Antonios Dimitracopoulos and Andrew Van Niekerk jot down best practices to be applied in the document intensive construction arena when the services of a lawyer are required.
There is only one thing that a lawyer dreads more than not getting paid on time and that is not receiving clear, timely and succinct instructions. Instructing a lawyer whilst not exactly an art form, does nevertheless require the openness and trust that one has with one's own doctor.
Just like it would be unthinkable for a patient to dictate how doctor should conduct an examination, how much time the doctor should spend and generally how he or she should go about carrying out their profession, it would be equally inappropriate to apply such restrictions to a lawyer.
Particularly with regard to the paper chase environment prevalent in the construction industry, this point cannot be overstressed.
It is a common practice that a developer, contractor or an architect for example would avoid obtaining legal advice before entering into a contract and simply hope for the best. This practice alone is very likely to bring about legal problems and necessitate the urgent dispatch of a dispute to a lawyer's intensive care unit. Even in that desperate scenario, when having to resort to a construction lawyer becomes inevitable, attempts are often made that seek to shortcut the steps that should normally be taken in conducting a full and detailed briefing, for the sake of what appears to be a short-term saving on legal fees.
The instances where such shortcuts are encountered broadly fall in two categories.
Firstly at the stage of corporate set up and contract negotiation and secondly at the stage of dispute resolution.
The pre-contentious stage
It is not uncommon for a lawyer to come across instances wherein, through lack of initial legal consultation, parties involved in construction projects have:
chosen an inappropriate type of legal entity to set up their corporate presence for the services offered in a selected project,
engaged into contracts for which they are not duly licensed in terms of the economic activity required,
engaged into contracts for which no prior legal input was obtained
proceeded to full provision of services with no contractual commitment being executed and none of the ensuing rights and obligations being reduced to a legally binding document.
The consequences of such lapses are predictable and would range from unnecessary legal exposure of the entity's set up, inability to limit liability to risk of imposition of fines from local authorities or revocation of licence obtained and loss of negotiating power during the course of the works or the occurrence of a dispute.
Equally predictable would be the benefits of ensuring that legal consultation is obtained and legal advice is heeded to, including the immediate advantage of knowing what lies ahead in terms of risk assessment, limitation of liability and enforceability of contractual agreements.
There are long term benefits that would also surface in the event of a dispute arising and relating primarily to a lawyer's thorough understanding of a corporate status and contractual position as a result of the fact that he/she would have advised on the setting up options, assisted in the licensing process and drafted or negotiated the relevant contract.
Starting off from the wrong footing in terms of corporate set up and contract negotiation can have traumatic consequences for the newcomer in this dynamic and intense construction market.
Proceeding to the next contractual adventure and running at the frenetic speed of this region's phenomenal growth, can be daunting.
Thankfully, this growth has led to a trend over the recent months among consultants, developers and contractors to be more meticulous in determining what contracts to embark on, which parties to contract with and what consequences the legal arena that awaits them entails. As a result, an increasing number of existing and, more often than not, new players of the local construction scene, seek the guidance of legal consultants even at the expense of eventually having to decline what initially appeared to be an attractive business opportunity.
The contentious stage
In circumstances where despite all best efforts have been made to avoid an unpleasant outcome, a position is encountered whereby some form of dispute resolution process in necessitated, instances arise wherein a reluctance is noted to entrust the full scope of an acrimonious matter to the hands of dispute resolution experts.
Still vividly etched in the back of the affected party's mind, is that bill that was paid to lawyers for their prior services during the contract negotiation stages and the thought of having to do so once more for what appears to be heading to a legal battle, is often positively uninspiring.
Once again, the judicious approach to take would be to provide a lawyer with all the pieces of the jigsaw puzzle, all the evidence available, with clear and uninhibited instructions to proceed to an effective, fair and practical resolution. And once again, many clients choose to make an uniformed and legal costs conscious decision on what the lawyer may need in order to provide the required services.
Such uniformed decision may range from isolation of one page from a contract with a request to advise on the validity of an out of context contractual clause, to presenting a set of theoretical assumptions with a request to determine what the legal position would be should those assumptions ever materialize.
Subsequent approaches could culminate in pressure for minimal time spent in reviewing and advising on the relevant facts, to discounts given on invoices issued. The doctor/patient analogy would once more flesh out how precarious a false economy approach could be.
So what would be an advisable approach?
As in most cases, precaution is better than cure. However, in the very documentintense area of construction, knowing how much to give to a lawyer is admittedly, less than straightforward, so the tendency of many clients not to err on the side of caution and provide as little as possible is sometimes understandable.
When it comes to preventing a dispute from occurring or an unfavourable development in its resolution from taking place, the following guidelines may prove to be of use to the prospective client who wishes to minimise long-term legal costs as opposed to economising on short-term ones:
Hand over a full written brief of the factual background and a complete set of all documents, clearly marked in separate dividers for easy and therefore most cost-effective reference, to the appointed lawyer enabling him to assess the parties' contractual obligations / entitlements and identify any provisions of the contract that are in conflict with UAE Law and practice.
Avoid random or subject extrapolation of the relevance of isolated contractual provisions, correspondence or factual elements.
Frequently, clauses snatched from a contract, cannot in isolation adequately illustrate a client's holistic contractual entitlements or obligations.
Adopting this approach would tend to perpetuate the practice that resulted in a client urgently seeking legal advice in the first place by trying to shortcut the way to an unfamiliar track. There is an inherent legal risk to this practice in that a lawyer is deprived of the opportunity to fully comprehend all contractual obstacles that need to be overcome to make or break a claim, or advise on the repercussions of a contractually agreed clause. It is also inevitable that the constant clarification that would be sought by a lawyer would escalate the actual costs that are involved, in comparison to the position where one had furnished all necessary documentation in the first place.
Provide all project documentation applicable not only to justifying your claim but also to refuting those allegations that have been made by the opponent. To this end, generally most claims are corroborated or refuted by comprehensive extracts of correspondence, notices and substantiation of notices, as well as any determinations that were submitted between the parties and that relate to the claim and/or the factual background to the claim.
Compile, in conjunction with the review of the project documentation, a full narrative of the facts that have led to circumstances requiring the claim to be made or defended and which can be represented to a lawyer at, or prior to, a first meeting.
Appoint one or two members of staff as the key points of contact having regard to their familiarisation with documentation and knowledge of the historical project background.
The most crucial aspect of any claim for damages, should the matter go to arbitration, is the actual substantiation of the quantum. The best practice that clients could follow to properly motivate quantum, begins at the outset of a project by following best accounting practice (especially in an environment such as the UAE with the lack of tax regulation) ensuring that all files and figures are kept up to date and are in as great a detail is possible. This practice could be enhanced where a narrative on each invoice is kept that records the reason for the expenditure, i.e., whether it related to extra man-hours or idle time due to an employer /contractor delay (for instance a delay in free issue material). If the foregoing has occurred, it is usually the case that arriving at a factually sound and credible substantiation of damages claimed based on the facts of the case can be achieved fairly early on in the process.
If, however, the steps outlined in paragraph 4 have not occurred, this exercise can be started prior to, or in conjunction with, instructing your lawyer. At this time, the lawyer's fees can be minimised as much as possible by reason of application of legal principles to readily available evidence, as opposed to the investigation and location of the evidence before the application of legal principles can be achieved.
If, at a minimum, the foregoing steps have been carried out by a client, the invariable outcome is adequate instruction to lawyers who in turn would be enabled to make prompt deductions and to take swift action at a minimised cost.
© Al Tamimi & Company 2006
