Dispute Resolution Process In Contract Management for Interior Designers
Dec 30, 2022 | Imnasangla Jamir
Clause 9.1: Mediation is a stage in which conflicts can be resolved without involving a court of law that will sometimes refuse to award costs if the successful party has refused to mediate to an unreasonable degree. This is one of the cheaper and swifter methods of dispute resolution as it takes up less management time and gives both parties the option to resolve their differences without incurring high costs. However, this method is futile unless both parties act reasonably. Mediation is confidential and avoids prejudice. Thus the information disclosed during mediation cannot be used in a court of law in later stages. At the least, it can clarify arguments and streamline the process of litigation or arbitration.
Clause 9.2: Adjudication is a method of dispute resolution used in construction disputes, available to consumers only if it has been explicitly agreed upon before drawing up the contract; this is another cost-effective and time-saving method as the adjudicator has to reach a decision within 28 days (or such longer period as is permitted by the parties). This short time period can be capitalised upon by the referring party by carefully constructing a case and then 'ambushing' the other party, leaving them with little to no time to construct a defence. To avoid such ambushing, designers must maintain complete and updated records. The costs of adjudication can be awarded by the adjudicator, which allows adjudication to be used with consumer clients, provided it had been previously agreed with them. Statistics point towards the fact that almost all adjudications are enforced; only about 5% of decisions actually go to court for enforcement, and less than 1% are not enforced.
Clause 9.3.2(a): The 'small claims court' (i.e. the small claims track litigation procedure in the County Court) allows the litigant to pursue their claim without incurring the cost of a solicitor as long as the mentioned claim does not exceed a total monetary amount of £5,000. While this may be seen as a very convenient method, it comes with its own risks. The client may issue a counterclaim of a higher sum, taking the dispute above the small claims limit. The judge may also decide that the claim is too complex to be dealt with under this simplified procedure and recommend taking it further.
Clause 9.3: Arbitration is completely private, so the designer does not have to risk having their name attached to a legal case which offers them a great advantage. The arbitrator is prevented from making an order for security for costs under clause 9.3.2(c). However, the other parties have to incur the cost of the arbitrator and other expenses.
Clause 9.1: This is not provided for specifically in ID/10 other than using it as a way of enforcing adjudication decisions. However, the parties can agree before the appointment is entered into to have disputes resolved by a court. Since the designer has actually worked on the project, they have the most knowledge about its detailed history, and this can be used to their advantage by assisting their lawyers in case of formal dispute resolution, say, to recover sums due or to resist a negligence claim.
The first step is to ensure that all papers relating to the project are in the file and are in good order. A process known as discovery or disclosure takes place if the dispute is being litigated or arbitrated in which all the designer's files must be made available to the other party. Under this, the designer and their lawyers need to identify the issue in dispute, copy any documents related to these issues and place them in a lever arch file in date order. A file is made for each issue in case of multiple issues. This is recommended as it helps save cost since it reduces lawyers' fees and, under clause 5.22.1 of ID/10 and the time spent will be recoverable from the client if the designer arises as the successful party. While making digital copies on disc as well as on paper available helps reduce costs, including irrelevant or duplicated documents may lead to a reduction in any costs that may be awarded.
Legal Cost Estimate:
The designer can ask for a cost estimate from their lawyer after compiling the files that represent the general scope of the dispute. Since lawyers traditionally charge on a time basis, this leaves the disputant at a disadvantage as they have no real idea of the total legal costs that apply to them. However, some lawyers are now prepared to quote fixed fees, target costs or conditional fees. Now, under their code of conduct, solicitors are required to provide clients with estimates of their likely fees from the outset of being instructed, which provides a layer of protection to the designers.
It is required the designer prepares a detailed chronology of events relating to the disputed issue, including all the relevant file documents. Then the lawyer needs to be taken through the entire process so that have full knowledge of everything in the case and its sequence. In a complex process such as an interior design project where it cannot be expected of the lawyer to have prescience of everything that has happened, some matters (such as the ultimate cost and timetable) will become clear only as the project develops. Thus it is important to keep the lawyer in the loop of any such developments that might have occurred.
Disputes, including design, generally involve technical issues or questions of opinion which cannot be answered by a layman. Thus the court usually requires the presence of an expert witness who can give their opinion. The parties can each appoint their own expert witness, or in some cases, the court themselves appoints a single expert. It is recommended that the designer's witness be appointed early in the preparations for the case before investing significant time and money since the experts' first and foremost duty is to the court. They can offer their expert opinion and unbiased evidence, which creates a fair and level playing ground, as such evidence does not always have to support the person employing them. Experts are required to prepare witness statements for submission to the other side and to the court. It is necessary that both the designer and their lawyer agree to the strategy of their expert's statement. The designer needs to read it at all stages in its preparation to make sure that it conforms to the facts of the case. It is of prime importance that the relevant evidence is separated out and the expert's attention is drawn to any key documents that can help the case, as expert witnesses will be pressured to give their opinion as quickly as possible, incurring the minimum cost.
Professional indemnity (P) insurers are often shockingly willing to settle on the client's terms in case of a dispute that involves a claim of negligence. This is due to the reason that the legal costs of defending a claim can be even greater than the amount of the claim itself, which defeats its purpose. If a claimant succeeds at trial in even one of their claims, the full burden of costs goes against the defendant, which can worsen the situation. However, clause 5.22 of ID/10 protects the defendant from such costs by explicitly providing that an unsuccessful party will pay the other party the costs of a claim or part of a claim which is successfully defended. However, this is contingent upon numerous factors comprising of how the claimant holds themselves before and during legal proceedings regarding cooperating with requests to consider alternatives to legal proceedings such as mediation, providing proper particulars of the case in good time, complying with directions of the court and requests from the other party to provide information and details of the case. The court has the right to penalise even a successful party in the number of costs which can be recovered from the other in case they don't follow the above-mentioned code of conduct.
It is advisable that the designer should discuss what their objectives are ear;y on with their lawyer so that they can formulate an appropriate strategy. This strategy must consist of details about the costs and time that the designer wishes to/is capable of investing regarding the dispute. Since the designer's own time will be required to support the action, which is an opportunity cost for them as this is the time they won't be able to invest in their own business, this needs to be taken into strong consideration.
Professional indemnity insurers often request appointing specialist construction negligence lawyers when the negligence is alleged either as a defence to a fee claim or on its own. They have this right under multiple policies, as the legal costs are borne by the insurers at the end of the day.
Even though these lawyers are acting on behalf of both the designers and the insurers, considering that they are receiving compensation from the insurers and may view future employment by the insurers as a sustainable source of income, they inadvertently put the insurer's needs ahead of the. This unfairness is furthered by insurers who often make solicitors communicate their advice and opinion on the case only to them and not to the designer. Herein the designer has the right to object strongly.
Designers should pay close attention to the expert and legal advice they receive, especially if it's alarming or negative. Lawyers often have to deliver hard truths like the fact that the designers' performance was unsatisfactory and that they may not receive payment due to non-compliance with necessary steps. When designers get such advice, they need to rely on their lawyers to come to the most advantageous settlement achievable and move on to more profitable activities instead of trying to manoeuvre their way out of it using their own efforts.
A witness should follow the following points to ensure that their preparation for the hearing makes use of effective evidence to give the designer an advantage.
- Learning the correct form of address ('sir', 'your honour', 'my lord') from their solicitor before the hearing
- Listening very carefully to the question and answering only when they are sure they have understood. Witnesses are advised to restate the question in clear terms before answering it to make sure they fully understand it.
- Avoiding feeling under pressure to answer immediately s the question is posed. One can carefully deliberate on the answer to make it more convincing.
- Use layman's terms to simplify the answer and make it understandable to all present.
- Capitalise on questions to bring out and elaborate upon relevant matters that support the designer's case
- Not give an unsure answer or anything outside their expertise.
- Say no to speculation or hypothetical questions.
- Always be courteous and polite to all parties, irrespective if one's personal feelings, particularly when being questioned by the other side's barrister. Reject any suggestion that is untrue in a firm but quiet manner
- Address one's comments to the adjudicator/arbitrator/judge, and don't be tempted to fill silences
- Give the answer to the question asked, even if the questioner attempts to stop one from doing so by making it clear to the adjudicator/arbitrator/judge that there is more to be said.
- Portray sincerity by admitting to facts that may be unfavourable to the designer by giving reasons for the same. Trying to evade a difficult question only makes a witness appear unreliable, and the judge has a lesser probability of ruling in their favour.
- Never attempt to be humourous and make a joke of a situation, as this is the adjudicator/arbitrator/judge's prerogative
While keeping the aforementioned points in mind, as long as the designer has followed the procedures in this book, the chances of them becoming involved in the legal action are reduced to a huge extent.
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