Fourteen Ways to Avoid Litigation

Because of the time, delay and expense involved, parties engaged in construction disputes should extend every reasonable effort to avoid litigation or arbitration. A number of factors which may help in avoiding litigation, as seen through the eyes of an attorney, include:

1. Understand the dispute by objectively gathering all of the facts at the earliest possible time and gathering all available documentation to sup port the facts.

2. Carefully determine your position based upon the facts. This determination should include not only the question of what you may be entitled to but also why and how much.

3. Know your adversary’s position. If possible, have him put it in writing so that you will not be in doubt.

4. Keep communication open between you and your adversary.

5. Be objective and don’t get emotional about the dispute. It’s a business problem and usually involves only dollars. Don’t make it a big moral issue or you will lose objectivity.

6. Involve experts. After determining what the problems are, determine what field of expertise may be involved. Obviously, if it is a legal problem, get a lawyer familiar with construction. If it is a structural problem, hire a structural engineer. When hiring experts impress upon them that you want their unbiased, objective analysis of this problem. You don’t want them to tell you what they think you want to hear. You want their best judgment because it will dictate how you handle the matter further.

7. Make sure that you are familiar with your contractual relationship and the terms of your contract with your adversary. If there is any question, consult a lawyer for a review and his opinions as to any questions involved. Make certain that you comply or are prepared to comply with any provisions of your contract requiring notices, designated methods of dispute resolution, submissions to the architect and similar such provisions.

8. Attempt to resolve the dispute in your own mind in a manner least burdensome to both you and your adversary. Most construction problems can be solved by either a more or a less expensive method.

9. Consider the costs, risks and time involved in litigation. Probably, the least expensive aspect of your being involved in a lawsuit (or arbitration proceedings) is the attorney’s fees. The real expense involves the time of you and your personnel which will be taken away from productive use and expended in the litigation effort. Litigation and arbitration both take time and are not resolved usually for long periods of time.

It is not uncommon for parties to spend four or more years in litigation and it is not unusual to spend half or more of that time in arbitration and arbitration-associated proceedings. Court dockets are crowded. For example, you might expect not to go to trial in a case in the Denver District Court for approximately a year and a half after it is filed. It may even be longer because of postponements. After the trial court may come appeals and more waiting time. Consider compromise as an alternative to the long wait. Also consider the risks in litigation: the judge or jury may not believe the testimony of your witnesses if contradicted by witnesses offered by your adversary.

10. After having fully explored the facts, understood your legal rights and having expert opinions where required, meet person-to-person with the most senior responsible official of your adversary for the purpose of discussing an amicable settlement. Whether to have attorneys for the parties present at this session is problematic. It may be better to meet first without attorneys but if one party has his attorney the other should likewise be represented by counsel at the meeting.

At the negotiation session explore the problem, set forth (and document if possible) your position. Also discuss the difficulties and expenses which would be involved for both parties if litigation were to follow along.

Also study what effect such litigation may have upon your reputation, other business, bonding capacity, future business with the same adversary and other consequences which may impact you and your adversary in the event of litigation or arbitration. The simple recognition at such a meeting that a compromise, even is not considered fa* by both parties, would save both substantial delay, risk and expense (direct and indirect) may bring about a settlement.

11. Judges and attorneys frequently observe that a “fair settlement” results when both parties are unhappy with the terms of the settlement.

12. Even if the first settlement conference fails, leave the channels of communication open. A cooling off period on both sides and a fresh look by both parties may still result in later success. Friends are more likely to settle their differences than enemies.

13. Although many people involved in settlement negotiation implement various strategies, use recommended negotiation techniques, study body language and engage in other forms of such gymnastics, probably the most successful technique is the employment of simple honesty, full knowledge of the facts and native intelligence.

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