A Subcontractors Plight: Mitigation or Litigation

On Behalf of | Nov 20, 2020 | Construction Litigation

Subcontractors are often forced to navigate through the legal morass that is construction litigation. Pursuing general contractors who refuse to abide by contracts forces them into a complex process, whether it involves lawsuits or alternative dispute resolution (ADR).

The most enforceable of contracts can become points of contention when one side violates the agreement. Subcontractors are left with bills not paid, accusations of defects, and disputes over change orders. Language in the document may call for a form of dispute resolution to prevent a more costly trial.

Negotiation as an option

ADR is the more cost-effective means to subcontractors’ goals. Mediating is not about weakness but pragmatism. Should negotiations fail, litigation is an option. However, victory is not a certainty, and it comes at a financial cost with no say in the outcome. Trials can potentially wipe out the prospect of profits. Conversely, ADR puts a subcontractor in control of the process instead of putting their livelihood in the hands of a judge or jury.

In some cases, litigation is inevitable when a general contractor refuses to find common ground. A cost-benefit analysis is paramount to ensure that the risk is worth the reward. Yet, even if a verdict goes their way, the opposing side may employ delay tactics with no intention of paying at all.

While financial considerations are essential, professional reputations and future work must be a factor in determining the resolution of a dispute. General contractors put in the position of defendants may not wish to do business with a subcontractor they consider “litigious.” New prospects who are aware of other disputes may be reticent to enter an agreement as well.

In the end, enforcing a legally binding agreement will always be the best option and sets a precedent that helps all subcontractors, should they find themselves in disputes.