Protect Your Business: The Power of Paper Trail safe?

Owning a construction business means being an expert in everything that can go wrong. From contractual troubles (what, you only shook hands?), to design challenges, change orders, equipment failure, weather, injuries, questions of quality, and more, construction is indeed a complex business, and a minefield of mishaps waiting to happen. Ideally you don’t end up in a dispute that requires court intervention, but in the event you do, litigators point out that solid documentation is your best defense. 

Documented Projects Are Defensible Projects

While meticulous records won’t prevent every lawsuit, they will turn into your best defense when a case moves past the initial stages. In the face of liability or a dubious claim, solid documentation cuts through the noise and shortens legal battles. In the experience of litigator, Taylor Orgeron, of Swift Currie, most contractors do a great job of documenting the early stages of a project, but then fizzle out, which is unfortunate in the event of a dispute: 

• The main recurring issue preventing an easy defense or dismissal is the lack of documentation. Generally, contractors have relatively good documentation for pre-project discussions and the start of the project (e.g., contracts, permits, scope of work, supplies and initial communications). However, as the projects go on, documentation becomes less detailed or even nonexistent. Whether this is complacency due to a project going well, a lack of time as the project gets busier, or some other reason, documentation usually dwindles until something really goes wrong. Then a major issue happens, the finger-pointing starts, and documentation returns with vengeance.

• Post-issue documentation can help determine damages and delays after the fact but has limited value in documenting the initial cause of the issue itself. Post-issue communications are always taken with a hefty dose of skepticism because the parties are usually trying to shift liability anywhere else.

Pointing out that there are countless ways “for a construction project to go sideways,” Orgeron underscores that documentation is the single best way to mitigate exposure in litigation, explaining: “It will dramatically improve your odds in cases that survive an immediate motion to dismiss. In these cases where there is potential liability or even a questionable claim, good documentation can shorten arguments and help clearly depict the facts of the incident.” Bottom line? Being diligent with documentation over the complete life cycle of every project arms an attorney to fight your case:

Most construction cases seem to come down to emails and documentation. Unless someone clearly messes up, more often than not, the party with the better documentation ends up substantially limiting its exposure….Just as you cannot make bricks without clay, you cannot win a construction case without documentation. You need to document your project even if you have been working with the same contractors for years and rely on verbal deals and handshakes. It only takes one bad project to ruin a relationship and bankrupt a company….Documentation is critical to protecting your company.

Clear and Enforceable Contracts Matter Too

Attorneys also remind construction business owners to avoid verbal agreements and handshakes in lieu of strong contracts. Amicable relationships, and even shared successes on previous projects do not protect you from costly misunderstandings and disputes. To ensure clear and enforceable terms, construction attorney Jeffrey Paul Lutz encourages inclusion of: “the scope of work, deadlines, quality standards and penalties for non-compliance” in every contract. It’s best practice to view contracts as a blueprint for a solid working relationship, and not a mere formality to check off. Without clear, comprehensive terms, you’re building on shaky ground. 

Get The Right Surety On Your Side

Colonial Surety Company has programs for builders of every size. We’re national, direct, digital bond writers (with experts who answer the phone). Say goodbye to painful and old-fashioned approaches to surety bonds, and get your company on a growth track with us behind you.

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Surety Bond programs for construction businesses of every size are a few clicks away:

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Founded in 1930, Colonial Surety Company is a leading direct seller and writer of surety bonds and insurance products across the USA. Colonial is rated “A Excellent” by A.M. Best Company and U.S. Treasury listed. Let’s connect today: Colonial Surety Company.