Times are changing in the construction industry, and business as usual will be a thing of the past. Every observant construction professional is aware that global forces are reshaping the construction industry. Multiple factors now force those in the architectural, engineering, legal and construction industries to find ways to deliver their services more efficiently. In the past 40 years, the manufacturing industry has become vastly more efficient as a result of pressure from global competitors. Conversely, many industry analysts believe the construction industry has progressed little. Firms that attempt to continue as they have in the past may be left behind as others innovate. Legal professionals must be among those who innovate and help their construction clients become more efficient. One area ripe for change is the incredibly inefficient dispute resolution system.
Unfortunately, the legal profession, as is true with any other group, does not always embrace change. Instead, much of the legal profession continues to enjoy the benefits of the status quo. The billable hour is a sure way to guarantee profits – win or lose. As well, the current system of adversarial dispute resolution locks in high fees by pushing parties into lengthy and expensive conflicts. In fairness, however, the culture in the construction industry is more adversarial than most with many taking a win-lose approach to conflict resolution. These conditions that hinder positive change must be eliminated.
In the past twenty years, developments in dispute resolution have attempted to reduce the cost and complexity of the process. Opponents of the legal profession have, whether justified or not, cast lawyers and juries as villains. An uninformed observer might conclude that a jury is nothing more than putty in the hands of a skilled litigator. In response to fear of runaway juries, the construction industry has embraced alternative dispute resolution methods such as mediation and arbitration. Unfortunately, these lawyer dominated proceedings have proven nearly as expensive and time consuming as the jury system.
With few good options for efficient adversarial dispute resolution, what is reasonable contractor to do? For one thing, companies and individuals who are centers of influence must push the industry for consensus on a system of dispute resolution that is less adversarial and less influenced by attorneys. Instead, disputes should be resolved by neutral decision makers who can evaluate claims on site and quickly. Contracts that now require arbitration or mediation can be modified to require that all disputes will be finally resolved by one or more third party neutrals. Imagine a contractual mandate that a neutral third party investigate and decide disputes. Imagine having a binding decision in months instead of years. Imagine parties to a dispute paying the fees of a neutral decision maker instead of each side paying lawyers to resolve a problem.
This proposal may not be the best model for change, but I hope that this suggestion will, at least, raise awareness that there are ways to reduce the costs of dispute resolution as a means of making the construction process more efficient, and as a result, more profitable.
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