Just returned from the Forum's January meeting in Scottsdale. One of the many well attended and well done programs was a breakout session on litigating the $200,000 case, put on by Franklin Elmore of the Elmore Goldsmith firm in South Carolina, and Erik Raines of the Hill Ward Henderson firm in Tampa Florida.
For construction lawyers, litigating a case in which $200,000 or less is in dispute, is a difficult challenge. Construction claims tend to be complex, involve multiple parties, and often require the assistance of experts in order to be resolved. Even a small payment dispute between owner and contractor, or contractor and subcontractor, will often be accompanied by quality of work or delay claims that are traditionally reviewed and explained in trial by experts, and the cost of litigating a smallish fight can very easily eclipse the amount in dispute. So, what are some tips for litigating a $200,000 (or less) construction dispute?
1. Define what a "win" is up front: because of the financial constraints on a $200,000 case, and the reality that litigation to conclusion will make the case financially unfeasible, it is important to define up front what a "win" looks like when you know you will likely not take a case through trial. Going in to a dispute with managed expectations is important for these cases -- even if the case is a slam dunk based upon the evidence, if the cost of presenting that evidence at trial eclipses the sum in dispute, that does the client no good. So, understanding that a "win" in a $200,000 case means getting what you need (but not everything) but at a cost that still makes the endeavor worthwhile, is key.
2. Take advantage of early mediation: many construction contracts include pre-dispute mediation clauses requiring parties to attempt to resolve their differences in mediation before proceeding to litigation. Often parties treat this as a perfunctory exercise but for certain cases this presents an opportunity to resolve a case early. This requires cooperation and early preparation by counsel and a decent measure of client control/expectation management. Also, careful selection of the mediator is important. For personality driven disputes, it is important to find a mediator who can bridge differences. For disputes based upon entrenched and differing views of the facts and law, it can be very helpful to find a hard working, evaluative mediator who is bright and who can offer a neutral third person's view of each sides' case. Attorneys (and clients) must work up their cases to the extent possible before an early mediation, and go in prepared to settle. In such cases I have settled disputes early. Where any of these components are missing, parties can be prepared for a long dispute.
3. Notify carriers/invoke indemnity provisions early: Frank Elmore pointed out at the conference that most litigants do not pay enough attention to the indemnity provisions, and use them in conjunction with other measures in the contract, to accomplish effective risk shifting. Insurance companies can be very slow to act and make agile litigation (and resolution) difficult. How common is it for insurers to refuse to start discussing numbers until they have seen fully fleshed out expert reports, involved every possible other insurer or subcontractor, and been advised of the likelihood of success on the merits after months of costly depositions? This may be well and good for the multi million dollar defect case, but what about one that is for $200,000 or less? For attorneys who have the good fortune to work with experienced adjustors who understand the way that claims can escalate if allowed to fester, agile and prompt action by insurers is possible and can lend itself to quick settlements. Claimants complaining about defects in their homes/buildings will have much less incentive to continue finding defects and escalating their claims, if they have reached a settlement with the only likely source of funds in a construction defect dispute. Understanding this, it is always in the best interests of the defendant and insurer to try to work a resolution to a case sooner rather than later, even if every fact is not known, because in defect cases, chances are that the cost of the claim is only going to go in one direction.
4. Technology advances: Elmore and Hicks stressed the importance of using the technological advances that are available for litigants, such as predictive coding for document review. This is at bottom software that enables a computer to weed out documents that are key to a case instead of requiring manual review of each page by an attorney or paralegal. The upfront cost of such software makes its something that will have to be planned for by firms up front and not attributed to a single smallish case, but for those firms that have it and are able to effectively use it, they will have a competitive edge both in marketing themselves and litigating such cases.