Save money on litigation with better document management

May 21, 2018
Whether it arises from a personal injury or payment dispute, lawsuits have become an unfortunate reality of almost every construction project.

Benjamin Franklin claimed that “in this world nothing can be said to be certain, except death and taxes.” If our Founding Father were alive to experience today’s construction industry, he might add litigation to his list of certainties. Whether it arises from a personal injury or payment dispute, lawsuits have become an unfortunate reality of almost every construction project. This lamentable reality is particularly worrisome when it comes to paperless construction projects, which, thanks to the availability of numerous construction software, are quickly becoming the industry standard.

While the reduction of hard copy documents is a welcomed (and much needed) change for our environment, paperless policies often result in an increased amount of documents; it’s simply easier to generate electronic documents. The added volume of documents presents a costly problem since the collection and review of electronic documents is an expensive, if not the most expensive, component of litigation. This problem, however, can be mitigated if owners and contractors follow 4 simple procedures:

1.     Establish a Uniform Naming Convention

In today’s construction world it is critical for projects to follow a uniform naming convention – that is, all documents of the same nature should be identically named. Choosing full names (e.g., “Specifications,” “Pictures”) or abbreviations (e.g., “Specs.” “Pics.”) is not important, but making sure to stick to one system is. It is also important to identify and distinguish different versions of the same document (e.g., “Draft,” “Final,” etc.).  Establishing uniformity is vital so that your lawyer spends less time (and less money) looking for documents.

2.     Adopt a “Need to Know” Policy

It is very easy to add people to an email chain. When someone is included on a communication, however, that person becomes a legal custodian of that document. For example, if a receptionist is included on a communication regarding safety solely so that the receptionist can take lunch orders, the receptionist is nonetheless a legal custodian of that email and whatever attachment it may have contained. In turn, when a lawsuit reaches the discovery phase, the party producing documents will have a legal duty to collect documents from each and every custodian, including the receptionist. When you have difficult opposing counsel who insists on collecting documents from each and every custodian, as irrelevant as they may be, the costs involved in such an endeavor can be astronomical. To avoid this potential exposure, adopt a “need to know” policy – that is, only include people on a communication who must absolutely be included.

3.     Generate Only Necessary Documents

The irony of paperless construction projects is that they usually lead to the creation of more documents. With everything done electronically, it is very easy to send a quick note via email or instant messenger. But, contrary to one of the golden rules of lawyering, it is not always best to put everything in writing. Of course, discussions about change orders, safety issues, schedules, and the like should be well-documented.  On the other hand, discussions about lunch plans and last night’s ball game should not take place over email or instant messenger. While documents about that to-die-for pastrami sandwich or LaVar Ball’s latest discourse are most likely irrelevant to a claim, an attorney will nonetheless still have to spend time (and your money) reviewing those documents to determine their relevancy to the litigation. It is imperative, therefore, that only necessary documents are generated. Thus, in the words of everyone’s mother, would it kill you to make a phone call every now and then?

4.     Keep Documents Organized

When it comes to organization, folders are your best friend.  It is recommended documents be grouped by type, meaning storing meeting minutes, contracts, change orders, etc., in separate folders. Go a step further and organize these groups by phase, month, or year. Whatever system you choose, make sure there is a method to your madness. Why is this important?  First, well-organized files means your lawyer will spend less time and money looking for important documents. Second, if the litigation warrants the need for an electronic discovery vendor, your lawyer will be able to easily control the amount of files that will need to be processed and reviewed, thereby saving you thousands or maybe even tens of thousands of dollars.  

Construction litigation is oftentimes unavoidable.  With the right document management protocols, however, litigation costs can be reined in.  Thus, a little planning upfront will save your business time and money.

Omar Parra is an attorney in the San Francisco office of Haight Brown & Bonesteel LLP. Mr. Parra is a member of the Construction Law, Employment and Labor, and General Liability Practice Groups.

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