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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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• Ways of organizing a construction project change
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• Construction industry firms change (in size in capabilities)
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51 change (in size, in capabilities)
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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51 • Contractor Has All Site Condition Risk
• 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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51 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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• 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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51 Prove Damages?
• What Are the Requirements for an A t bl CPM D l A l i ?
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• 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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hop Sources of Contract Law Rules
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• Statutes
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• Common Law
• Contract Terms
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51 • 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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inte 1960 12% of cases filed went to trial
(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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• 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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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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