ONE DOWNSIDE TO almost any building boom is that contractors can get so caught up in making money that they lose sight of what else is going on around them. Everyone knows that few industries are as cyclical as construction, so who can blame you for taking full advantage of the good times when business is on a roll?
In these circumstances, however, some companies may allow critical practices to slip so that their customer service and business planning aren’t what they should be. Other contractors may let new competition creep into their market, figuring that they’re so busy that more than enough work is around for everyone.
The reality is that the good times never last forever, and you wind up paying for your inattention to internal operations and competitors when business slows down.
What is happening to contractors in Nevada appears to be even more sinister. While contractors in that state were wrapped up in a prolonged construction boom, the state legislature changed the law a few years ago to make it easier for builders and subcontractors to be sued for alleged defects in construction.
To no one’s surprise, contractors believe that trial lawyers are behind the legislative maneuvering.
The results haven’t been pretty. Plumbers and other contractors are finding it increasingly difficult to obtain liability insurance. Deciding not to issue new coverage, insurance companies say they will renew only existing customers. Even then, premiums have skyrocketed.
Just as bad, contractors and insurance companies are paying their way out of lawsuits, even when the contractors feel they’ve done nothing wrong. At $5,000 to $10,000 a throw, contractors and their insurers believe that’s still cheaper than getting mired in a lengthy class-action lawsuit.
To be sure, homeowners who are victimized by shoddy construction are entitled to a means to redress the situation. We all know that the number of unreliable contractors doing sloppy work makes this a necessity.
But a system that compels competent contractors to pay a ransom to get out of spurious lawsuits is just plain wrong. A better system would allow these companies the right to inspect and repair any defect before a lawsuit is filed.
That’s exactly what contractors are asking in Nevada. They want the legislature to give them that right along with a strict definition of a construction defect as anything that affects the habitability or structural integrity of a dwelling.
Both those are reasonable requests, and we urge Nevada legislators to make those changes in state law when they address the issue in 2003. We’d also advise you, regardless of where you live, to be vigilant to what’s going on in your statehouse.
As we’ve seen in utility deregulation and other issues, you can’t expect legislators to be knowledgeable enough to have your best interests at heart. You have to be prepared to take the time and invest the resources necessary to educate them.
You have to remember, too, that many more consumers than contractors go to the polls on Election Day. So, given the choice, legislators always will come down on an issue so that they’re on the side of consumers – or think they are.
Contractors in Nevada are smart in pointing out that a proliferation of defective construction lawsuits also hurts homeowners. They begin to suffer when the lawsuits make it more difficult to obtain a mortgage and when the suits take a toll on their home’s resale and property values.
These points must be made to legislators – and homeowners – in Nevada and elsewhere as part of the education process.
Slower periods of business can have an upside as well. You can take a little more time to examine your internal operations and to shore up your company against competitors. You also can check to see what’s happening in your state legislature and other governmental bodies.
Don’t let what’s happening in Nevada occur in your state if you can help it. Remember that lawyers have a way of making sure that they never have a slow season.