Construction law is concerned with the relationships between construction professionals and property owners. Most laws governing construction are drawn from state statutes and cases. These state laws consist of construction-specific matters, such as right-to-repair legislation, and basic legal principles drawn not only from real estate law but also from other areas of law (e.g., contract law; tort law). Some federal laws also apply, largely to public construction projects by the federal government.
Construction law work is either transactional or litigation-related. The transactional work revolves around the roles and agreements of the experts who contribute to the construction project. These experts include the general contractor, specialty contractors, architect, engineer, construction manager, lender, insurer, and others. The relationships between them and the owner are complex and governed by detailed contract documents executed by the parties.
Construction litigation is also complex; as noted by the Construction Litigation Committee of the ABA’s Section of Litigation, “[c]onstruction cases tend to involve multiple parties, countless documents and a myriad of facts all of which tend to increase the cost and time involved in litigating and trying a case.”
There are many subspecialties of construction law. For example, the ABA’s Forum on the Construction Industry offers 12 divisions intended to put construction attorneys in touch with other practitioners in the following areas:
- Dispute avoidance & resolution;
- Contract documents;
- Design;
- Project design systems;
- Contract negotiations, performance & administration;
- Employment law & labor relations;
- Bonds, liens & insurance;
- International contracting;
- Specialty trade contractors & suppliers;
- Legislation & environment;
- Corporate counsel;
- Owners & lenders.
Types of Firms Practicing Construction Law
Construction law is an active area of practice, in part because construction is considered by many to be “the single most important economic activity in this country” [Construction Law (LexisNexis Matthew Bender), Foreword]. It is practiced by all segments of the legal market; for example, the 6,000 members of the ABA’s Forum on the Construction Industry “are drawn from all areas of practice: large law firms, small firms, solo practitioners, government lawyers and corporate in house counsel.”
An attorney involved in a small construction project often is working for a client with limited funds for legal review and thus “cannot craft a contract at leisure after extended client consultation.” Instead, the lawyer normally will start with a standardized agreement and propose changes reflecting the client’s requirements.
Construction litigation handled by solos or small law firms often involves construction defects in single-family dwellings. In recent years, tens of thousand of new homes have had serious construction defects, resulting in a significant number of court decisions. Some attorneys handle these cases as a part of their general practice, while others have made this a narrow but economically viable field of legal concentration and devoted a significant part of their practice to it [Gary Jackson, Evaluating and Prosecuting the “Bad House” Case, 2-6 Mealey’s Litig. Rep. Constr. Defects 23 (2001)].
Most attorneys in small and medium-sized law firms get design or construction litigation cases from time to time, but many of these cases are for relatively low stakes.
Large Law and National firms are more likely to handle complex construction projects or litigation involving large commercial, industrial, public, or multi-family structures. Their clients are sophisticated, their construction attorneys tend to be highly specialized, and construction law is a very common practice area for them – e.g., all Large Law firms in Chicago practice construction law.
In-house counsel routinely deal with a wide variety of construction and real estate issues. Many corporations are directly involved in the construction industry, including institutional lenders, large general contractors, and construction companies and other developers. According to The Corporate Legal Times:
- Real estate in general is one of the areas most likely to be handled in-house by general counsel (May, 2004 issue).
- Corporate law departments continue to hire attorneys to handle transactional work, including construction and real estate (May, 2004).
- Real estate development and commercial real estate have been hot practice areas for corporate counsel for several years (April, 2005).
The ABA recognizes the importance of construction to the Corporate Legal market, as demonstrated by the following:
- The Construction Litigation Committee of the ABA Section of Litigation has an In-House Counsel Subcommittee, which was “established to create a unique forum for the expression of the special concerns of in-house counsel for the lender, owner/developer, general and trade contractor, and surety companies who regularly become involved in public or commercial construction contract litigation and alternative dispute resolution.”
- The ABA’s Forum on the Construction Industry has a division devoted to corporate counsel; its goals include education of its members “on construction law issues unique to and from the perspective of corporate counsel.”
Typical Tasks Performed by Construction Law Attorneys
- Drafting, reviewing, or negotiating documents/forms (e.g., preparing alternatives to certain clauses in AIA forms).
- Advising a client on its duties and rights under its insurance policy (usually a Comprehensive General Liability, Architect/Engineer, or Builder’s Risk policy).
- Representing a party in litigation (e.g., a builder or homeowner in a construction defects action).
- Representing a client in an arbitration or other ADR (alternative dispute resolution) proceeding involving a construction law dispute.
- Presenting a client’s development proposal to the public at a community board hearing.
- Representing a client at an administrative hearing, e.g., to obtain a variance or other zoning relief.
- Helping a property developer, lender, or purchaser satisfy environmental due diligence requirements by, for example, retaining an environmental professional to supervise the due diligence work and participate in the process.
- Using public records to research the status of a professional license held by a contractor, real estate broker or agent, architect, or other construction professional.
- Selecting an expert – e.g., engineer, soils expert, surveyor, or appraiser – to call as a witness in a case, or investigating the background of an adverse expert witness.
- Monitoring news and construction industry sources to follow trends, transactions, and current developments, and for client development purposes.
Key Organizations for Construction Attorneys