Ways to Make the Construction Dispute Resolution Process More Efficient and Less Expensive – Part I

This post is the first of two blogs about making the dispute resolution process more efficient in construction-related matters.[i]  In our view, construction is well suited to streamlining the resolution process, particularly when experienced lawyers and judges / arbitrators are involved.

It seems that lawyers approach the resolution of disputes as a quest to find the ever-elusive truth.  We pursue discovery with diligence and vigor on our mission to somehow discover or know the “story” and eliminate all uncertainty about the “facts” of our cases.  Truth, however, has little to do with the outcome of a lawsuit or arbitration.  The outcome of a lawsuit or arbitration, as most lawyers are well aware, is determined by the presentation of the evidence on the day of the trial or arbitration.  Only the Almighty knows the Truth – the award will be based only on the evidence.  Perhaps a cynical view, but reality nevertheless.

Construction disputes, as with all other lawsuits and arbitrations, are decided on what the parties are able to prove on the day of the arbitration or trial.  Inordinate amounts of money are spent on that expensive journey to arrive at the truth.  Many construction companies now eschew these traditions, instead recognizing that most cases settle.  The economic cost of pursuing the veracity and exactitude of every fact is outweighed by the need for finality and speed of resolution.  There is a willingness among businesses to accept greater uncertainty about the facts, in exchange for earlier resolution.  This is a tradeoff that many in-house construction lawyers and business owners are willing to make. 

Discovery in the legal process involves document exchanges, answering written questions (interrogatories), answering requests for admission and depositions (where lawyers ask witnesses questions and witnesses answer under oath in a recorded proceeding).  Discovery can take vast amounts of time and cost a company significant resources.  Many times, only small portions of a deposition might actually be used at the hearing in cross examination.  The question then becomes whether the cost of the discovery is providing a return.  Oftentimes, the answer to that question is “no.”  Thus, lawyers and clients should consider pursuing settlement earlier, before resorting to the all-out discovery and expensive dispute resolution processes. 

There are also certain steps and requirements that arbitrators and judges (or the parties themselves) can impose on the process to make the dispute resolution process more efficient, including the following:

1.  Client Involvement in the Lawsuit / Arbitration.  Lawyers are focused on the process and accumulating more data and information before considering taking the case to hearings or a settlement.  Frequently, contractors do not feel the same need.  The people who actually own the problems want the problems to go away sooner rather than later and are more concerned about getting to an acceptable outcome than the process of doing so.  Judges, arbitrators, and lawyers should consider having clients appear with their lawyers in pre-trial meetings and pre-arbitration proceedings.  By involving the client decision-makers in the process, control of the case is wrested from the lawyers and placed in the hands of the business people making the judgments as to how a particular case should be disposed of.

2.  Involvement of Senior Trial Lawyers.  In arbitration and litigation, experience counts.  Experienced lawyers can frequently get to resolution when junior lawyers are unable to do so.  Senior lawyers are more likely to avoid unnecessary battles and cut to the chase.  Judges and arbitrators should demand that senior trial lawyers participate in pre-hearing conferences; thus, making the entire litigation team accountable for the cost of the dispute resolution process.

3.  Avoid Too Much Process at the Expense of Practical Outcomes.  Lawyers gravitate toward process; there is refuge in it.  Clients, on the other hand, want results and they want them now.  Judges and arbitrators should be cognizant of the fact that the process is expensive and, generally, with few exceptions, can be streamlined and specifically tailored in the resolution of construction disputes.

4.  Discovery Limitations.  Construction disputes are document intensive and, generally, after an exchange of documents, both parties pretty much understand what the other side’s position is.  To further cut down on expensive deposition discovery, arbitrators and judges (as part of the pre-trial order) can demand that parties exchange detailed claim statements and defenses that provide few, if any, surprises without the need for multiple and lengthy depositions or interrogatories.

5.  Accelerate the Hearing Date.  There is significant empirical data that the cycle time of a case directly influences and bears upon the cost of the case.  The longer the case drags on, the more it will cost.  Judges and arbitrators should schedule prompt hearing dates, which will cut down on expenses and increase the efficiency of the dispute resolution process.  Granted, there is a trade-off between the expeditious resolution of a dispute and ensuring that both sides have ample time to properly prepare for the hearing.  In many instances, as with most other things in life, the time to prepare for a hearing can be significantly truncated if a reasonable deadline is imposed.

6.  Identify and Decide Key Issues.  In most cases, there are only one or two key issues that are an impediment to resolution.  Judges and arbitrators should focus on those key issues and decide them first, which will expedite resolution of the case.  Even in arbitration, dispositive motions are now commonplace.

7.  Reduction of Briefing.  Lawyers are inclined, even if provided with page limits, to brief an issue extensively.  The briefing typically expands to the page limits regardless of how inane an issue may be.  Arbitrators and judges may resort to telephone calls or one or two briefing requirements which will cut down on unnecessary costs and paperwork associated with the dispute resolution process.  Particularly experienced arbitrators, who are conversant with the legal precedent in a particular jurisdiction, have little need for legal briefings on particular legal matters.

8.  Decide Quickly.  Construction parties need fast decisions, which will save substantial amounts of money otherwise spent on process.

Comment:  Perhaps the most important factor in bringing a matter to a quick close is for the judge / arbitrators work for the parties (not necessarily for the lawyers), to take control of the case, and ensure that the process imposed is one that is fair, streamlined, and economical.

[i] This post draws heavily on a recent post on the American Arbitration Associations’ Legal Rebels blog.  Patrick J. Lamb, 10 Things Judges Can Do to Help Business Litigation be More Efficient and Less Expensive, Legal Rebels, April 24, 2014. Though the article is directed more toward litigation in general, the principles apply both to construction arbitration and litigation.

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