When it comes to disagreements, disputes, contracts, and other legal matters in construction, how do you know when a lawyer is actually required? The answer to that pivotal question: It depends. In this article, we’ll review some real-world scenarios where hiring a construction lawyer might be advisable — and when an attorney may not be necessary.
What construction lawyers do
Construction law lawyers assist a wide variety of clients — anyone who touches the process of construction may need a construction attorney at some time or another. They represent large companies, individual workers, property owners, and sureties. There are a ton of different reasons these lawyers might be needed, but workmanship issues and payment disputes are two of the most common areas of construction law.
Do you need a construction lawyer?
Unfortunately, that’s a hard question to answer. Whether or not a construction attorney is needed will vary greatly depending on the specific factual circumstances. Still, there are general principles that apply.
Let’s take a look at some common scenarios.
Going to court
This one isn’t quite cut and dry, but the answer is almost always yes.
Everyone has the right to represent themselves in court: That’s a foundation of law in the United States. However, most construction businesses aren’t sole proprietorships. This means that most of the construction companies providing construction work won’t be doing it as simply themselves, the individual, in the eyes of the law.
Whether it’s an LLC, an incorporated company, an LLP, or something else – any organizational structure that isn’t a sole proprietorship will require representation in order to appear in court. That’s true even for individuals operating their business as some other entity (like an LLC). So, in the majority of cases, a construction lawyer will be needed in order to go to court.
Even if you are entitled to, representing yourself in court is often a very bad idea. There’s a mountain of literature out there proving why. Lawyers are experts at their trade, and there’s a reason they get paid to do what they do.
Going to small claims court
Small claims court is unique. It’s specifically designed to be a faster, less expensive, and overall more efficient version of traditional litigation. Plus, it’s designed so that lawyers aren’t really needed in the same way they’re needed in regular litigation. However, the same rule applies as above. Individuals (or sole proprietors) can represent themselves in court, but any other type of entity must be represented.
Read more: How to win your case in small claims court
Also, a lien or bond enforcement action belongs in “regular court” and not in small claims court, as do most other construction-related claims and issues.
Liens, bond claims & other payment disputes
Not every construction payment dispute will require the use of an attorney. There are plenty of things that contractors and suppliers can do to collect payment without the help of a lawyer.
Every state has mechanics lien statutes and bond claim laws can be leveraged without the use of an attorney. Even when it comes to actually making a lien claim or a bond claim, a claimant can typically do that without the use of an attorney.
Of course, when it comes to enforcing these claims, a construction attorney will almost always be necessary – and it will always be a good idea to have a lawyer involved when proceeding with an enforcement action of either a lien claim or a bond claim.
Unlike lien and bond claims, prompt payment and retainage claims will very typically require some form of legal action. If that’s the case, you probably need an attorney, and you should definitely hire one regardless.
However, like lien and bond claims, unpaid parties have an opportunity to leverage these claims before taking to the courts. Construction payment remedies can be extremely severe, so the threat of a claim will always carry some weight.
When a letter demanding payment is coupled threat of legal action and sent by a construction lawyer, the dispute can often be resolved before legal action becomes necessary.
Reviewing a construction contract
Do you need a lawyer to review or help write a construction contract? YES! In fact, this is as close to a no-brainer as it gets.
It’s common for contractors, subs, suppliers, or other trades to fall in love with one contract and use it on every job. Honestly, that’s great! Using the same contract is the best way to ensure familiarity with the terms of the agreement.
Still, prior to adopting a contract of choice, it’s wise to have it reviewed by a construction lawyer. They will be able to assess the strengths and weaknesses of the agreement, spot potential points of contention, and snuff out potential liabilities.
Even if a party will be using a contract form they’re unfamiliar with, it’s always a good idea to have the agreement reviewed by a construction attorney before signing the dotted line. It’s not uncommon for construction contracts to contain troublesome clauses that shift risk, create an inordinate amount of liability, or consent to less-than-ideal dispute resolution terms.
Construction lawyers are experts at deciphering contracts, and they will be able to help construction businesses avoid potential pitfalls.
While the above disputes are specific for the construction industry, other legal claims – like a breach of contract, unjust enrichment, quantum meruit, and countless more – these claims must be made in a courtroom.
These claims may also be leveraged (with or without a lawyer – but a lawyer would help!) in an attempt to resolve the dispute without litigation. However, the threat of litigation won’t be enough to do the trick every time – and if suit must be filed, an attorney is typically necessary.
Regardless of whether an attorney’s help is required, the guidance of a construction lawyer will make this process more easily navigable.
When to call a construction attorney
We’ve described a number of different scenarios in this article where consulting a construction lawyer would be helpful (if not mandatory). Still, let’s take a rapid-fire look at a few common scenarios that require the touch of a construction lawyer.
As you’ll notice, the saying “An ounce of prevention is worth a pound of the cure” applies well here. By and large, the best way to utilize a construction lawyer is to avoid legal issues before they pop up. Even when a construction lawyer is reactively brought in, doing so sooner than later can help keep a dispute under control.
Parties being sued
Fighting a lawsuit without the help of a lawyer is a bad idea. Sure, a lawyer might get expensive — but losing the suit (and failing to minimize exposure) will cost a lot more. Not to mention, they might be able to identify cross-claims to work in your favor.
Parties suing someone else
Same as above! Fighting a legal battle without the help of legal experts is just a bad idea. Engaging in a lawsuit without the representation of a lawyer might not even be legally possible — and it’s definitely not the best option.
Parties under the threat of suit
This one is a little less cut and dry. Not every threat of a lawsuit will require consulting a construction lawyer. However, with the help of a lawyer, it’s much easier to decipher which threats are bogus and which ones have some merit. By consulting a lawyer, a construction business will be able to better assess potential liabilities.
Choosing the right course of action
“I don’t know how to proceed, but I need to get paid.” We hear this all the time in the Payment Help Center, and it’s a common position to be in working in this industry.
When payments aren’t coming, construction businesses have a number of tools at their disposal. Deciding which ones are the most appropriate, most feasible, and most likely to result in payment will be much easier with the help of a construction lawyer.
Both the party injured on the job and their employer will have a use for a construction lawyer in the aftermath of an onsite incident. Injury claims and workers compensation disputes can get ugly, fast. A lawyer can help to keep things on track and hopefully out of the courtroom.
Defective construction claims
Claims of defective construction are one of the biggest drivers of construction litigation. Regardless of what side a party is on — whether they’re claiming a defect is present or defending against a claim of defective work — construction lawyers will help to provide clarity to the situation and might actually help to avoid litigation. They’ll be able to decipher the relevant laws and contractual duties in order to uncover who, if anyone, is at fault and who might be liable.
Taking contractual actions
Want to exercise a feature of the contract, like a termination clause or an escalation clause? A contract might provide for the ability to take an action like a termination or a price escalation — but proceeding without caution could actually result in liability.
Before exercising contractual options, it’s a good idea to talk to a lawyer about how exactly that should be done and some potential issues that might arise. Whether that’s before the agreement is signed or before some action will be taken, the guidance of a construction lawyer is invaluable.
If you think construction law is unique, bankruptcy law takes things to a whole new level. There is a separate court system for bankruptcies, and not every lawyer has the experience necessary to navigate this process. A construction attorney may be able to help you through some of the procedures, but you may also want to hire a bankruptcy lawyer for this specific scenario.
If you are considering filing for bankruptcy protection, a construction lawyer can be an extremely helpful resource, especially if they also have significant experience with bankruptcy law. You will need to have a full accounting of your company’s assets and liabilities, and understand what type of bankruptcy is right for your situation.
Perhaps more problematic is when a customer or a property owner on a project files for bankruptcy, especially when you have outstanding invoices that you want to collect on. Bankruptcy courts have specific rules for creditors in a bankruptcy, which includes timing requirements for collection actions. A bankruptcy lawyer can help you decide whether your outstanding payments are worth the pursuit, and whether a mechanics lien claim can give you extra payment security in the process.
What to do before hiring a lawyer
Once you decide your situation merits a lawyer, take some time to prepare. This will save you time in the attorney’s office — and time is money.
- Do everything you can to avoid the dispute first. This one is worth repeating, since it’s almost always easier — and less expensive! — to avoid a problem altogether than to try to smooth out a problem after it’s already happened.
- Be organized. Have all of your paperwork organized and readily accessible.
- Document everything. Get your contracts, change orders, and other important documents in writing and signed. Have backup paperwork for anything that’s related to the dispute.
- Follow your contracts to the letter and send any required contract notices. Following your contract to the letter doesn’t give a potential legal opponent much room to maneuver.
- For payment issues, leverage your lien rights. Send preliminary notices and a notice of intent to lien if a payment issue develops. Lien rights are just that — rights. They’re there to make sure folks just like you get paid the money they’ve earned. Don’t be shy about leveraging your rights!
Finding the right lawyer
There are a number of other websites online that help connect lawyers with parties that have legal questions, but very few that focus specifically on legal advice for construction businesses. We have a network of thousands of construction attorneys across the country that are ready to help.
Related: Find a construction lawyer near you