When A Dream Construction Project Becomes A Nightmare: How Attorneys Can Assist

In the construction industry, it's rare for projects to go off without a hitch. While some hiccups are unavoidable, construction disputes caused by miscommunications, unclear contracts and especially defects can be cut off at the pass by involving an attorney early on in the process. 

Attorneys can create and negotiate contract agreements between project stakeholders before a project even breaks ground, to help ensure that everyone is on the same page about who is responsible for each part of the construction process — and who will be deemed at fault should something go awry. 

Brad Porter, Managing Partner and owner of Houston-based Porter Law Firm, said that when looking for the right attorney for a construction project, the first step should be finding one that is board-certified in commercial real estate law, or at least belongs to a firm with significant experience in this particular niche.

Porter walked Bisnow through the role that attorneys play throughout the construction process and the steps owners and other project stakeholders can take to protect themselves when disputes arise.

How Can Building Owners Find The Right Construction Lawyer?

When doing research to find a construction lawyer, Porter advised clients to pay attention to the lawyer’s experience level and reputation within the industry, as well as their temperament and approach. While some lawyers may advise negotiation or mediation, commercial litigators may be more inclined to fight right out of the gate. Ultimately, the right approach might be a combination of both. 

“Finding the right lawyer may involve an interview process, but it’s a great way to get a sense of who specializes in this type of practice and learn what qualities you value in an attorney,” he said.

What Should A Construction Agreement Stipulate?

Construction attorneys may draw up agreements that specify which other contractors will be on the job, who is responsible for what tasks, requirements for submitting progress reports, insurance details and a payment plan for the construction crew, Porter said.

During the project, attorneys will periodically check in on how things are moving forward, ensuring that all of the documents are in order and that the project has reached particular milestones. The latter would determine when contractors get paid, he said.

“We make sure that before money is released, everything is being done the right way,” he said. “We are heavily involved in the construction agreement because the project’s success is contingent upon the property being built correctly.”

A Construction Issue Happened. Now What?

Porter said that owners typically investigate when projects go over time or over budget. Contractors may claim that the project had to be extended because of labor or materials shortages or inclement weather. If mistakes occurred, they could also point the blame at another person on the team who didn’t complete their task correctly, thereby causing issues for the next person in the chain.

“The more parties that are involved and the more time passes, the more likely that people will point fingers at one another and say, ‘This went wrong because of what someone else did,’” Porter said.

When construction defects happen — which oftentimes can include water or electrical issues, or problems with the building’s foundation — they cause the most problems when spotted at the end stages of the project or, in the worst-case scenario, after the project is completed. This is the point at which it’s most difficult to determine who, exactly, is at fault. 

“Once the sheetrock or the walls are put up, a lot of issues can be hidden,” he said. “There’s a myriad of ways that issues can unfold, and it can be extremely disruptive once the property is built to have to identify them.”

Porter said that fixing some of these issues can cost upward of millions of dollars depending on the size and scope of the project. Because construction issues can sometimes lead to litigation, attorneys will work with a third-party expert who can go on-site to collect information and help craft the narrative regarding exactly what happened and who is to be held liable.

Is Litigation Necessary?

A construction contract typically stipulates that a negotiation must be included in the steps needed to resolve a dispute, Porter said. If the dispute is between the building owner and the general contractor, the owner’s attorney would lay out the issues and what needs to happen to continue the contract, whether that be receiving money for repairs or offsetting the cost of the damages.

If a solution isn’t reached through negotiation, the discussion transitions to mediation, which is overseen by either a former judge or an attorney certified to act as a mediator. If there’s no resolution, a lawsuit is generally filed.

In most scenarios, it’s preferable for clients to resolve their issues with negotiation or mediation because the litigation process can be expensive and prolonged, taking valuable time away from clients’ regular work, he said.

“As hard as it is to construct a project, it can be more difficult to deconstruct it to figure out where the issue is and why it’s happening,” Porter said. “It’s time-consuming, costly and stressful for the client. Ideally, an attorney can help clients resolve issues outside the courtroom so they can get back to what they do best, which is focusing on their business.”

This article was produced in collaboration between Studio B and Porter Law Firm. Bisnow news staff was not involved in the production of this content.

Studio B is Bisnow’s in-house content and design studio. To learn more about how Studio B can help your team, reach out to studio@bisnow.com.