
Going to court is like walking through a wall of
molasses
Just because you’ve reached the steps of the courthouse
(or arbitration hearing room) does not mean the lawsuit
will get any easier. In courts across the country, your
case will be sandwiched in between the other business
that is on the court’s calendar, including pre-trials,
hearings, pleas and sentencings. In fact, in most
states, criminal cases take priority over civil cases,
regardless of how old or complex they may be. If your
case is slotted behind the petty thief who is demanding
his day in court, your case will end up getting bumped
back, either by days, weeks or months. This will happen
irrespective of the preparation and cost put in, the
travel schedules of your witnesses or the demands of
your routine business. Even if your trial starts, rare
is the court that is able to devote more than four or
five hours of attention to it on a daily basis. The
balance of the day is devoted to the other matters the
court is handling at the same time.
Construction is too important to be left to the lawyers
Sometimes, litigation is inevitable. Often times,
though, it can be avoided. Before accepting the amount
of time and money that comes along with litigation –
such as jurisdiction issues, loss of business, the
discovery process and the court system – it’s best for
those involved in the construction process to be
proactive.
The best tool for litigation avoidance is communication.
All too often, on a job site, too little is left unsaid,
too much is assumed. Procedures are not followed by
anyone. Egos replace wisdom. If contractors and
owner/developers could mutually work towards better
communication during the process, then disputes can be
thwarted. Of course, this is a two-way street and both
sides need to work diligently at the process, bending
and cooperating as demanded by the process. Change
orders should be clearly spelled out. Delay claims
should be brought to everyone’s attention immediately.
Quality issues have to be addressed before they get out
of hand.
In the end, construction projects that result in
litigation benefit no one. Preventative medicine is the
best course to take for everyone. Otherwise, let the
finger pointing begin.
Christopher M. Ernst
is a Partner and a member of the Litigation and Real Estate &
Construction Practice Groups. He can be reached at
cernst@bdblaw.com
or 216.736.4216.
