If there is one “theme” to Construction Law Musings, those that read regularly hopefully see that I take my role as counselor to construction companies seriously. Aside from the fact that litigation and arbitration are both expensive and not a great way for any business, particularly a construction business, to make money, I have found construction professionals to be a pragmatic group of people that would rather solve a problem than go to court.
I have also discussed the need for a good foundation for the project in the form of a well drafted and properly negotiated contract. This contract sets out the rights of the parties and essentially makes the “law” for your construction project. Virginia courts will not renegotiate the terms for you and while this can lead to problems where parties either don’t understand the terms or don’t work to level the terms, it does mean that the parties know what the expectations are where the expectations are properly set, preferably with the help of your friendly neighborhood construction attorney and counselor at law. Practical considerations such as your feel for the other party and which terms are worth forgoing the work for should drive your considerations almost as much as the legal implications.
With a good contractual foundation, hopefully you won’t ever have to call your attorney to deal with a dispute (at least in a “public” sense). While I highly recommend getting advice early and often when you see a problem coming down the pike (and there will be problems), be practical about whether you want to use any of the “hammers” in the contract (which can range from termination to stopping work to arbitration). The first and likely best option is to try and work through the problem and figure out a solution. The least expensive and fastest way to get through to the end of a project that has problems almost never to terminate a subcontractor or walk off a job. While these are proper in the right circumstances from a legal standpoint, they lead to additional issues, non-payment, mechanic’s liens, and in the end litigation or arbitration.
While I come from a litigation background, and litigate more often than I’m sure my clients would like, most often the practical approach, with a healthy dose of understanding the contract and the law, will get a construction project to the end and resolve issues in a less expensive and more satisfactory manner.
The legal profession is a noble one. But is that the impression the public has of lawyers? What images generally come to mind?
Let’s start with Noah’s Ark. A biblical theme park called Ark Encounter in Williamstown, Kentucky, is suing its insurers for insufficient coverage of rain-related losses. The centerpiece of the park is a giant, 500-foot-long replica of Noah’s Ark. There was an actual flood in the vicinity. The ark was not damaged, but other assets were. One news headline read: “Noah’s Ark theme park damaged by heavy rain … and the lawyers come two-by-two.”
What does this say about the legal profession’s image? At best, we’re ambulance chasers. At worst, we’re at par with most of the ark’s passengers (other than hyenas, I suppose—they readily laugh freely).
And how does literature treat us? Geoffrey Chaucer’s Canterbury Tales does not even include a lawyer? There are numerous callings but no “lawyer’s tale.” Why? Maybe the pilgrims did not care to have one on the pilgrimage. Perhaps Chaucer initially had a lawyer along but canned him. There just may have been a draft tale that reads like: “And then there was the lawyer from Yorke, who carried a big purse. And he was a windbagge. He tried to impresse us with his Latin phrases, and we could ne understand him at alle. And so, the miller gave him a goode kick in the arse. And we were all happy, paternoster.”
William Shakespeare was not much kinder a couple of hundred years later, saying: “Let’s kill all the lawyers.”
Even now, we have expressions about lawyers such as “shyster” or “mouthpiece” or “Philadelphia lawyer.” I Googled the latter and noted “an expert in exploitation of legal technicalities.” Wikipedia defines a Philadelphia lawyer as “the ultimate in crooked lawyers.” I’d say this adds a new dimension to the phrase “Broad Street Bullies.”
Then there are the lawyer jokes and even a joke about lawyer jokes: Lawyers don’t think they’re funny; and nonlawyers don’t think they’re jokes.
So, the question becomes: Why is our profession generally viewed unsympathetically? Let me express some of my thoughts.
1. LEGAL FEES
We are talking hundreds per hour. Who personally can afford this type of money? Most of us still line up at gas stations like Costco to save a few cents per gallon (that’s per liter in Canada, so we save about 3.7 times as much at Costco). Legal bills can exceed most other expenses, even your car. And at least with a car, you have something tangible you might show off.
I have heard more than once colleagues saying something like: “If I ever had a divorce action with my spouse, I couldn’t afford myself.” (Never mind the part about whether they would hire themselves; they’d have a fool for a client.)
People do not relish paying legal fees. They think: “Isn’t that unfortunate suit enough punishment?”
2. HONESTY AND TRANSPARENCY
Most lawyers are above board. But what does the public see—or not see? They do not see the lawyers spend the time that they claim that they are spending. It is a matter of faith. The lawyer’s bill reads: “Letter to Jacob Henderson, .4 hours.”
No doubt the lawyer wrote the letter. But the client does not see the lawyer reviewing the file, drafting and revising that letter. They only see a bill at $400 per hour, with the letter, alone, costing $160.
We live in the Uber age. If you want to go from A to B, Uber will instantly confirm up front the exact cost, such as $13.43. And the customer can verify this service, seeing that they are not going from A to C.
We can understand why a client will get rattled when they see their lawyer’s bill. And generally, they won’t shift their anger onto Jacob Henderson.
I won’t even talk about high-profile lawyers who strayed and are now in jail (or as Chaucer would say, “in goal, and goode for them”).
3. AMBULANCE CHASERS
There is simply no shortage of lawyers, and competition is understandably fierce. What the public must find disturbing are those large ubiquitous legal services ads. Not to offend any colleagues, I shall not quote any, but suffice it to say they do not come across anything like: “We try harder.” (Actually, after 50 years, Avis changed its tagline to “It’s your space”).
In short, these billboard and media ads often cross the line. There is a local firm in my hometown in Canada that posts its ads on the walls of lavatories over the urinals. This adds a new dimension to the phrase “over the top.”
4. LONG-WINDED COMMUNICATION
As the warden said in the iconic 1967 movie Cool Hand Luke, “What we’ve got here is failure to communicate.”
It’s no secret that lawyers are generally perceived as being long-winded, even when we expect straightforward information. I wanted to connect to a Starbucks Wi-Fi signal recently, and to achieve this goal I had to run through a gauntlet of legal conditions to accept. I must have spent 15 minutes doing so. Meanwhile, my Grande cappuccino cooled off. I will confess I also had the inexplicable urge after reading the document to bill someone “.3 hours.”
Most laypeople likely simply click “agree,” griping about those overpaid lawyers making life complicated.
Aside from being verbose, lawyers also use confusing and excessive terms, including but not limited to a plethora of “hereinafters,” “whereases” and, of course, “including-but-not-limited-tos.”
Nor do we impress clients with our foreign terms such as “voir dire,” “de minimis” or “habeas corpus.” In over 40 years of practice, I never once came across a “habeas corpus.”
Even the terms for lawyers appear a bit ostentatious. “Attorney at law” sounds uppity. Equally sinful, in Canada most office plaques read, “barrister and solicitor.” Many of my colleagues would comment, eyebrow raised, when they saw my letterhead reading “lawyer.” Hey, my practice was in Toronto, not at the Old Bailey.
5. ADVERSARIAL CLIMATE
The nature of the beast is adversarial. Understandably. The other side is the enemy, and ergo so is their lawyer. Therefore, in most cases, it’s likely all the lawyers will be despised by someone.
It would be a coup if we could convince our clients that we’re all decent lawyers doing our jobs faithfully. We must focus on understanding the clients’ perception, reminding them that Shakespeare also said something complimentary about lawyers, namely, “Strive mightily, but eat and drink as friends.” (They likely know about the bard’s other aforementioned comment.)
Other professionals, such as physicians or dentists, don’t have that problem. Then again, who will dare get argumentative with their dentist?
6. CASE DURATION
Compounding matters, most cases linger, often taking months or years to resolve. A dentist’s work, say, is generally done within an hour—fortunately.
The best we can do is to clearly explain the process to the client, ensuring them that the reason for the long stretch is not because their lawyer spends too much time golfing.
7. TAINTED CLIENTS
Lawyers often are detested as a result of the clients they represent. Which one of us has never been asked: “Would you act for a client who admitted to you he committed the crime?” We respond with something like “innocent until proven guilty” or “everyone is entitled to make full answer and defense.” I have yet to hear a layperson comment: “Thanks. Of course, it all makes sense to me now.”
CAN WE CHANGE ANYTHING?
While we cannot generally practice pro bono, it would help to bill reasonably and transparently.
We must market ourselves, but our ads need not look like they were commissioned by the Ringling Brothers.
And we should bend over backward to communicate adequately, with simplicity and even some humility, and in plain English.
Perhaps I can sum it up with a quote from a wise lawyer namely Atticus Finch, the hero in To Kill a Mockingbird: “You never really understand a person until you consider things from his point of view … until you climb into his skin and walk around in it.”
Maybe if we do more of that, the media will be kinder to lawyers next time there is a flood.
Although it was a summary order with no precedential effect, the Second Circuit held in In re: Lehman Brothers Holdings, Inc. that an exchange of emails with a mediator can constitute a binding settlement, even if the parties never signed a written agreement. While the case is certainly interesting and the holding appears to be novel, it appears consistent with traditional contract law principles.
In Lehman Brothers, there was a mediation between Lehman and an individual defendant. The mediator sent Lehman and the defendant an email confirming that they had accepted his proposal and agreed on the amount of a payment in settlement of Lehman’s claim against that defendant. Lehman then sent the defendant the draft of a written settlement agreement. According to the defendant, the agreement contained additional terms that had never been discussed, much less agreed upon in mediation, such as the timing and manner of payment, the identity of the parties to the settlement, the scope of releases, and other terms. Subsequently, the defendant requested changes in the agreement to which Lehman agreed. Finally, the record contained evidence that defendant’s counsel sent Lehman an email saying its client would sign the written agreement as revised.
The question before the court was “whether the parties intended to be bound [to a settlement] in the absence of a document executed by both sides” by considering:
(1) whether there has been an express reservation of the right not to be bound in the absence of a writing; (2) whether there has been partial performance of the contract; (3) whether all of the terms of the alleged contract have been agreed upon; and (4) whether the agreement at issue is the type of contract usually committed to writing.
Altough two factors weighed in favor of an agreement and two factors weighed against and agreement, the Second Circuit ultimately held that the “balance tips in favor of finding an intention to be bound.” It is not clear whether the appeals court would have found a binding agreement had the defendant not later said it would sign the settlement. However, the appeals court focused on the original email exchange when the mediator notified the parties that they had agreed on the settlement amount.
Lesson learned: Words matter, but written words matter more!
What are the damages caused by the WRONGFUL recording of a lis pendens, and I am referring to a lis pendens NOT founded on a duly recorded instrument (e.g., not founded on a mortgage) or a statute (e.g., not founded on a construction or assessment lien)? These are damages that should be accounted for in a lis pendens bond.
The recent opinion in LB Judgment Holdings, LLC v. Boschetti, 44 Fla.L.Weekly D693a (Fla. 3d DCA 2019), relying on Haisfeld v. ACP Florida Holdings, Inc., 629 So.2s 963 (Fla. 4thDCA 1993), explained:
Haisfield looks back at losses that were actually suffered by a property owner from a lis pendens found to be unjustified, rather than at prospective losses that might be suffered. Its methodology is the best yardstick for evaluating the market value component of damages that may result from a wrongfully-filed lis pendens. Haisfield instructs that such damages, if any, are measured by any decline in market value between the time the lis pendens is recorded and the time it is discharged. The proponent of a lis pendens might pay no damages if the market value increased substantially during that time.
Haisfield also recognizes that the expenses of preservation and maintenance of the property subject to a lis pendens may be awarded for the interval between recordation and discharge if the lis pendens is found to be unjustified and the expenses are a consequence of the unjustified lis pendens.
Now, what about loss of investment return / lost opportunity? For example, what if the lis pendens impacts a sale where there is a net market value for the property of “X” after taking the fair market value and deducting brokerage commissions, mortgage debt, and past due taxes. This amount would ultimately represent equity in the property that if the party had could then earn interest—in other words, there is a loss of use of that equity. See, e.g., LB Judgment Holdings, supra (party posting lis pendens bond proffered expert to produce computation to support what lis pendens bond amount should be; although the court required a higher lis pendens bond amount). However, this loss of investment return / lost opportunity could be a damages methodology in different situations as it pertains to a real property dispute depending on the circumstances of that dispute.
Also, attorney’s fees should be factored into the lis pendens bond that “foreseeably may be incurred in discharging a lis pendens.” S and T Builders v. Globe Properties, Inc., 944 So.2d 302 (Fla. 2006); accord LB Judgment Holdings, supra (rejecting argument that attorney’s fees include fees incurred during entire litigation as entire litigation is beyond fees incurred in discharging lis pendens).
It’s been a while since I discussed the role that I believe a construction lawyer should serve. Back in 2013, I discussed how those of us that practice construction law are seen as “necessary evils.” I was thinking over the weekend about certain clients and matters (as I often do, particularly in the shower) and came to the conclusion that the best role for me as a Virginia construction attorney is that of counselor and sounding board for my clients. Sure I come from a litigation background, enjoy working with other construction lawyers here in the Commonwealth, and often the first contact that I have with clients is when there is a problem, but I enjoy my practice, and I believe clients are more satisfied with their interactions with me when I try and provide a more cost effective and pragmatic solution than that which litigation or arbitration provides.
The six years of solo construction practice since 2013 (yes, I’m close to the 9 year mark with my practice) has only served to cement the fact that construction professionals need and want the “counselor” portion of “attorney and counselor at law.” Working as a sort of “in house counsel” to various construction companies, as opposed to simply dealing with the litigation, allows me to better understand their businesses and assist them in avoiding problems through contract review, discussions of situations that come up short of claims, and general risk management. I also get to know these mostly small business owners on a more personal level (sometimes even resulting in a fishing trip or two).
Finally, and likely most importantly, proactive consulting with an attorney saves my clients money in the long run. Frankly, I make more money on a per matter basis if I am litigating for a client. However, that construction client cannot and should not be budgeting for litigation when running its business. It is my job as a construction attorney to do my best to help them avoid litigation and keep projects running smoothly. A few hours of my time helping to avoid possibly hundreds of hours in litigation time is the most efficient way to help my clients. Of course, it helps that I generally like those I work with so helping them is easy.
In short, I take my counseling role (along with my other roles as a lawyer) very seriously. I firmly believe that I best assist my clients in this role because it helps me give pragmatic, cost effective advice that hopefully assists them in a better run, more profitable, and less risky business.