The new year is a time to reflect on the year that was and look to what is ahead. What did we do well? What are some areas for improvement? Part of this reflection should include assessing your company’s risk management approach. As part of this risk management assessment, it is a great opportunity to specifically review your legal claim processes and whether there is room for improvement.

When you have an impending legal claim, having those processes and procedures in place can increase efficient processing of that claim, reduce stress to you so you can focus on your business, and reduce legal costs. Below are 3 tips we have culled from claims we have handled, litigated, arbitrated or settled.

1.    Project File Organization (During Construction)

One of the largest costs of any construction claim is document production and review.  A poorly maintained, incomplete or highly duplicative project file can result in even higher costs. Compounding matters, most project files are maintained electronically and storing those files for litigation purposes typically requires use of third-party vendors that charge monthly storage fees on a per megabyte or gigabyte basis.  We recently arbitrated a claim where the cost of storing—not reviewing, just storing—the general contractor’s and owner’s file was over $9,000 per month.  And, that was the lowest bid.  The highest was $33,000 per month.  To get the full extent of the pain, you need simply multiply that number over a typical 18-month litigation cycle.

Reducing the cost of reviewing and storing your project file requires planning while the project is still under construction. How is your file organized? The prime contact, any subcontracts, change orders, pay applications, and the contract drawings and specifications should be readily available and easily accessible for all projects. Those are fairly “no-brainers” that you need to maintain copies of and keep organized. But what about your pre-bid documents? For instance, if the project delivery method is construction manager at-risk, are there documents that define and confirm the scope of pre-construction services?  Are there other pieces of key correspondence further defining your scope of work? How are you organizing your email correspondence with the owner or your subcontractors? Are you maintaining copies of all on-site meeting minutes? How are documents and comments posted in proprietary project management systems stored after the project is complete?

Sometimes the most seemingly insignificant email or project meeting note can be pivotal in assessing a claim, but requires finding a “needle in a haystack” without some organization. Having organizational processes in place can help you and your attorney efficiently navigate a legal claim.

2.    Project File Organization (Project Closeout)

Most email inboxes, even ones dedicated to specific projects, are littered with duplicative emails or ones that do not relate to the project, at all.  We have litigated claims (not just one, unfortunately) where email communications between a field superintendent and his mistresses create a made-for-trial timeline illustrating just how little time the superintendent spent managing, coordinating and monitoring the project.  We have also litigated many more matters where relevant portions of the project file were gone—either never saved or corrupted.

Project file organization takes on newfound importance during project closeout.  Are all emails and texts maintained? Are duplicates removed before final storage?  Are emails that are irrelevant to the project removed from the project file? Creating a uniform system for determining what electronic data should be saved with the project file at closeout can save you significant time and cost down the road.

3.    Notice to Other Parties

Hand-in-glove with project file organization is “sharing the love” of a written notice of claim with other parties who should be involved in the claim.  Since many times you may have only days or weeks to involve other parties or respond to the notice letter, a quick determination of who was involved with the project is imperative.  Without a consistent approach to maintaining project files, the risk you negotiated in the contract may be reallocated with you absorbing more risk than you bargained for.

Regardless of whether you receive a demand letter specifying a particular date to respond or whether are served with citation and a lawsuit, developing a timely response strategy is critical. Not only may the letter or lawsuit require a response by a specific date, but the applicable statute of limitations and statue of repose may require you take immediate action to notify your developer, subcontractors, suppliers, or design professionals.  Many times, lawsuits are filed on the cusp of the limitations or repose period expiring,  Failure to notify other parties prior to the expiration of these deadlines may legally prevent you from obtaining financial contribution from them.

While you reflect on the year past and plan for 2021, you should consider adding a review of your project file organization and notice protocols to your new year’s resolutions. Our attorneys in Dallas and Austin are available to answer any questions you may have and to help you and your company prepare for and process any legal claims you may have.  Contact us at info@gstexlaw.com if you have any questions. 

Legal Disclaimers

This blog is made available by Gerstle Snelson, LLP for educational purposes and to provide general information about the law, only.  Neither this document nor the information contained in it is intended to constitute legal advice on any specific matter or of a general nature.  Use of the blog does not create an attorney-client relationship with Gerstle Snelson, LLP where one does not already exist with the firm.  This blog should not be used a substitute for competent legal advice from a licensed attorney.

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