The Future of Construction Law & Claims

March 15-18, 2012By: Andrew D. Ness

Jones Day

p Who Am I?er

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p Who Am I?

• Partner, Jones Day, Washington, D.C.

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, y, g ,• Construction Lawyer – 33 years in practice• Chair-elect, ABA Forum on the Construction

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Industry• Fellow, American College of Construction Lawyers

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, g y• Contract drafting/negotiation, counseling, dispute

resolution

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• Contractors, Owners & Engineers

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The Future of Construction Law & Claims

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Where is new construction law going to come from?

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51 How is the law going to develop and change?

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Construction law needs to change!

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• Society changes• Construction technology changes

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inte Construction technology changes

• Ways of organizing a construction project change

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• Construction industry firms change (in size in capabilities)

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SOTh l i th

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construction process needs to change

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p I d t D l t Gi

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hop Industry Developments Give

Rise to New Legal Issues

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• Rise of Design-Build

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• Development of a Variety of Other Alternative Delivery Systems

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• Integrated Project Delivery (IPD)• Building Information Modeling (BIM)

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• Green Construction, LEED Certification• Location Based SchedulingA

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• Location-Based Scheduling

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More Law, Really??

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p Law Does Changeer

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• Delay in Completion is Minor Breach

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• Absolute Rule of No Apportionment Where

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Both Parties Cause Some Delay

• Contractor Has All Site Condition Risk

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• Availability of Extended Home Office

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Overhead

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How Does Construction Law Get

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Made?

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And What is it Actually?

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The 7 Minute Law Degree

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Construction Law =

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Contract Law (Mostly)

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Contract Law = State Law

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Freedom of Contract –

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The Contracting Parties Agree on the

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Contract Terms, Which Are the “Private Law” Between Them

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p Types of Contract Law Ruleser

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R l Ab t H t I t t C t t

Types of Contract Law Ruleses

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te • Rules About How to Interpret Contract Language

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• Default Rules That Govern When the Contract Terms Are Silent

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• Special Exceptions – Contract Terms That Will Not Be Enforced

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Rules That Deal With Issues That Contract Terms Do Not Normally

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hop Contract Terms Do Not Normally

Address

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• When Can a Total Cost Claim Be Used?

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• When Can Estimated Costs Be Used to Prove Damages?

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• What Are the Requirements for an A t bl CPM D l A l i ?

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rna Acceptable CPM Delay Analysis?

• What is an Acceptable Way to Prove Labor A p yInefficiency?

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p Sources of Contract Law Rules

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• Statutes

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• Common Law

• Contract Terms

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p Construction Statutes

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hop Construction Statutes

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• Mechanics’ Liens

Prompt Payment Acts

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• Anti-Indemnity Acts

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• Prohibitions on No Damages For Delay

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Common Law = Reported Case Decisions (Mainly Appellate)

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E thi El “S d S ”

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Secondary sources are: treatises, articles, blogs, restatements, etc.

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Congratulations!

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So What’s the Problem??

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Nobody Tries Cases Anymore

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The “Vanishing Trial”

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p The Vanishing Trial

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• 1960 – 12% of cases filed went to trial

The Vanishing Trial

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(civil cases, Federal courts)

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• 2009 – 1.7% of cases filed went to trial

• Between 1992 and 2001 number of trials in

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the 75 most populous counties declined by 50% (although filings increased)

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• State of Hawaii in 2008 – 17 civil jury trials!

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Why?? A D R

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Is This a Good Thing or a Bad

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Construction Law Stops Evolving

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Hon. Nathan Hecht, Texas Supreme Court:

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“I think it’s a detriment if we lose the d l t f th l th h

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and appeals that have been the [basis of the] rule f l i thi t i it f di ”

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Rt. Hon. Beverly McLachlin, Chief Justice of Canada (& recovering Construction Lawyer):

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“All f l t ti l i l d d

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living, constantly evolving trees. Some branches t d th k d d t i i

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Thus, the law develops and remains responsive to h i i t ”

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“The Construction Law tree looks different than it

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used to. It may not be dead, but new branches are not appearing as often as they once did And

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old branches that need pruning are being neglected ”

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How Long Has This Been Going

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On?

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p Forensic CPM Analysis for Claims

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hop Forensic CPM Analysis for Claims

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inte • Started Being Used in Early 1970s

• Quickly Accepted as Persuasive Evidence

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• A Staple of Delay Claims for Nearly 40 Yrs.

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• What Does Bruner & O’Connor Say?

D t B d f C L I l i

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Federal Government Contracts

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How Many Cases From 50 States & Federal Courts (Non-Govt)?

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- Less Than 10 -

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p Other Exampleser

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• Design/Build and EPC ? (30 yrs)

PPPs ?

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• BIM ?

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Forget About it!

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What is the Effect?

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In Preparing a Delay Analysis: Would it be B tt t H M & Cl G id

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to What is Acceptable?

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In Mediation/Settlement Discussions: W ld Cl L l R l M k

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Greater Reluctance to Adopt New

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Ideas, Such as BIM and IPD

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“Most disputes can and should be resolved by ADR processes. But where issues arise that

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require resolution by the courts, that should remain an option.”

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• Channel Disputes Involving Novel Questions f C t ti L t T i l?

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• Publish Arbitration Decisions?

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• Appellate Arbitration, With Published D i i ?A Decisions?

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Where Do We Go From Here?

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“Nature Abhors a Vacuum”

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But What Takes the Place of

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How About Statutes?

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A “Uniform Construction Code” ?

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Can Standard Form Contracts Fill the

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Gap?

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p Contract Forms Have Changed er

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• Suspension of Work

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• Differing Site Conditions

• Termination for Convenience

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Beyond Existing Standard Forms:

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U F d f C t t & M k O

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Own Law?

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A Standard Contract Addendum --With Legal Principles the Parties Want

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“Making Law” One Contract at a Time

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Only Gets You So Far . . .

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How Can We Develop New Legal R l f M G l A li ti ?

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What Role for Construction I d t I tit ti ?

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p Major Industry Groupser

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• Trade Associations – AIA, AGC, COAA, ASA etc

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• Lawyer Groups – ABA Forum On

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Construction Industry, American College of Construction Lawyers

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• Other Groups With Some Claim to Independence Impartiality

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• AACE International?

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Industry Institutions as Emerging “S f L ”

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If Not You, Then Who?

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Will it Happen?

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Substantial Barriers:

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1. History & Tradition

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y2. Judges’ Conception of Their Role

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Th k Y !

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