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Contractors' Best Risk Management: Avoid Problem Projects and Customers
June 17, 2010
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Topics Litigation

spider sense tinglingWhile I LOVE trying cases, my clients usually detest court cases and do their best to avoid litigation.  Forming appropriate entities, drafting tight contracts, and ensuring proper documentation are all critical risk management strategies ... but I would say they all come a distant second.  The number one way to avoid problems is to avoid problem projects and problem customers.

What am I talking about?  You have had that moment of your "spider sense tingling" during your initial project meeting with an owner, that fleeting precognition that this owner will be a problem.  We have all had the sense that someone is unreasonable, has wildly unreasonable expectations, is highly combative, or cannot make up their minds.  These personality traits can doom your project success before it begins.  Listen to that little voice and avoid those situations.

I recall one case in particular from very early in my legal career.  A very esteemed architect (who will recognize this story!) took a project as a favor for a couple he knew socially.  His wife expressly warned him before the contract was signed that they knew the couple was difficult and would be a problem.  The architect said, "I ignored her, I knew I could handle it."  Years later, a successful court victory under his belt, the architect told me that his new permanent rule was always to listen to his wife when she said not to take a client.

Even if your project does not result in litigation, dealing with problem customers is a time sink that erodes all your profit margin, creates headaches and stress, and dilutes your focus from profitable and enjoyable work.  And that is the best case scenario.  The worst case is those personality quirks drag you and your company into protracted, expensive, and avoidable litigation.  Save your margins, avoid these people and spend your time doing what you love, not hate!

Image by davide.tarasconi

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    Timothy Hughes is the managing shareholder of Bean, Kinney & Korman. He also represents clients in construction and commercial litigation, as well as corporate, contracts and general business matters. With over 20 years ...