iI have practiced law for 40 years with the vast majority as a “construction” lawyer. I have seen great… and bad… construction lawyering, both when representing a party and when serving over 300 times as a mediator or arbitrator in construction disputes. To be clear, I have made my share of mistakes. I learned from my mistakes and was lucky enough to have great construction lawyer mentors to lean on and learn from, so I try to be a good mentor to young construction lawyers. Becoming a great construction lawyer is challenging, but the rewards are many. The following is mistake No. 4 of the top 10 mistakes I have seen lawyers make in construction disputes, and yes, I have been guilty of making this same mistake.
No. 4: Not Folding Bad Claims/Defenses
We are taught in law school and as young lawyers to assert every claim and defense, especially at the beginning of a lawsuit or, in the case of most construction disputes, in arbitration. This is not a mistake. It is necessary because typically at that early stage of the dispute the facts are unclear. Your client also may be focused on going after the other side and want you to make every possible claim or defense. The mistake is to continue stubbornly on this path through to the arbitration hearing or trial in a courtroom. This kind of mistake was carved into stone by the late, great singer-philosopher Kenny Rogers, who crooned, “You’ve got to know when to hold ‘em, know when to fold ‘em.” This simple but catchy phrase is applicable to all trial lawyers, especially to construction lawyers.
In the typical commercial construction dispute, there are scores of claims and an equal number of defenses. The best examples are defective work and change order claims. On a recent arbitration panel of which I was the chair, there were 38 claimed change orders – some seeking only money; some requesting time; and some seeking both money and time. But each change order had its own factual story, many times quite complicated. This is one of the reasons why construction disputes are so expensive as far as legal fees (and client time). As discussed in mistake No. 1 in this “mistake” series, the most important four issues in any construction dispute are the facts, the facts, the facts… and the facts. In turn, the defenses to such multiple claims can be equally factually complex. Many times, there are alternative theories: There was no timely claim notice; there was no defective work; even if there was notice and defective work, the client did not cause it; and even if the client caused it, the costs sought are both unnecessary or unreasonable or both.
Credibility before an arbitrator or judge (and the jury), both for you as a lawyer and your client, is absolutely critical. If you have 15 claims and determine prior to the hearing that eight are extraordinarily strong, four are “iffy,” and three are extremely poor, the mistake is not “folding” the poor claims. The same goes for defenses. I cannot tell the young construction lawyers out there how many times, as an arbitrator, when bad claims/defenses are presented (through the same set of witnesses used for the strong claims/defenses), I have then questioned the credibility and viability of both the “iffy” and strong claims. This consequence applies equally to a party who stubbornly refuses to concede unopposed facts or portions of claims. Any attempt to practice scorched earth “litigation” tactics simply does not go over well in front of an arbitrator or judge. The best example in a construction context is when one side’s claims are less than the amount stipulated to be owed to the other side, but that side has refused to pay the undisputed amounts.
Remember, while a judge or jury may not know anything about construction, a construction arbitrator does. The arbitrator is a construction industry expert, normally a very experienced construction lawyer, who has been through scores of arbitrations, both as counsel and as an arbitrator. Stubbornly sticking to losing positions, especially in arbitrations, is a grave error that will hurt your client’s chances of a successful arbitration outcome.
Also, consider if raising a claim or defense is worth the time and effort. How much time do you have to put toward your case? I have had parties in a multi-day arbitration where the total claims exceeded $1 million spend three hours on a $1,000 claim when the total legal (and arbitrator) fees for these three hours may exceed $5,000. I have had a client go against my strict instructions to agree that a picture showed exactly what the other side was contending on a ridiculously small claim. Instead, he refused to do so. The other lawyer pounced on the opportunity. The arbitrator rolled his eyes, and it destroyed the client’s credibility and adversely affected the final result. His explanation to me afterwards was: “Oh, sorry, I just wanted to try to confuse that jerk of a lawyer.”
To be clear, to fold a bad claim or defense you must fully educate and involve your client, and that can sometimes be difficult. The client is in charge and calls the shots. But there can be gobs of credibility gained with the arbitrator by strategically, timely, and tactically making concessions prior to and especially during a hearing. As Kenny wisely sang: “You’ve got to know when to hold ‘em, know when to fold ‘em, know when to walk away, and know when to run.”
