How construction firms can prevent and prepare for client lawsuits.

Reputation is everything for businesses in the construction sector. Whether they cater to residential or commercial clients, referrals are often how they keep new clients coming in for work. Major disputes with prior clients and lawsuits against the construction firm could do incalculable damage to the business’s reputation and financial prospects.

It is therefore incumbent upon those who own or operate construction businesses to have a plan in place for the possibility of a client complaint that eventually snowballs into a lawsuit against the company. How can construction firms prepare for the possibility of litigation related to construction defects or allegations of contract breaches?

With comprehensive contracts

The written agreement between a construction firm and its client is often the cornerstone of the claim against the construction company. Therefore, it is a worthwhile investment to customize the terms of the contracts signed with each new client. From including highly-specific rules about communication and conflict resolution to clear details about pricing, project timeline and client expectations, the details included in a construction contract can help protect a business from lawsuits based on unmet expectations and miscommunication.

With thorough project documentation

Each construction project has its own unique timeline. Even firms with established crews may work with different contractors on different projects and may need to meet different standards for different clients. Maintaining thorough records of each stage of the construction process to validate that the firm has adhered to building codes and complied with the client’s requests can help the organization counter claims that it provided substandard services or deviated from the agreement with the client.

With an assertive response to complaints

Instead of simply ignoring client complaints, it is often necessary to carefully investigate what may have caused their disappointment. After a client expresses dissatisfaction, it may be necessary to review the contract and the records of the project at length to properly respond to their concerns. In some cases, it may be possible to resolve the situation amicably with prompt communication. Other times, the client may insist on moving forward with a lawsuit against the business. Even then, proof that the company was responsive to the initial complaint can help undermine allegations that there was an intent to defraud the client or mistreat them following the completion of work on the project.

When litigation does occur, the contracts between the parties, the records from the work on a project and communications records can all play a major role in securing a favorable outcome for the firm that has completed the required work. Recognizing that each new client is a source of lawsuit risk may help to inspire construction firms to safeguard their operations from the risks of reputation-destroying lawsuits.

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