Transcript Construction Law Update

Construction Law Update
March 6, 2003
AGENDA
GOOD MORNING!
ARE YOU ASKING FOR IT?
(TEN TIPS FOR INEFFECTIVE CEOs)
CHOOSING A PROCESS
WHEN, HOW, WHAT TO CLAIM
LITIGATION PRIMER
Are You Asking For It?
Top 10 Tips
For Highly
Ineffective
CEOs
Tip # 10
Develop a Culture of Fault
(seek out & punish the innocent)
Tip # 9
Ignore the Maxim:
Think Lots;
Say Little;
Write Less.
(especially in the age of e-mail!)
Tip # 8
Be “Penny Wise & Pound
Foolish”
(don’t train staff;
don’t pay to have someone look
over the contract documents;
wait ‘til its too late)
Tip # 7
Put Personalities Ahead
of Practicalities
(silverbacks in the Ruwensori; “I
don’t care what it costs”
mentality)
(try to be somewhere in between)
Tip # 6
Plan to Make Your
Money at the Back End,
Not the Front
(forget the bid,
just get the job;
make profit on extras)
Tip # 5
Draw Lines in the Sand,
Early & Often
(encourage a culture of
confrontation & withdrawal)
Tip # 4
Rely on Ambiguity &
Assumption
(i.e. b.s. baffles brains)
Tip # 3
Choose Volume over
Quality of Business
Tip # 2
Ignore “Credibility” as a
Corporate Asset
(look ahead, examine industry
leaders. What is their chief
asset? Capital or Credibility?)
Tip # 1
Give all your
Profit to
Lawyers &
Consultants
10.
9.
8.
7.
6.
Develop a Culture of Fault
(seek out & punish the innocent)
Ignore the Maxim: Think Lots; Say Little;
Write Less
Be “Penny Wise & Pound Foolish”
(don’t train staff; don’t pay to have someone
look over the documents)
Put Personalities Ahead of Practicalities
(silverbacks in the Ruwensori; “I don’t care
what it costs” mentality)
Plan to Make Your Money at the Back End,
Not the Front
(forget the bid, just get the job; make profit on
extras)
5.
4.
3.
2.
1.
Draw Lines in the Sand, Early & Often
(culture of confrontation & withdrawal)
Rely on Ambiguity & Assumption
Choose Volume over Quality
(TCA program)
Ignore “Credibility” as a Corporate Asset
(look ahead, pick industry leaders. What is
their chief asset? Capital? Credibility?)
Give all your Profit to Lawyers & Consultants
Keeping Your
Options Open
Charge of the Light Brigade
A British cavalry charge during the battle of Balaclava (present day
Ukraine) in the Crimean War in October, 1854. A misunderstanding led
to British cavalry being committed to an attack up a valley strongly held
on three sides by Russian troops. Of 673 men, less than 200 returned
from the misdirected charge.
When
to
Claim
How
to
Claim
What
to
Claim
Early Claims Resolution Strategies
Choosing a
System
Perfect Procedural Fairness
(if the process is right, the result doesn’t matter)
“Your Case”
(individual
outcome)
Golden Rule:
“Do unto others etc.”
“Big Picture”
(- societal
outcome
-fair exchange
of values
-fair balancing
of risks)
Perfect Outcomes
(if the result is right, the process doesn’t matter)
Justice Circles
Perfect Procedural
Fairness
Utopian Ideal
Trend of Courts
(Faith in System)
Your
Case
Big
Picture
Trend of ADR
(Faith in person)
Perfect Outcomes
Coin Toss /
Lottery
Divine Justice
Choosing
A
Process
CCDC 40
CCDC 40 was developed for use with
CCDC 2 -1994, Stipulated Price Contract
Provides rules for mediation and
arbitration, depending on contract
Mediation: entirely voluntary, no-risk
process
Arbitration: most formal ADR procedure,
binding outcome
Dispute Review Boards
Parties select DRB panelists at outset of contract
More formal than jobsite negotiations, less formal
than arbitration
No discoveries, but full documentary backup
DRB first meets after exchange of documents
By the time the claim reaches the DRB, DRB
should be partially familiar with the claim
DRB conducts “meetings”, not “hearings”
DRB issues detailed written recommendation for
resolution of dispute
Any party dissatisfied with outcome can litigate
Mediation
Non-binding method of dispute resolution
Parties select mutually acceptable mediator
Parties voluntarily reach their own mutually
acceptable solution or settlement
Dispute is not translated into legal issues
Process is not a litigation look-alike
Mediation is usually conducted without prejudice
to the parties’ legal positions
If mediation does not result in a solution, parties
are free to commence litigation
Arbitration
Binding process of dispute resolution
Parties choose one or more neutral arbitrators
(panel)
Evidence is presented to panel
Panel renders award in form of damages or
other equitable relief
Limited right to appeal binding and final award
Enforcement mechanisms under provincial
Arbitration Acts
Pros and Cons
Arbitration
Pro
Summary in smaller
cases
Access to expertise
on panel
It’s all confidential.
No-one ever needs to
know
Con
Ends up looking &
costing like litigation
in bigger cases
You end up paying for
3 judges and a
courtroom
No precedent value –
the law stagnates
Mediation
Pro
It works
Con
It works
People go in
committed to
settlement
The built-in
assumption, going in,
is that there is a not
payor, not payee
It is not necessary to
do production and
discoveries
People can lie in
mediation and get
away with it
Litigation
Pro
Decisive
Con
Expensive
Coerces settlement
Investment at point of
settlement can be high
So do other systems,
if done right
Adversary system
gets to heart of matter
Specialty courts shape
an industry, take “big
picture view”
Little or nothing ever
goes to trial anyway
Litigation # 2
“He saw a lawyer killing a viper, on a
dunghill hard by his own stable. And the
Devil smiled, for it put him in mind of Cain
and his brother, Abel.” – Coleridge
“For, as thou urgest justice, be assured
thou shalt have justice, more than thou
desirest”. – Merchant of Venice IV, I, 315
The Lost Art of Settlement
Example: Settling a Lien Claim
Preliminary Points:
It is not necessary to settle every issue to
settle the lien issue
Interim or partial settlements are perfectly
fine
Issues in rem may be separated from
issues in personam
Settling a Lien Claim II
Solicitor’s Role:
Bring parties together in such a way that
they are likely to reach mutually
satisfactory terms
Know the parties, be aware of state of
various lien claims, status of pleadings
and particulars, status of productions and
discoveries
Settling a Lien Claim III
Three essential tools for reaching
settlement:
Good spreadsheets
Good mathematics
Good communications
Settling a Lien Claim VI
For more detail:
D.W. Glaholt, Conduct of a Lien Action
(to be published by Carswell later this
year)
When All Else Fails
LITIGATE
Litigation
Primer
Golden Rules
4.
3.
2.
1.
To calculate costs: witness x 2 x 510,000 = trial cost; trial cost x 2 =
total cost
If it goes to trial, it will cost each
side the amount in issue, before
you get a judgment
Your first loss is your best loss
A bad settlement is better than a
good lawsuit any day of the week
Day # 1
$500,000 Claim
Goal: Get to Zero
Net Gain
Net Loss
-500K
(Claim)
6-12 Months From Day # 1
A dozen or so letters; two case management conferences;
some production; some discoveries
Net Gain
Net Loss
-650K
(- 500K claim
-150K accrued costs)
12-18 Months From Day # 1 $250,000 settlement
More discoveries; more motions; a successful mediation
Net Gain
Net Loss
-500K
(- 500K claim
-250K accrued costs +250K settlement)
18-24 Months From Day # 1 $500,000 Judgment
Net Gain
-200K
Net Loss
Loss 18-24 Months From Day # 1
Net Gain
Net Loss
-1,300K
(- 500K claim
-500K accrued costs - 300K to successful defendant)
Questions?