Power Negotiation: Effective Legal Tools to Achieve Settlement Out of Court
As a construction professional, when you're faced with litigation it's ideal to put yourself in a position of power to achieve settlement out of court. Settling out of court, especially if you can do so sooner rather than later in the process, saves you time, court costs, legal expenses, and frustration. This allows you to re-focus on your business instead of dealing with the stress of a legal case.
Many construction cases can be settled out of court, but to do so, you need to have certain key details in place. Remember this simple formula:
Transaction + Power = Payment.
Now let's break this formula down:
- Good Contract (Transaction): The root of any transaction you engage in should be a solid contract. At the most basic, your construction contract should cover the names and addresses of both you and the party you're working for, details of the project you're working on, specifics on the work to be performed, a timeline, and of course, details on your payment. It's wise to have an attorney help you set up your construction contract and be available to help you review any later changes.
- Mechanics Lien Protection (Power): For projects where you can place a mechanics lien, you need to have a good process in place to handle any preliminary notices required, send invoices, and file your lien correctly. If you work in multiple states, it is wise to have someone who can help you handle your mechanics liens across state lines. Getting a lien in place quickly puts you in a position of power for reaching a settlement out of court on your claim.
- Other Statutes (Power): Depending on the state the project is in, there may be other statutes that you can use to enforce your right to payment for your work. Prompt payment acts have been passed in many areas. They require owners, government, and general contractors to pay for work performed in a timely fashion.
When you have a formula that ensures you have a strong contract, you've collected the information you need on your job sheet, and you're tracking and filing mechanics liens, then you're putting yourself in a strong position to settle out of court and get paid. If your claim is valid and if you can leverage additional legislation designed to ensure timely payment for work performed, then you'll be able to negotiate to skip the costs and frustration of going through with a foreclosure or other claims action.
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