To protect your business, sometimes all you need is to pay attention to some small details and make minor adjustments. These minor adjustments can save you hundreds of thousands of dollars in legal fees or sometimes can keep it from going bankrupt because of a law suit.

Owners: Do the following.

  • Get conditional lien releases when you make a progress payment and and unconditional lien and releases at end the end of a job.
  • Read all contracts presented to you and if you do not understand do not sign
  • Confirm all verbal conversations with an e-mail or letter
  • Make your scheduled payments. Contractors can lien your property if you do not pay.
  • Communicate with your contractor in writing (email works too) about important issues.
  • Get a copy of Contractor’s ACCORD Insurance certificate.
  • Have the contractor put your name as an “additional insured” and provide an “additional insured endorsement.”

Contractors: How to avoid, or lessen the impact of, lawsuits:

  • Do not do any work over $500 on a residential project without a written contract
  • Confirm all important changes in writing, and have the owner or general contractor sign
  • Make sure all important events on the job are recorded (writing; photos etc.)
  • Have a workable progress payment schedule in your contract and stick to it
  • Make a note of the date you started and the date you finish the job for your lien rights
  • As a subcontractor send preliminary notices routinely within 20 days from the start of the job
  • Remember you can file a lien, if not paid, within 90 days from the end of the job

Everyone: Have a good filing system for each Job, and in there keep:

  • Contracts
  • Insurance Documents
  • Reduced copies of the plans, Shop drawings
  • RFIs
  • Invoices
  • Change orders
  • Correspondence
  • Daily Field Reports:
    • Must have: date, day of the week, weather, who on the job from your company and who on the job from other trades, short description of the job on that day
  • Photos

What to do if you get sued:

  • Contact an attorney immediately sometimes insurance company will not cover you and there are requirement that an attorney can help you with to trigger the policy;
  • Tell your attorney everything: the good, the bad and the ugly
  • Give all your documents to the attorney