Three international insights from the Society of Construction Law Conference in Chicago

What are the international legal trends for the construction industry, and how can lessons be applied in New Zealand? Partner Janine Stewart shares her insights from the Society of Construction Law Conference in Chicago, where she debated the tensions between experts and lawyers.

  1. Failure to account for ground condition risk is a global issue.  

There is much discussion in New Zealand about the contractor’s perspective on unfair risk allocation in contracts.

In many cases contractors assume risk around ground conditions without enough information and/or time to consider the implications.

Due to the historic ‘lowest bid mentality’ this risk is not allowed for in pricing – the contractor possibly banks on claiming a variation post tender award. However disputes and cost blow outs follow as the contractor will face difficulty if the variation relates to the risk assumed under the contract.

Helmut Johannsen of Singleton Reynolds and the American and Canadian Society of Construction Lawyers gave a thought provoking presentation confirming that issues around risk allocation and ground conditions is a global problem.

Key take outs:

  • Consider the benefits of both parties facing the issue at the outset – and principals either maintaining or sharing ground condition risk, and/or exploring risk mitigation strategy.
  • It is prudent to develop a process where the contractor has sufficient opportunity to investigate to make an informed decision, and price appropriately on ground condition risk.

2. The use of Dispute Boards and their function is not consistent across jurisdictions.  

Dispute Boards are a creature of contract, and the contract determines their function.

A panel of experienced lawyers from the United States, Canada and Australia spoke to the use of dispute boards in their jurisdictions.

In the US Dispute Boards were viewed more as performing a project management function – addressing progress and issues arising during a project, not as a decision making body. Whereas in Canada and Australia dispute boards are review and/or decision making bodies.

Key take outs:

  • While Dispute Boards can hold a variety of functions from an interactive and interrogative to ‘adjudication’ boards to determine (even at an early stage in cases) disputes arising under the contract. There has been mixed success around the world on different functions.
  • Greater success may lie in Dispute ‘Review’ Boards – a proactive board without an adjudication focus. However, challenges arise when boards merge both functions.

3. The expert / lawyer relationship is a hot topic across all jurisdictions.

Sean Brady, Simon Braithwaite, Stephen Price and I spoke on the role of the expert in various countries and the tensions between lawyers and experts that arise. As the panel discussion progressed it became clear that the issues were common despite some differences across jurisdictions on the role of the expert. For example in the United States there is no code preventing advocacy of the expert and the lawyer plays a crucial role in writing the expert’s brief.

Experts in the audience spoke of the need for guidance from lawyers on the law applying to their evidence and of the embarrassment of being ‘thrown under the bus’ by less experienced or educated lawyers requiring them to perform a role they are not entitled to perform (i.e. determining the ultimate issue in a proceeding).

Lawyers spoke of frustration when experts want to explore the full picture before the lawyer had crafted the scope of the question to be answered.

Key take outs:

  • An expert may not be able to answer any lawyer’s question if they haven’t had the opportunity to gather evidence at an early stage and before it is destroyed.
  • Lawyers should responsibly brief the expert on their role and the code/law they must follow to produce admissible evidence.

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