Recap: West Coast Casualty’s Construction Defect Seminar 2012

The 19th annual West Coast Casualty’s Construction Defect Seminar (WCCCDS), held at the Disneyland Grand Hotel has come to a close.

Preliminary estimates of attendance indicate that this year’s attendance may have been down slightly from last year, though the final numbers won’t be available until later this week. Overall, it was clear that a good time was had by all – especially for all the suits stumbling around Downtown Disney late Thursday evening…

The Good, The Bad, and The Ugly

In the “good” category, there were definitely some standout moments during this year’s conference. Whereas last year, only one company seemed to be taking a proactive approach to preventing construction defect litigation, this year there were several firms that were promoting quality assurance and quality control (QA/QC) services. Although many of us depend on revenue generated through the construction defect litigation process, it has always been my perspective that the goal is to improve quality in the built environment. Since WCCCDS caters primarily to residential construction defect litigation, much focus pertains to how large-scale speculative home builders address defective construction. I heard first-hand about how some insurance carriers are offering discounts on premiums for contractors implementing third party verification of quality. Unfortunately, the profit margins for performing third party QA/QC are incredibly low, and as a result, most large builders’ quality verification programs are (to me) less than ideal.

Something else that was clear at this year’s event was the impact that technology has on the construction defect industry. In order to improve efficiency and reduce the total cost of claims related to construction defects, forward-thinking firms presented evidence of technological innovations. My friend Rob Mathewson debuted his cloud-based construction photo documentation platform to the defect industry and provided plenty of hands-on demonstrations of how this software would benefit those of us that depend on photos for evidence in disputes. Jim Hays and I skipped lunch to discuss his construction inspection software that his firm developed at great expense for documenting both course-of-construction and post-construction investigations. On Thursday afternoon, I had a chance to talk about the incredible series of webinars that Pete Fowler’s firm has been offering to the community. And last, but certainly not least, the full LiMa Solutions team was on hand to showcase their innovative approach to resolving construction defect claims.

Regarding the “bad” – I do not want to single out any one particular firm or individual. It was clear in the exhibit hall that there were less vendors than in past years. Due to a downturn in construction defect litigation, there are a number of firms that have endured reductions in staff, or have merged with other firms, or have gone out of business altogether. In other situations, some firms have split, leaving some rather negative emotions. As I walked around and spoke with various professionals, I noticed some less-than-content demeanors. In almost every case, these professionals are involved with firms that have failed to adapt to the changing marketplace. This, in part, inspired me to write about pivots in business strategy at my personal blog.

The primary “ugly” truth that was abundantly clear during the 2012 WCCCDS is that the world of construction defect litigation is changing. Economist, investment advisor, and analyst Gary London clearly demonstrated that the number of construction defect lawsuits filed is trending downwards. To add further insult to injury, because new construction (particularly in the residential sector) has almost come to a halt, the future is quite grim for construction defect litigation. It is unlikely, perhaps even impossible, that construction defect litigation will somehow cease altogether. However, the total amount of work available for construction defect professionals (especially expert witness firms) is shrinking fast.

Image courtesy HBC4511

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