Discovery In Construction Disputes

 OP CIVIL ED PIC 1By Alvin F. Lindsay

There are few businesses that generate as many disputes as the construction industry. Chances are that even the best owners, contractors and design professionals will experience formal dispute proceedings, whether in court or in arbitration. And few businesses generate as much information, so it is helpful to understand how and why lawyers obtain discovery of that information. Here are some tips for those business people who may be new to the litigation process:

Discovery is the Longest Part: Civil litigation is not like the criminal procedural shows on Netflix – there is no speedy trial rule. Both court cases and arbitrations can take years just to get to the final hearing or trial. During this time, the parties are usually engaged in the discovery of each other's information. The idea is that there should be a level playing field where each party can obtain from the other party anything that is relevant to the dispute.

It Is All About Documents: There are many different types of discovery generally permitted. Parties can serve interrogatories to be answered in writing, take sworn deposition testimony and access and inspect land or other things. But most importantly, they are allowed to request copies of each other's relevant documents, which are usually electronic. This often means dealing with terabytes of emails, texts, PowerPoints, spreadsheets, CAD files, Primaverra file and project- or product-specific databases. As Confucius said, the faintest of ink is more compelling than the most fervent testimony, and that holds true in the electronic world. This is why the lawyers want all the documents.

You Have to Keep Them: The law typically requires that once a dispute is "reasonably foreseeable" parties must preserve all relevant documents. Thus, the first thing a good lawyer will do on a new dispute is make sure a "litigation hold" is in place to stop document and email deletion. The punishment for deleting data can range from monetary sanctions up to having claims and defenses stricken.

Regrettably, some people still attempt to delete select emails or even entire hard drives when faced with a lawsuit. They usually get caught, however, because other people have copies of the emails which the lawyers cross check. And although forensics experts might not be able to recover a "wiped" hard drive, they can still determine date and time it was wiped, and usually even the name of the deletion application – which include names like BleachBit, EvidenceWiper and FileShredder – that was used.

Document Discovery Can be the Most Expensive Part: Largely due to the array of document types used in construction – which include bids, contracts, sub-contracts, insurance policies, initial design documents, as-builts, job cost reports, RFIs, testing certifications, status reports, Gantt charts, claim notices, applications for payment, emails and more – document discovery is often the most expensive part of a construction case. A terabyte of information could fill the Empire State Building if printed to paper. Large-scale construction disputes can involve multiple terabytes. 

The lawyers must not only collect, analyze, and produce their client's data, but then must also analyze what the other parties produce. Roomfuls of contract lawyers often perform document reviews, and the process is never cheap. This is the price of a level playing field. Lawyers can control the amount of data to some extent by agreeing to narrow things like date ranges of the data and the "custodians" from whom they will collect. The best thing a party can do to control cost is to institute defensible document-management policies at the start of projects, and before disputes arise.

There is Discovery in Arbitration Too: Like court litigation, arbitration is an adversarial method for resolving disputes. The parties, however, agree to structure the arbitration process as they desire. Parties can and often do agree on limits to discovery, for example, the production of only certain categories of records, or the exclusion of all emails. The arbitrators must respect those limits.

Absent agreement of the parties, arbitrators generally have wide discretion to require as much or as little discovery as they want. Not uncommonly, arbitration will take as long and require the same discovery burden as civil court litigations. There are benefits to arbitration, however, like being able to agree upon a neutral law and venue, often critical concerns for projects built in countries with less-developed law or more corrupt judiciaries. For these reasons, construction contracts frequently specify arbitration, and arbitration has become the default in the AIA forms of agreement. 

Know What Privilege Means, and What it Doesn't: Certain documents – those that are "privileged" – are exempt from the requirement to produce. The attorney-client privilege protects any communication between an attorney and a client. The work-product doctrine protects any work done by or at the direction of an attorney, if that work is in anticipation of litigation. All too often, project personnel attempt to protect the contents of e-mails by titling them with "attorney privileged" or similar statements when they are not actually privileged. Lawyers must produce the documents based on the law, not the title of an email. Even if the lawyers withhold the document, a "privilege log" also must typically be produced, and the other side may challenge a questionable designation.

"Dance Like No One is Watching, but E-Mail Like it Will be Read Aloud in Deposition:" People still say the darndest things in emails. They joke about the quality of the job or their subcontractors. They blame others for things that are still their company's fault. Some will even send an email telling others not to put anything in email because of litigation. Lawyers are good about finding and using the other side╒s emails. Lawyers will specifically search the production database for bad language and even tell-tale comments like "let's discuss." E-mail has its place. Questions must be asked and answered, and claims must be made and responded to. E-mails sent in haste, anger, or frustration, however, rarely prove helpful to the writer.

Alvin F. Lindsay is a partner in the Miami, Fla., office of Hogan Lovells US LLP. He has more than 20 years of experience handling large-scale and complex construction disputes before U.S. courts and international arbitration tribunals. 

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