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Litigation set to rise as building sector suffers
MORE disputes are expected to arise between companies in the construction sector as a result of the property market downturn, according to lawyers.
Firms that pull out of building projects may face legal action from aggrieved business partners who will have lost money from the decision.
Lawyers at a leading Yorkshire firm have introduced a new service which they say will make it cheaper to fund litigation and allow clients to retain greater control of the proceedings.
Simon Palmer, national head of construction dispute resolution at Addleshaw Goddard, said: "What happens when money becomes tight is that businesses are forced into making difficult decisions that are more likely to lead them into disputes.
"That is inevitable. But I think the challenge for them is to work out ways in which they can resolve those disputes as quickly, economically and satisfactorily as possible."
He said the firm, which is headquartered in Leeds, is getting more litigation work and he expects to see case numbers rise in the next 12 months.
"We are seeing money being pulled out of projects," he added.
"If someone pulls out of a project or stops, there will be losses incurred by several parties... who will have to decide whether to recover their losses. In the good times, the parties can swallow their losses because there will be another project around the corner. When the good times have gone, they have to decide whether they are able and willing to swallow these losses and whether they need to recover them."
In construction, there are three main types of dispute resolution: adjudication, arbitration and litigation. They require a third party to make a decision. A fourth is mediation, in which a third party seeks to help the parties settle and who withholds a decision.
Mr Palmer said mediation was popular as parties did not cede control: "You are not giving the third party the power to make a decision."
Addleshaw Goddard is offering conditional fee agreement, after-the-event insurance and third-party funding in a package called CONTRO.
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Saturday 11 February 2012
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