Another year, another conference at the Disneyland Hotel in Anaheim, CA with about 1,500 of my colleagues who work in the construction defect litigation industry. Once again, Dave and Coral Stern put on an outstanding event that was jam-packed with information on how construction claims are being handled, as well as new approaches to resolving claims. Below is an overview with some of my general impressions.
One interesting aspect of attending West Coast Casualty’s Construction Defect seminar is that it really shines a light on the business climate surrounding our little cottage industry. Although I was unable to attend last year’s event, I did notice that there seemed to be slightly less attendees, and less vendors from a couple years ago.
If I were to hazard a guess as to why that is, I’d venture that it might have something to do with a prediction from two years ago that there would be a 75% reduction in construction defect cases over a five year period.
As a result, some of the exhibitors at this year’s event seemed to be spending less money than in past years, and looking at the attendee list, it seems that some firms are sending less employees to attend.
Tightening the Belt
One theme that remains consistent over the years—this year’s event is no exception—is the focus on reducing the total cost of construction claims. There were panel discussions on the difficulty of collecting defense costs from additional insureds (AIs, as they are commonly called), bad-faith claims (which seem to be on the rise), and tactics for dealing with bankrupt defendants and insolvent carriers.
Another theme that seemed to be prevalent was exploring claims involving different types of construction projects and expanding into jurisdictions outside of California and Nevada. For example, there was a panel discussion on public works projects, claims associated with product manufacturing, and multiple panels associated with a wide range of states including Florida, Washington, Oregon, Texas and Colorado.
Why “Doing It Like We Always Did It” Won’t Do Anymore
Of course I would be remiss if I didn’t mention the panel discussion that my colleagues at Xpera Group presented. The title: Why “Doing It Like We Always Did It” Won’t Do Anymore.
This panel started off with economist and market researcher, Alan Nevin, explaining major shifts in the types of construction projects currently underway and in the planning stages. According to Nevin, we can expect to see a whole lot less of the massive single-family residential tract developments that were the “bread and butter” for those of us in construction defect litigation for so many years. Instead, expect a lot more in the way of urban infill, high-density, residential and multi-use projects. While there will likely be some condo projects coming online, expect a lot more apartments to meet the changing needs of the marketplace.
The Xpera team also highlighted an area where I personally see a huge potential for growth: Third-Party Quality Assurance and Quality Control. On the plus side, insurance carriers are realizing that demanding third-party QA/QC helps offset risk. However, we are seeing some unfortunate trends in the marketplace. Specifically, the quality of the third-party QA/QC services are going down as the industry races to the bottom as a result of commoditization. (How’s that for irony?)
In the last several months, I have been involved on several construction claims where well-known and established QA/QC companies failed to deliver on their promise. Sadly, two of these third-party entities are also well-known for their work in construction defect litigation.
Clearly, there is a need in the marketplace for better quality in construction quality management services. Conveniently, that also happens to be my mission in life…
The Only Constant is Change
Summing it all up, I had a blast at this year’s event, although I had to leave early for some family obligations. Now that the industry has matured—in San Diego, we are moving into the fourth decade of construction defect litigation—some of the biggest struggles involve coping with changes in the marketplace and changes to the laws and insurance policy language that dictates how the game is played.
Regardless of the changes, there is no end in sight for construction defect litigation.
In the coming weeks and months, expect more posts on insight gleaned from West Coast Casualty’s 2014 Construction Defect Seminar, as well as posts from another construction defect litigation conference I attended in Key West. Until then, take care.