Meet the Forum's ADR Neutrals: TOM NOCAR

Company: Hahn Loeser & Parks, LLP

Office Location: Columbus, Ohio

Email: tnocar@hahnlaw.com

Website:  https://www.hahnlaw.com/professionals/j-thomas-nocar/

Law School: The Ohio State University Moritz College of Law

Types of ADR services offered: Arbitration and Mediation

Affiliated ADR organizations: AAA Construction Panel

Geographic area served: Nationwide

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Q: Describe the path you took to becoming an ADR neutral.

A: I am a former builder turned construction attorney. I spent 26 years building before going to law school. I’ve worn every hat in the industry—D/B business owner, owner’s rep, CM at risk, GC, design/builder, subcontractor, and vendor at some point in my prior career. I chose to adapt these experiences to a law career in 2009 with the focus of practicing construction law. Now I commonly represent commercial builders and developers. AAA added me to the Construction Roster in 2022.

Q: What percentage of your current legal practice is spent on ADR work? If less than 100%, what do you do when not serving as an ADR neutral?

A: My ADR practice is small, but growing. I served as a neutral on five cases in 2023. I am primarily a construction attorney counseling clients in practical approaches to dispute avoidance, and representing clients in transactions and litigation.

Q: What are your thoughts on requiring mediation as a contractual prerequisite to litigation or arbitration?

A: Forcing parties to mediate is not a great idea. It is rarely productive.  I have been involved—as many of us have—in a mediation where one party shows up for the sole purpose of satisfying the contract clause, and then just leave. A total waste of time. A successful mediation usually involves two willing parties who want to avoid litigation risks and costs, and are capable of seeing past the dispute validities to reach a business decision.

Q: What can attorneys do to best position their clients for a successful mediation outcome?

A: Prepare them for compromise. Set financial expectations using the BATNA (Best Alternative to Negotiated Agreement) approach. Go through anticipated negotiation scenarios. Review the merits of each side’s contentions but remove the emotions where possible. Mediation is for business decisions, not for trial. Assure the client that mediation settlement is voluntary, and understand the walkaway number. Have a settlement agreement in the queue that can be quickly edited with the terms of agreement and signed by the parties that day.

Q: What should attorneys and their clients take into consideration when vetting and/or selecting an arbitrator?

A: (1) the arbitrator's construction industry expertise, both technically and legally specific to your case; (2) whether the arbitrator will control arbitration costs, limit discovery, briefing requirements, etc.; (3) the arbitrator’s tendencies when it comes to awards—do they split the baby or let chips fall where they may—and (4) what factors the arbitrator considers when deciding attorney fee awards.    

Q: What advice do you have for parties when considering whether to choose a single arbitrator or a panel?

A: This is generally a function of cost and risk. A panel is generally advisable when the amount in controversy exceeds $2M, when there are several parties, and/or the subject matter is exceedingly diverse or technical. Otherwise, if the single arbitrator passes your vetting as describe above, go forth.

Q: What measures do you take as an arbitrator to ensure arbitration is less costly and more efficient to litigation?

A: Arbitration should be less costly than litigation. I try to limit the amount of discovery to help in this regard.  Also, we are trained to allow all evidence to be presented and heard, but I caution the parties that duplicative witnesses and hearsay testimony has little probative value and adds time to the hearing. I also generally favor pre-hearing and closing briefs and discourage opening or closing statements.

Q: How has your prior career in commercial construction management helped you to serve as a neutral in construction cases?

A: My former design/build career provides a wealth of hands-on experience to draw from that commonly expedites my comprehension of the issues in the case. I have performed many times over the very tasks that are at the center of the controversy—issuing contracts and change orders; managing design from concept to completion; creating and managing schedules, submittals and shop drawings; running and documenting progress meetings; coordinating manpower, equipment and material deliveries; managing quality and safety; and dealing with non-performing parties. This insight helps me to quickly cut through the noise to get to the heart of any construction dispute. 

Q: What are some of your interests or hobbies?

A: Live music, travel, cooking, and cycling.

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Editor-in-Chief Marissa L. Downs is a construction attorney in Chicago, Illinois where she has been practicing law since 2009. Marissa is a partner at Laurie & Brennan, LLP and represents owners, general contractors, and subcontractors in all phases of project procurement, claim administration, litigation, and arbitration/trial. Marissa can be contacted at mdowns@lauriebrennan.com.

Consultant Corner: A Picture is Worth a Thousand Words...Technical Storytelling in Construction Litigation

Engineers are not commonly thought of as storytellers. But telling a true, accurate, and convincing story is one of the most important aspects of the job. Whether testifying as an expert witness or conducting a forensic investigation, technical experts require not only deep expertise but also the ability to effectively communicate complex ideas of a technical nature. Therefore, an effective and persuasive technical expert needs to master the art and science of storytelling.

While storytelling may vary from case to case, one of the most essential techniques is visualization. Most people are visual learners. A great graphic can be more effective in delivering the technical message, enhancing comprehension, and providing a lasting impression than the expert’s report or other testimony. This is particularly important in the legal setting, in which the audience—often a judge or jury—is typically non-technical.

Creating Graphics

Common types of visuals typically used in forensic investigations and construction litigation include two-dimensional (2D) graphics such as charts, figures, timelines, three-dimensional (3D) renderings or animations, engineering analysis models, or other tools such as Augmented Reality(AR) or Virtual Reality (VR). Development of the visuals is an integral part of the forensic investigation and technical storytelling process. Visualization typically used in forensic investigations or as demonstratives in construction litigation are often created using technical illustration techniques. Technical illustration is to visually communicate information of a technical nature based on science and physics. These graphics are not only “art” but also “science” as they are based on mathematical formulation and physics-based computer simulations. To tell a compelling, impactful, accurate, and relevant story, the visuals must be consistent with the evidence, analysis results, and the expert opinion.

Common Applications

This section highlights some common applications in which the use of 3D renderings and/or animations is helpful.

(a) Visualization of a complex system – Visualization can be helpful to illustrate an engineering system that is highly complex and/or has multiple interior components. In these situations, a 3D rendering of the system using a combination of visualization techniques, including callouts, cutaways, or ghosted views, proves to be effective. For example, Figure 1 uses a cutaway to demonstrate the main components of a composite floor.

Figure 1: Cutaway illustration of a composite floor
(snippet from an animation, courtesy: Thornton Tomasetti, Inc.)

(b) Design comparison – Visualization can be helpful to compare different construction, such as as-built versus as-designed configurations, or between different designs or layouts. Figure 2 is a side-by-side comparison of the slab reinforcement layout at the column location shown in the floor plan. The two reinforcement layouts of interest are those that were (i) specified in engineering drawings (“as-designed”), and (ii) constructed in the field (“as-built”). It is clear from the rendering that the as-built layout shows fewer reinforcements and larger bar spacing compared to the as-designed layout.

Figure 2: As-designed vs As-built slab reinforcement layout
(courtesy: Thornton Tomasetti, Inc.)

(c) Sequencing – When the construction, installation, or failure of a system involves multiple steps or stages, of which the order and/or timing are relevant to the narrative, an animation may be warranted. For example, a construction sequence animation with timestamps can be used in construction delay cases to highlight the planned versus the actual construction progress at various project stages.

Figure 3: Construction sequence illustration
(snippets from an animation, courtesy: Thornton Tomasetti, Inc.)

(d) Explanation of technical concepts – One of the most important applications of visualization in forensic engineering is to explain complex technical concepts. An animation allows the expert to “zoom in” at any location for further review, create section cuts and/or “see through” the interior details, such as reinforcement arrangement, or take advantage of the motion to explain how different parts interact dynamically in a failure mechanism. Figure 4 shows a close-up view at a slab-to-wall connection to illustrate the failure of the steel reinforcement and the concrete, which ultimately led to the collapse of the slab.

Figure 4: Illustration of the reinforcement failure at the slab-to-wall connection
(snippet from an animation, courtesy: Thornton Tomasetti, Inc.)

In another example, Figure 5 is a snippet from a time-lapse animation of an underground parking garage that experienced water intrusion. The animation captures accurately the locations and timing of the documented leaks in the walls and floor slab. The timescale is included to illustrate the timing of the events.

Figure 5: Time-lapse of documented water intrusion
(snippet from an animation, courtesy: Thornton Tomasetti, Inc.).

Technical and Legal Considerations

One of the first, and perhaps the most important, tasks is to plan for the use of graphics.

The technical expert and the legal counsel need to thoroughly develop a plan for the case at hand and how the visuals will fit into the overall strategy. There are several aspects that the team needs to evaluate, including the need for graphics, potential limitations, and when to introduce graphics.

Different experts have different ways to tell stories and explain technical concepts. Understanding the strengths and weaknesses of the experts is key to more compelling storytelling. From the technical perspective, the expert needs to ensure that the visuals are consistent with the evidence (such as column and beam size as shown in drawings) and other expert testimony (such as the opinions stated in the expert report). It is critical to understand the basis of the visuals, how they are correlated with the evidence and the engineering analysis, and the underlying assumptions of the analysis model on which the visuals are based. If the visuals are based on an engineering simulation, it is important to understand the input and output of the analysis model, the model settings, any assumptions, and limitations of the analysis.

From the legal perspective, when using graphics in construction litigation, the technical expert and the legal team must be familiar with the rules of evidence to develop a proper legal strategy. There is a distinction between “demonstrative aids” or “visual aids” and “demonstrative evidence,” which is admitted and sent back with the jury or considered as “evidence” by arbitrators. To become the latter, a graphic needs to meet admissibility standards, for instance, it has to be authentic, relevant, and especially, not hearsay. It is equally critical that the visuals not be confusing, irrelevant, inconsistent with expert testimony, or highly complex. This will increase the chances of admissibility and ensure that the audience can readily comprehend and appreciate the technical story the visuals are intended to tell.

Concluding Remark

Learning how to tell a technical story to a non-technical audience, especially in the legal setting, can be a daunting task, even for seasoned experts. Proper use of storytelling techniques, such as visualization, can greatly enhance the expert’s effectiveness in presenting his/her opinions. These graphics are not just “pretty pictures,” but also play an integral part of the expert’s role as communicators and storytellers.

For more examples of technical visualization, see Technical visualization samples.

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Author, Thanh Do, is a structural forensic engineer with Thornton Tomasetti, Inc. He specializes in investigations of construction/design defects and collapses, and standard of care assessment. He also oversees the Forensic Visualization group at Thornton Tomasetti, which produces graphics and animations for trial exhibits/demonstratives.

Meet the Forum's ADR Neutrals: LISA D. LOVE

Company: JAMS

Office Location: New York, NY

Email: llove@jamsadr.com

Website: https://www.jamsadr.com/love/

Law School: Georgetown University Law Center (J.D. 1984)

Types of ADR services offered: Arbitration, mediation, neutral evaluation and special master services

Affiliated ADR organizations: JAMS, Chartered Institute of Arbitrators, and CPR

Geographic area served: Domestic and International

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Q: Describe the path you took to becoming an ADR neutral.

A: I started my legal career practicing law as a complex commercial transactions attorney in the corporate department of a major New York law firm for eleven years. After leaving the firm, I served as chief legal counsel to several municipalities and as co-founding partner of a boutique finance, infrastructure and real estate law firm. 

In my legal practice, I have served as counsel in many complex transactions involving infrastructure, transportation, construction, real estate development, public private partnerships, acquisitions, dispositions and mergers, energy, and public and corporate finance. I have represented parties on all sides of the transactions from owner, public entity, lender, issuer, contractor, borrower, equity investor, trustee, fiscal agent and closing title agent. As a result, I have extensive experience drafting, negotiating and interpreting complex agreements for sophisticated transactions from many different perspectives.

In 2017, I decided to use the knowledge that I have acquired in my legal practice to provide a practical, experienced and transactional perspective to resolving commercial disputes. This knowledge informs my decision-making as an arbitrator and my conciliatory efforts as a mediator. I believe that transactional attorneys are uniquely positioned to provide a legal and business perspective to many of the principal claims involved in complex commercial disputes.

Currently, I am a neutral with JAMS and am a member of its Global Engineering and Construction Disputes Resolution Panel.

Q: What should attorneys and their clients take into consideration when selecting an arbitrator?

A: When vetting or selecting an arbitrator, it is important to consider the subject matter expertise of the arbitrator, including experience gained through the practice of law generally and in specific practice areas. While I acknowledge that most of the ADR professionals that I know are former litigators, I am confident that transactional attorneys have the advantage of having been involved in the intricate details of drafting and negotiating the business terms of many transaction documents that are similar to many of the provisions that are subject of the ADR proceeding. Such experience is extremely important and should not be underrated in our legal system which thrives on the concept that the documents “speak for themselves.” 

Equally important is the need to select well-qualified, diverse neutrals who bring a diversity of thought, perspectives and experience to decision making which improves the arbitral process. While many arbitral institutions have increased the diversity of their panels, the discretion embedded in the selection should be more inclusive. 

One way to embed diversity in the selection process is to consider adding arbitrator diversity as a component of the arbitration agreement.  Several institutions have adopted diversity clauses that can provide guidance for drafting a diversity component to the arbitration agreement.

Q: If you were going to draft your own dispute resolution clause in a construction law contract, what points would you include (or exclude)?

A: As a contract drafter, I have personally witnessed that many dispute resolution clauses in transaction documents do not fully receive the attention to drafting required prior to the execution of the transaction documents. Unlike many labor, environmental, tax, securities and other specialized provisions in transaction documents, many arbitration clauses are included in the miscellaneous section of contracts and may be combined with the governing law and other provisions and are not timely reviewed by the firm’s dispute resolution professionals. 

In drafting dispute resolution clauses in construction contracts, there are several provisions that I recommend that parties consider for inclusion in their dispute resolution provision.  

First, a couture clause designed to address the parties specific requirements.  When drafting dispute resolution clauses in construction contracts, the parties should recognize that dispute resolution is a party-controlled process. The more specific the dispute resolution clause is, the less reliance will be on institutional rules and the more on party control.  

The dispute resolution clause provides an opportunity for the parties to assess the possible claims that could arise during the course of the project and design well drafted ADR provisions to meet the specific needs and expectations of the parties for expedient  and efficient dispute resolution. The ADR clause should incorporate an expedited, tiered process (dispute resolution boards, negotiation, mediation, and/or arbitration, as desired by the parties) within specific time frames acceptable to the parties to be handled by experienced ADR professionals. 

However, in drafting a dispute resolution clause, it is extremely important that the specificity of the clause does not lead to inconsistency within the clause. If the clause is found to be internally inconsistent, the result could be the disregard of the entire arbitration agreement.

Second, an integration clause to consistently and centrally resolve disputes by ADR. The transaction documents should fit together like an intricate, completed puzzle and should include integration provisions requiring all disputes in all construction transaction documents to be subject to the dispute resolution process. This ensures that litigation is not proceeding with respect to issues arising out of one contract (without an arbitration clause) while arbitration is proceeding with nearly similar parties arising out of another contract (with a dispute resolution clause). The parties should also consider whether dispute resolution clauses should be the same in all contracts or whether some disputes, in light of the amount in dispute, or the parties involved, e.g. sub-tier contractors, may require less complex dispute resolution provisions.

Third, an arbitration appeals clause to provide for appellate review of significant issues. Although not commonly used currently, an arbitration appeal process can be incorporated into the dispute resolution clauses of the construction documents that will permit the appeal of the decision of the arbitration panel. If an appellate process is desired by the parties, it should be specifically addressed in the contract’s dispute arbitration clause. If the appellate process is not included in the contract dispute resolution clause, the parties can agree later to an institution’s optional arbitration appeal process. However, once a dispute occurs, it may be difficult for the parties to agree upon an appellate process.

For large projects, the appellate process could be customized to be used only for claims exceeding a certain threshold or utilized to preserve rights of parties for certain claims for the appellate process until the end of the project in light of all of the project claims  at that time.

Q: What do you do when not serving as an ADR neutral?

A: Over the years, my ADR practice has consistently increased. However, when not serving as an ADR neutral, my boutique law firm—Love and Long, L.L.P.—represents federal, state and regional public agencies, museums, and Fortune 500 companies in the areas of infrastructure, transportation, construction and energy projects, real estate, public private partnerships, public finance, corporate governance, contracting and commercial leasing.  

I have served as lead counsel to the U.S. Department of Treasury, the U.S. Department of Transportation and the U.S. Department of Commerce. I have also served as bond, disclosure, real estate and P3 counsel to New York, Pennsylvania and regional agencies. 

In addition, I am an appointee to the Chartered Institute of Arbitrators, Professional Conduct Committee (2021 – 2024), an associate in the College of Commercial Arbitrator Associates Program and an academy participant in ICC 2023 – 2024 DRS Learning Academy.

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Editor-in-Chief Marissa L. Downs is a construction attorney in Chicago, Illinois where she has been practicing law since 2009. Marissa is a partner at Laurie & Brennan, LLP and represents owners, general contractors, and subcontractors in all phases of project procurement, claim administration, litigation, and arbitration/trial. Marissa can be contacted at mdowns@lauriebrennan.com.

Recent Statutory Changes Cap Retainage on Applicable Construction Projects

Recent reforms to certain state retainage laws have reduced the lawful amount of withholding permitted on construction projects. In theory, retainage allows an owner to mitigate the risk of incomplete or defective work by withholding a certain portion of payment until the construction project is substantially complete. Recent statutory developments in Washington, New York, and Georgia represent significant changes in how much an owner may retain on applicable construction projects in those jurisdictions. The details of each state’s retainage laws vary in many important respects. Most states set caps at 5% or 10%, with important variations depending on the type of project and the amount of progress completed. Some states require retainage to be held in an escrow account, but most do not. Many federal construction projects allow up to 10% retainage, while other federal agencies do not require any retention. See 48 CFR § 52.232-5(e) - Payments Under Fixed-Price Construction Contracts.

The ongoing motivation for retainage reform is typically framed in terms of reducing delays in getting payment to subcontractors who complete their scope of work on time and free from defects. 

Washington

Washington State enacted Senate Bill 5528 to reduce retainage on private projects to 5% of the contract price of the work completed. See RCW 60.30.010. Effective July 23, 2023, the new law now reflects Washington’s pre-existing 5% cap on public projects. Under the new law, an owner has 15 days after notice of completion of work to notify the contractor of additional work required for completion of the project. After 30 days, unpaid amounts begin to accrue a 1% per month penalty per violation. In lieu of retainage, SB 5528 contains a provision which allows contractors and subcontractors to tender a retainage bond to the owner or upstream contractor.  

The Washington law does not apply to single-family residential construction of less than 12 units. Notably, waiver of the new statutory cap is not prohibited. The new law does not appear to contain language implying the possibility of retroactivity.

New York

On November 17, 2023, Governor Kathy Hochul signed legislation making important changes to New York’s Prompt Payment Act (N.Y. Gen. Bus. Law §756). Much like Washington, the New York legislation caps retainage on private construction projects at 5%. The changes apply to all private construction projects in New York with a contract sum over $150,000. Under the new law, New York contractors can submit an invoice for the full amount of retainage after achieving substantial completion.

Before the amendments, N.Y. Gen. Bus. Law §756 allowed an owner to retain “a reasonable amount” of retainage. There is a 1% per month penalty for violations.

Georgia

In 2022, the Georgia General Assembly passed Act 781 amending O.C.G.A. §§ 13-10-80 and 13-10-81. The relevant retainage reforms apply to most public works projects in Georgia not including roads or highways. The main feature of Act 781 is capping retainage on applicable public projects at 5% of each progress statement. The statute also contains language which allows the owner of a public works project to withhold 200% of the value of any outstanding punch list work remaining after substantial completion. These and other changes went into effect on July 1, 2022, and are not retroactive.

How did Retainage Become Popular?

Retainage appears to have developed as a construction industry custom at least as early as the beginning days of the 19^th century. For example, during England’s 1840s railway boom, railroad companies began to withhold up to 20% of contract sums to mitigate the risk of inconsistent and under-skilled labor. Today some type of retainage is a common industry practice in many, but not all, domestic and international jurisdictions.  

Conclusion

Understanding the current retainage laws in a client’s jurisdiction is critical to help prevent disputes before they begin. Because important details of these laws vary widely from state to state, it may be helpful to review the applicable retainage and prompt payment laws during the pre-bid and contract-drafting process.

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Patrick McKnight is a member of Fox Rothschild’s national Construction Practice Group. For more information, please contact Patrick at pmcknight@foxrothschild.com. 

This article is provided for informational purposes only—it does not constitute legal advice. Readers should consult legal counsel before taking action relating to the subject matter of this article.