Understandably, most contractors and business owners perceive the costs associated with hiring professionals as an expense to minimize. While this may be true in the short run, hiring a competent, experienced attorney or law firm can protect a contractor from unexpected liabilities, costs and headaches. Over the past few months, this column has addressed some of the many legal issues contractors and subcontractors can face on a daily basis, ranging from subcontractor agreements and protection through payment bonds, to handling independent contractors and various ethical issues in the workplace. Taking time to carefully select the person or persons with whom a contractor will trust to address and solve its legal issues is an invaluable investment with both short-term and long-term dividends.
The skills and knowledge necessary for the representation of a contractor can be the most varied for any area of law. Considering the answers to the following questions may provide the contractor a blueprint for finding the person for whom he is looking.
What Type of Lawyer Do I Need?The two major "types" of practice are transactional and litigation attorneys. Transactional lawyers are those persons who handle the drafting and preparation of contracts and other documents that become necessary or are used throughout the course of business. Litigators are the lawyers who represent businesses and individuals who get into adversarial disputes. A contractor's lawyer must have both litigation and transactional skill. A contractor's need for legal services varies from the transactional elements of drafting and reviewing construction-related contracts, handling employee situations, securing lien and bond rights, discussing succession planning and other general business operations and strategies to litigation needs of negotiating and resolving disputes, enforcing payment rights, and, if necessary, arbitrating or litigating unresolvable disputes.
What Does the Lawyer Need to Know?Your lawyer or the law firm who represents you needs to know your business. The construction industry uses a unique language and involves issues that require at least a familiarity with construction practices and terminology. There is no substitute for experience. A lawyer who has represented contractors in the past is likely to have addressed many of the topics that a new client might present. Also, experience in the construction trades helps improve the lawyer's creativity and ability to problem solve. Although a more experienced attorney may appear to also be more expensive, experience is usually less expensive in the long run. An attorney who is "learning on the job" will take more hours to accomplish tasks and achieve resolutions, thereby costing more to the client. More importantly, an attorney's lack of experience can lead to mistakes or omissions that can cost the client much more than attorney fees in the long run.
Do not hesitate to question your lawyer or prospective lawyers with whom you are considering doing business as to their experience with the law of contracts, liens, bonding and employment law, as well as civil litigation and arbitration issues. If it is relevant to your business, discuss with your attorney their experience with state and federal governmental agencies and various types of insurance and surety companies, as well as their familiarity with your state's construction-related statutory requirements. An efficient attorney must have the ability to handle the interrelation of these many facets of your business.
When is the Right Time to Find a Lawyer and How Can He Help Me?The simple answer to this question is: before a problem occurs. The phrase, "good legal work is preventative medicine" holds especially true in the context of contracting work. Frequently, hiring an attorney once a dispute has come to light becomes an exercise in damage control. A good lawyer, working well with his or her client, will strive to achieve damage prevention. Prevention comes with preparation.
Often, disputes arise between contractors, owners and subcontractors where there is ambiguity in the scope of the project, the parties' responsibilities and other areas of a project that should be clarified at the outset. Well-drafted documents at the beginning of a project can solve many of these problems. A well-drafted document is more than having standard language about payments, schedules and worker's compensation. Any contract that is in any way new or unique to your business should be reviewed by your attorney and tailored to fit the specific job. The attorney must not only work with his or her client, but with the other parties involved, so that there is a clear understanding of all aspects of the project and how the documents can be tailored to meet a client's specific needs.
It is important to note that while there are several public sources that are becoming more popular, they should be avoided. Form contracts and other documents can now be found on the Internet, in industry manuals and publications, and through various industry organizations. While these sources can be instructive to clients and sometimes contain useful information and valid provisions, because of their standardized format, they can ultimately cause more harm than good. They are not drafted to meet the client's needs and goals, are not state-specific and frequently contain provisions (such as arbitration, liquidated damages and indemnification clauses) that are the exact opposite of the individual client's best interests.
What is a Lawyer Going to Cost?In addition to the several substantive requirements that a construction lawyer must have, the contractor has to consider the economic realities of the legal representation. Picking a lawyer must make fiscal sense. When interviewing attorneys or when discussing a project with your current counsel, ask for a price for the completed project, not just for an hourly rate. Similar to a product or material used in construction, the contractor must carefully analyze the strengths and abilities of the lawyer in light of his or her cost. Additionally, depending on the size and scope of the business, the contractor's legal issues and needs will vary, which should be another factor in the decision-making process.
The most cost-effective solution is for a client is to find a lawyer that can handle the majority of the wide array of issues that contractor-client presents and to have that attorney work at a firm that can address the other issues that fall outside the lawyer's expertise. Creating and cultivating a long-term relationship between the client and an attorney and one firm is beneficial for a number of reasons. First, the more a single attorney can handle the needs of a client, the less the client has to pay a new lawyer to learn about the client. Hiring new lawyers means educating the lawyer about the business's needs and the parties involved. Second, the more familiar an attorney is with the client's past, present and future, the easier it will be to create business solutions that are broadly beneficial and achieve long-term goals. Third, a firm with a wide practice area will have the necessary resources to meet all of the client's needs. These resources range from specific areas of law such as business organization, employment, contract preparation, litigation and succession planning.
Developing a long-term relationship with your attorney or law firm can be much more than a cost of doing business. Your attorney should gain your trust and confidence over time and become your trusted advisor. An attorney who cares about your business, your family and your success will also be an attorney who, in the long run, will make your business more efficient and profitable, while saving you the expense and distractions of avoidable conflict.
Selecting your company lawyer is much like many other areas of your business. Adequate planning and education before making a decision will help ensure that your relationship with your attorney is successful and enduring.