Technology like eSUB provides companies more protection against “reptile theory” and “nuclear verdicts” trends in the construction industry
Contractors and subcontractors are facing a surge in litigation, with disputes reaching unprecedented values, according to a recent report by Arcadis. This trend – where the average value of disputes in North America increased by 42% from 2021 to 2022 – is expected to continue in 2024. As a result, legal experts say many commercial contractors in the construction industry are turning to management software as an inexpensive hedge against lawsuits.
“Most contractors have pretty disorganized books, so there’s very little paper trail,” said Dan Bawden, a custom home builder, renovator and attorney. “A good lawyer is going to beat you up with that. Management software allows you to have photo documentation of what’s happening on the job and record signed change orders, which is the number-one reason for most construction disputes.”
Recommended AI News: High Point Aerotechnologies Announces the Acquisition of Flex Force Enterprises
Bawden said the rising phenomenon of “nuclear verdicts” poses an additional threat to the construction industry. These substantial legal judgments, exceeding $10 million, are often associated with the reptile theory.
“The reptile theory is a plaintiff attorney making jurors feel that our industry intentionally seeks profits over safety,” Bawden said. “In the courtroom, especially in jury trials, every juror sitting in that jury box has been ticked off by a contractor somewhere along the line or somebody in their family has. So, the courtroom and these dispute resolution settings are not good for us and should be avoided at all costs.”
Andee Hidalgo, the owner of Spearhead Construction, said entering information daily into reporting software may seem time-consuming and tedious, but having documentation makes it easier to prepare for whatever could happen. She said she’s now empowered to respond promptly to disputes and request compensation for delays and additional costs.
Recommended AI News: SEI and TIFIN Partner to Power the Future of Wealth Through Artificial Intelligence
“We genuinely rely on those field notes,” Hidalgo said.
They help her respond quickly when forepersons in the field share critical information about the contract requirements.
“That’s the difference [between] surviving and not,” Hidalgo said.
She said subcontractors frequently grapple with justifying work that wasn’t part of the original contract or tasks that took an unexpected turn. Without a solid record, they have no basis for explaining payment for their work and the escalated materials and administration costs. These claims are often submitted after the fact (if at all) — hanging in the balance, threatening profits and leading to disputes.
This is why lawyers like Bawden said real-time, meticulously recorded documentation that includes every change order and additional hour can give subcontractors evidence to help them stay out of court and on the job site.
Recommended AI News: AXYS and F4CP Revolutionize Chiropractic Data Management
[To share your insights with us as part of editorial or sponsored content, please write to sghosh@martechseries.com]
Comments are closed.