How to get paid (everything your mate down the pub doesn’t know)

Hands up if you’re a contractor or sub(specialist)-contractor and you’ve had a bit of “friction” with the other party to your contract? Let me guess… whatever you were arguing about, ultimately, it came down to money, right? For one reason or another, you will have either thought you were being paid too little and/or too slowly, or you’ll have thought you were being fleeced on a poor job that took too long (depending on which side of the contract you’re on)? That might have been because there was an argument about variations, defects, delays or whatever, but however you slice it up, it was ultimately about who was getting paid what and when. Sound familiar?

I’ve spoken a lot about dispute avoidance rather than dispute resolution, and I continue to stand by the principle that prevention is better than cure. It’s infinitely cheaper, too, not just in financial terms but in terms of reduced stress, time away from the primary activities of your business and so on. I’ll keep shouting that from the rooftops.

As I explained last time I was on Own the Build, the most enjoyable part of my job as a construction lawyer, by far, is helping to train clients to prevent these sorts of disputes from occurring in the first place. Unsurprisingly, many businesses don’t want to shell out for legal services until a dispute has actually started. The lawyers are often seen as a distress purchase. Although I think that’s usually a false economy, I get why it’s like that.

With that in mind, I thought it might be interesting to talk about what happens at the other end of the line. What do we do if there is a dispute? What’s in our toolbox?

Those who listened last time I was on the podcast will recall that I discussed some of the common mistakes and misconceptions that people in the industry make in relation to critical points of construction law (around how contracts are formed, how the payment mechanism works under the Construction Act, etc.). It’s the same with dispute resolution. There are lots of common misconceptions that we hear repeatedly. We often hear clients who have not been paid say things like, “…but we’ve been told we can just do X,” or “Why do we need to do Y? We should just go straight to Z?” It’s never entirely clear where the advice about those options has come from, and it’s often misguided.

I thought I’d take this opportunity to discuss some of those misconceptions and give listeners a bit more insight into the different methods of trying to enforce payment (after all, if I’m not helping clients avoid disputes, my second favourite part of my job is slaying the opposition for them ).

There are a variety of options available (everything from a stroppy letter to a winding up petition, with adjudication, litigation and arbitration all thrown into the mix, and don’t forget the potential for a negotiated settlement, which may or may not be through a slightly more “formal” process such as mediation).  There are significant (but sometimes nuanced) differences between the options, and it’s not uncommon for people to confuse the terminology (is it adjudication or arbitration, for example?).

Which option is best will always depend on all the circumstances taken together (how much is being claimed, whether it’s admitted or disputed, whether it’s at an interim or final payment stage, the wherewithal of both parties and so on). A one-size-fits-all approach isn’t appropriate, and strategy will always need to be carefully planned, balancing the pros and cons of each approach in the context of the specific circumstances to ensure the most commercially viable approach is taken.

About Sam Bawden

Sam Bawden is an experienced construction lawyer and Partner at Holmes & Hills Solicitors. Sam is well-known within the industry for advocating a cost-effective and proactive approach to avoiding disputes, rather than waiting until after they have occurred to react. He is, however, extremely well-seasoned in all methods of dispute resolution and will confidently wade into battle for his clients whenever they need him to.