Crunch affects claims in the building industry

Oct 1 2008 by Tony McDonough, Liverpool Daily Post

IT IS a brave man or woman that can say that the credit crunch is not affecting them in some way or another, be it at work or home.

Over the second and third quarter of this year, and certainly the last few months, a number of trends have emerged in relation to legal issues associated with the construction and building industries.

For example, we have seen an increase in the number of smaller value claims being referred. This time last year, it may well have been the case that such claims were discussed between the parties and a commercial settlement reached in order to perhaps preserve the working relationship and move on to the next project. This trend suggests the industry is now going for everything.

Clients are also seeking early legal advice before a dispute has arisen on matters such as interpretation of contract conditions in an attempt to avoid conflict as well as what to do in anticipation of a dispute.

In the current economic climate, there is a real need to settle disputes at a proportionate cost. Some clients are telling us that parties are trying to settle claims as soon as they emerge without recourse to legal action.

We must assume that this reflects an attempt to avoid the potential of the other side not being around when it comes to enforcing a settlement.

While there has always been a wish on the part of clients to have claims dealt with quickly, it is of greater concern in the current climate, either to maintain cashflow or to avoid the other side experiencing difficulties with its solvency, with the consequent inability to recover the claim.

I left the construction industry in the UK in 1995 while working on the Jubilee Line, London, to work overseas. “Subbie bashing” was a term in the civil engineers’ dictionary then.

Rather than growing old and passing away gracefully, it seems to have married and had a few children – employer, developer, contractor and consultant.