Last week saw the first-ever meeting of the ABA Forum on Construction Law in Louisville, Kentucky. The event brought together over 500 attorneys, ADR neutrals and consultants for what was the first meeting helmed by incoming Forum Chair, Tracy James. Thanks to the hard work and dedication of countless individuals, including but not limited to Program Coordinators Colbie Campbell and Liz Kraengel, the program was an unbridled success. Focused on all things contract negotiation and project start-up, it was fitting way to kick off the 2025-26 year of programmatic excellence. As usual, the lessons learned were many and varied but read on for my top 10 take-aways.
10. The Kentucky Derby is the most-watched and most-attended horse race in the United States. The iconic Louisville race has been run every year since its inception in 1875. Traditionally held the first Saturday in May as the first leg of the Triple Crown, the Derby is referred to colloquially as the "run for the roses" and "the most exciting two minutes in sports." While the Derby event itself is brief, the Churchill Downs is a bustling city of racing-related activity for most of the year and stables over 1,400 horses annually. Travis Stone (the voice of the Kentucky Derby) and Derby bugler, Steve Buttleman (who has been playing the "
call to the post" at Churchill Downs for over 30 years) opened the Fall Meeting in grand style with a live demonstration of their skills and a little bit of Derby spirit.
9. Don't settle for business as usual when it comes to arbitrator selection. When it comes to arbitrator selection in complex disputes, business as usual may no longer cut it. At the Division 1 lunch Wendy Venoit and Sean Dillon spoke of newer, more robust tools which parties can avail themselves to ensure that all of the arbitrator candidates they are presented with have the expertise and calendar availability needed to effectively resolve the dispute at hand. The AAA-ICDR offers an Enhanced Arbitrator Selection process on large, complex cases, which allows parties to receive additional information before making their selections. Gone are the days of having to stealthily suss out the predilections of your potential panel...if the parties agree, they can submit questions for candidates to answer, ask the AAA to pre-screen candidates by certain criteria, or the AAA can arrange for all parties to interview the candidates by telephone or video call.
8. "There is no such uncertainty as a sure thing." As exemplified by this quote by Robert Burns, certainty in contractual rights and remedies can often be elusive. Owners and contractors who drive hard bargains during contract negotiations to impose overbearing, one-sided contracts on downstream parties may be surprised to eventually find out that the "ironclad" provisions they negotiated (such as aggressive forum-selection clauses, indemnity and LD provisions) may not actually be enforced when conflicts arise. Whether contrary to statute, public policy, or the intent of the parties, overly aggressive contract provisions are never a sure thing. To make matters worse, the can make their beneficiaries overly complacent and overbearing in claims negotiations. To truly avoid conflict on your projects, the better course of valor, according to panelists William Geisen, Kristine Kubes, Matthew Mendoza, and Rob Ruesch, may be to deal reasonably (and communicate openly) with project participants.
7. Customize your payment provisions. From (a) contracting the right to stop work if unprocessed change order requests exceed a certain amount to (b) requiring that the owner deposit contested sums into an escrow account, there are many ways to modify payment terms to better suit a project's needs. John Slates and Lauren Catoe reviewed payment-related contracting considerations; and, while treatment of stored materials is never the first thing on anyone's mind, they cautioned attendees not to overlook the importance of requiring a contractor to label and segregate materials procured for their project. Otherwise, if the contractor in possession of the materials declares bankruptcy, the stored materials (even ones the Owner has paid for) could become part of the debtor's estate.
6. Pick your protection when it comes to performance security. Performance
security mechanisms are risk-management tools designed to ensure that contractors
fulfill their contractual obligations. While retainage and payment/performance
bonds are perhaps the most frequently used tools to ensure a contractor and its
subs will abide by their obligations, according to Nick Brooks, Patrick Kirby, and Kristen Sherwin, there are a variety of
other tools that can operate to protect owners and avoid
the potentially debilitating ramifications of contractor/subcontractor default
on a project. The less utilized options include parent guarantees, Subcontractor Default Insurance, and
Standby Letters of Credit. Whether and which of these tools are appropriate will depend on the
nature, size, and complexity of the project.
5. Spearin may not be all that it's cracked up to be. Under the well-known Spearin doctrine, liability for defective design rests with the owner in traditional DBB projects; however, it may be explicitly contracted out by clauses that shift design verification duties to the contractor. This can be accomplished in a variety of ways such as by requiring the contractor to comply with performance specifications (rather than traditional prescriptive specifications), validate constructability or “fitness for purpose”, verify all dimensions and conditions, or assume responsibility for design adequacy. That said, panelists Laurie Choi, Kimberly Davison, and Kendall Woods offer this word to the wise for any owner attempting to divorce itself of design liability: courts require such disclaimers to be clear and specific. Ambiguous language can fail to override Spearin and may be presumptively void depending on the jurisdiction. And, if the owner drives too hard a bargain they may unwittingly draft themselves out of insurance coverage for future claims.
4. Closeout should start during pre-construction. This was the takeaway from panelists April Parrish, Sunu Pillai, and Max Taylor. Closeout should not be an afterthought as it is an important milestone in the life cycle of a project and for good reason; it signals the fulfillment of contractual obligations, enables release of final payment and retention, and provides Owner with the documentation it needs to operate and maintain the completed facility. It is a mistake to wait until the end of the project to start thinking about what will be needed for final completion. Including project closeout in a meeting focused on contract negotiation was done because “successful closeout hinges on having well-defined expectations from day one,” beginning with clear communication during scope reviews about what closeout deliverables will be required. Good documentation throughout the project, particularly in relation to change orders, will help ensure the closeout process proceeds smoothly.
3. Float like a butterfly, sting like a bee. Muhammad Ali was born as Cassius Clay in a racially segregated Louisville in 1942. He famously started to box at the age of 12 after his bicycle was stolen. From a place of powerlessness, he would eventually rise to become the greatest boxer and one of the most recognizable athletes the world has ever known. Ali had a penchant for creating rhymes (the bee/butterfly tagline being perhaps his most famous) and has been credited with being the first-ever rapper. Known equally well for his activism, Ali was a principled man of many talents. Attendees of the Forum's Fall Meeting received an insider's view into Ali's life at the Muhammad Ali Center, a museum dedicated to honoring and celebrating Ali's principles of peace, social responsibility, respect, and personal growth.
2. DEI is not dead. Despite mounting pressure and political scrutiny, not all companies are distancing themselves from their long-standing commitments to diversity, equity, and inclusion (DEI). Jimmie McMillian, the Chief Diversity Officer and Senior Corporate Counsel at the Penske Entertainment Group (which includes the Indianapolis Motor Speedway) shared what Penske is still doing to foster and promote diversity in the motorsports industry. In a compelling and inspirational Q&A with Sam Laurin, Jimmie spoke of his work for the Race for Equality & Change, an initiative to provide opportunities for underrepresented women and men in the motorsports industry and open-wheel racing. Beyond the initiative’s mentorship programs for students and bringing more diversity in racing, Jimmie hosts thousands of young people at the Speedway each year to get them excited about the sport.
1. "Building the best construction lawyers" necessitates that we address mental health. In a first-ever-of-its-kind presentation, the Forum invited Daniel Lukasik, New York State Judicial Wellness Coordinator, to present on the mental health challenges that face the legal field. Daniel shared the grim statistic that, according to a 2016 poll of 13,000 attorneys, it was discovered that 28% suffered from depression and 11.5% had experienced suicidal ideations, levels which are 4 times higher than the rates seen in the general population. According to the National Task Force on Lawyer Well-Being, poor mental health and well-being in the law are driven by a "parade of difficulties" which includes work addiction, sleep deprivation, job dissatisfaction, work-life conflict, incivility, a "narrowing of values so that profit predominates," and negative public perception. Even those lawyers (and law students) who do not develop mental illness or substance use disorders as a result of these forces still may not be thriving. One study suggested that attorneys feel depleted/exhausted, pessimistic towards their works, and ineffective about half of the time. These sentiments are precipitated by a combination of heavy workloads, long hours, demanding clients/colleagues, a feeling of lack of control, lack of recognition, toxic work environments, and fear of job loss. While there are tools each individual can use to improve their mental health (engaging in deep breathing exercises and expressions of gratitude to name a couple), legal organizations also need to acknowledge and mitigate mental health impacts to help create positive and healthy workplaces.
Author and 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.
No comments:
Post a Comment