Construction

In a nutshell

Construction law can broadly be divided into non-contentious and contentious practice. The first involves lawyers helping clients at the procurement stage, pulling together all the contractual relationships prior to building work; the second sees them resolving disputes when things go wrong. In the past the relatively high monetary stakes involved and the industry trend for recovering building costs through the courts made construction a litigation-happy practice. However, since the 1990s most new contracts have contained mandatory procedures to be adopted in case of dispute. Adjudication of disputes has become the industry norm and these tend to follow a swift 28-day timetable. Others are resolved through mediation or arbitration; however, some disputes are so complex that the parties do still choose to slug it out in court.

What lawyers do


Procurement

  • Negotiate and draft contracts for programmes of building works. Any such programme involves a multitude of parties including landowners, main contractors, subcontractors, engineers and architects.
  • Work in conjunction with property lawyers if the client has invested in land as well as undertaking a building project. Together, the lawyers seek and obtain all the necessary planning consents as well as local authority certifications.
  • Where the developer does not own the land, liaise with the landowner’s solicitors over matters such as stage payments, architects’ certificates and other measures of performance.
  • Make site visits during development.

Construction disputes

  • Assess the client’s position and gather all related paperwork and evidence.
  • Extract the important detail from huge volumes of technical documentation.
  • Follow the resolution methods set out in the contracts between the parties.
  • Where a settlement is impossible, issue, prepare for and attend proceedings with the client, usually instructing a barrister to do the advocacy.

Realities of the job

  • Drafting requires attention to detail and careful thought.
  • It’s essential to keep up to date with industry standards and know contract law and tort inside out.
  • People skills are fundamental. Contractors and subcontractors are generally earthy and direct; structural engineers live in a world of complicated technical reports; corporate types and in-house lawyers require smoother handling. You’ll deal with them all.
  • The construction world is often perceived as a male-dominated environment, but while some clients might see a visit to a lap-dancing club as par for the business entertainment course, there are many successful construction lawyers, architects and engineers – male and female – who avoid such activities.
  • Most lawyers prefer either contentious or non-contentious work, and some firms like their construction lawyers to handle both, so pick your firm carefully.
  • A background in construction or engineering is a major bonus because you’ll already have industry contacts and will be able to combine legal know-how with practical advice.

Current issues

  • Domestic activity in the construction sphere has seen a sharp increase in productivity over the past 12 months. High value and high profile projects have helped the industry in the wake of the recession and Brexit. Key projects like the £8 billion Battersea Power Station redevelopment have caught the media's attention, as has the public outcry over the housing crisis. The government has pledged to funnel additional funding to finance the building of 25,000 homes, use public land to build homes, and re-evaluate the regulations around brownfield and greenfield land as development spots.
  • However, the economic uncertainty of Brexit – when exactly we will leave the EU single market, and on what terms – has caused many projects to be put on hold, while others in the pipeline might not get greenlit as there’s now less money available to finance them.  
  • But lawyers across all sectors aren’t hedging their bets too early and are eager to see what positives Brexit might bring. For example, infrastructure looks like a key growth area now. Hinkley Point C (the first nuclear power plant constructed in the UK for 20 years) is well underway and the third runway at Heathrow airport is predicted to inject £61 billion into the UK economy.
  • According to the Construction Products Association, road construction and energy/ infrastructure projects are likely to be key areas of growth for the sector by 2018. Road projects will be up by 46.1%, while energy/infrastructure builds are predicted to increase by 118.2%. So, it’s probably a good idea to watch out for sub-industry expansion areas. Keep in mind that in the run-up to the EU referendum, Britain's builders had their worst few months in eight years due to cautious investors and a collapse of new orders. In the wake of Brexit, and the uncertainty that surrounds the negotiations, whether these projections turn into reality remains to be seen.
  • Lawyers now are likely to be inundated with queries from international clients or investors who are attempting to work around the alterations to UK legislation that will be no longer influenced by EU regulations. Again, because of the precarious nature of the current economic climate, firms are looking to shore up their construction practices in Europe. Switzerland is thought to be fiscally appealing due to the stability of its currency, compared to the rest of Europe where the euro is declining.
  • Yet financial instability feeds disputes. Many parties have been forced into litigation or alternative dispute resolution (ADR) after projects have either fallen through, been suspended or downsized. This has seen a particular hike in the use of arbitration, as parties are more in need of quick settlements, rather than waiting out a lengthy court process.
  • The average value of a construction dispute in the UK rose to £27 million in 2016, after having shown a steady decline in the previous two years. The average duration of a dispute rose to 14 months, up from 10.7 months the year before.  
  • ADR and especially arbitration will be a vital growth area for the UK after Brexit. London remains one of the world’s leading arbitral centres, as English law still governs many cross-jurisdictional contracts – agreements that span the Middle East, Africa and the rest of Europe.