Hard to Handle: Today’s increasingly complicated construction claims

Over the past 20+ years, most of my client-facing work has been associated with some facet of resolving conflicts in the architecture, engineering and construction industry. This has given me a unique opportunity to see behind the scenes of cases that have shaped risk management trends in the built environment.

At the Xpera blog, I shared some my observations of some of the biggest changes affecting real estate design and construction, particularly related to the increasingly common high-stakes, multi-party complex claims that my team and I have been facing daily for the past several years. Here’s an excerpt:

Single-family residential lawsuits involving dozens or hundreds of homeowners in a single tract, which once represented the bulk of claims in terms of both quantity and dollar value, are now quite rare. The reason for that should be immediately apparent to most in our industry: America’s home building productivity screeched to a halt during the recession and has yet to resume to previous levels. Similarly, condominium and other multifamily for-sale projects haven’t been in vogue for a decade, so we don’t see nearly as many lawsuits and claims involving homeowner associations as we once did.

The types of projects most often involved in disputes these days are apartments, hotels, schools (K-12 and higher education), governmental facilities, medical facilities, office buildings, skilled nursing and assisted living facilities, and other nonresidential projects.

Looking at this list, a common theme emerges—these are all more complex project types.

Not only that, but the parties involved in these types of claims tend to have a lot more at stake, in addition to having the resources to retain top representation. The stakeholders themselves are more complex, often with sophisticated organizational structures, sometimes even involving foreign entities. For instance, one trend that insurance carriers are reporting is that more and more claims are coming forward on projects involving EB-5 Visa money.

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The title of my article was “Hard To Handle: Managing Increasingly Complex Construction Claims” and was inspired by the Otis Redding song, Hard to Handle. Nothing against Otis Redding, but I’ve always been partial to the numerous versions by the Grateful Dead featuring the late, great Ronald “Pigpen” McKernan.

Image courtesy Youtube