A judicial surgery....

I get troubled by huge legal fees in disputes, countless non-recoverable management costs, inappropriate use of adjudication, some immoral and unethical tactics and so on. Of course we must strive to avoid lengthy/costly disputes as best we can and only press the formal legal button as an absolute last resort, but once that button is pressed then that's it; you are in the grips of a process that isn't exactly designed to be time/cost effective. I can't see previous reforms have really made that step change difference in dispute resolution.

So here's some thoughts on how we could make it a more just process.....open a few 'dispute surgeries'. This is paid for by Govt who should get a good return on fewer formal disputes and less Court fees. The  'doctors' would be most likely be practical people - judges, the odd expert and so on. Their role (say 2 of these 'doctors' at a time) is to have a no more than say 60mins consultation with both parties in dispute (or at least one of them!). They would listen to the basic facts presented and how the parties would best like to resolve the dispute then make a decision as to the most appropriate means to resolve the dispute - it could be mediation, conciliation, adjudication, arm wrestling or straight to arbitration or litigation.

Rather than force us through adjudication which seems to me to be utterly inappropriate and massively abused in many instances I hear of, the 'doctor(s)' writes a prescription and the parties book an appointment at the chemist to get their dispute solving medicine. I would love the 'doctor(s)' to be able to say the sum in dispute is £100k so the parties cannot each spend more than say £40k in costs (or whatever) preparing for the hearing (or if they do they bear them). We get appropriate dispute resolution decided by sensible experts with a sensible cap on the input from both parties in getting to the truth as quickly as possible

Sensible or stupid; possible or impossible (as too many self-interests)?

How about capping/limiting legal costs in cases?

In the Ampleforth Abbey Trust v Turner & Townsend Project Management Limited, I've read a few commentaries on lessons learnt and none seem to come from the angle I'm looking from (not surprising some might say). Although there are no doubt some salutary lessons on letters on intent, limits of liability and all that stuff, that I can see the losers (weren't both parties losers really in this thing going to Court?) were told to pay the winners a few hundred thousand pounds. Where am I going with this, well it's all the other costs of course - legal fees, expert witnesses, the judge, the court, management lost time of both organisations and so on. I'm sure it might be easy enough to find out the legal fees in this case but it would not surprise me if these were many times the award amount.

Is this a problem? Of course it is! Apart from why do these sorts of cases have legal fees likely heavily outweighing the disputed amount, why are the parties and their advisers allowed to do this? Here's a thought, forget the highly dubious 'no win, no fee' and relying on justice through award of costs, how about costs recovery of the parties however incurred cannot be more than the sum awarded - or words to that effect, but you get my gist?

Where is the business case for spending more costs than the sum at stake, this from the perspective of the parties? I'm aware such costs can be sometimes clipped back but I'm talking about throwing the whole system upside down so the parties have to seriously think about the sum at stake, how much legal/management etc time/fees they can therefore commit and maybe, just maybe, realism will take a grip and we will have some sensible outcomes.

Just a thought, actually that prompts another thought....

Anti-collusion et al certificates

Another thing recently is someone asking where the NEC versions of eg anti-collusion certificates were located. They aren't. It then struck me, why do we have things like this from tenders basically saying, "...guvnor, we promise we have not broken the law...". Why would we want to do this, what on earth does it add to anything? Doesn't collusion = corruption = fraud = criminal offence (=maybe 3 good meals a day and an Xbox?!), or at least something along those lines?

There are a million certificates we could write promising not to break the law or act in a completely wrong manner. What is the point?

The intelligent client needs to weed out bad suppliers - maybe ask about Court convictions or the like for collusion, corruption, bungs and whatever else takes your fancy. Maybe this takes out the baddies from the tendering process and makes other smarten their act up. One thing I can say, it's a little bit late to find that you are in contract with someone who turns out has colluded, maybe good grounds for termination but the damage is done.

If we have legal/moral/ethical and other standards that suppliers must match up to before even been given a chance to tender, stick that stake in the ground and sort out those who can, from those who can't match up to such standards.

Rob

Letters of intent - part 2!

I remember having a rant about just how rubbish/bad/useless etc letters of intent are and some of you agreed. See previous blog below.

http://www.blogger.com/blogger.g?blogID=491774513914518621#editor/target=post;postID=8930257740702719408

Then  we recently have Ampleforth Abbey Trust v Turner & Townsend Project Management Limited and that to me serves only to reinforce never ever ever using these damn things. There is absolutely no excuse not to use a standard form instead of a letter of intent if you absolutely must get on with something whilst we wait for ....for what, really what is the issue here, why can't people step up and do whatever they have to do to get the formal agreement signed? So, how about my golden rules for letter of intent:

1. Never ever ever use them
2. Bust a gut to get the formal agreement in place before proceeding
3. If it looks unlikely to get the agreement in place for whatever reason then really really bust a gut and do whatever you have to do to get the formal agreement in place
4. If this definitely cannot happen (which I just don't believe) then use something like NEC3 ECC to procure a bit of what you must have - use Option E if you need need some sort of random start now; Option A if you know what you want odering/doing now; Option C if you know what you want odering/doing now but there is an inherent amount of Contractor's risk in this
5. Once 4 occurs, as buyer you have definitely relinquished a bit of bargaining power - why would you want to do this? So dwell on 3 and make it happen.

What I would love to see is at least the professional bodies coming out and saying...."letters of intent are [choose from rubbish/negligent/bad practice/really rubbish]" and giving the Courts a helping hand. This of course won't happen. Lots of people make very nice incomes from the very chaos that letters of intent cause.

There, breath, rant over....

Do sellers carry out due diligence on buyers?

I have read a few cases recently and did a note to self 'make sure I never get involved with those cowboys', as you do! Anyway, I see masses of questions (pre-qualification, tender etc) from buyers to sellers (much of it not necessary but that's another story), but how often do sellers carry out some sort of due diligence on their buyers (at any level of the supply chain)? What is the legal status of the actual company I might enter into contract with, what sort of reputation do they have, what are their payment records to sellers, maybe something on culture, and so on? I bet people are wary of doing this, thinking it might 'upset' the buyer but that's tosh. What do people think, how frequently does this sort of check take place?

Rob

UK Govt Z clauses - fair payment

See link below to updated UK Govt Z clauses for consideration in any public procured contracts. Z1 and Z2 are slightly modified (replacing OGC with ERG), Z is as was (but in the process of being updated currently), Z4 is on hold (!) and Z5 is a new clause dealing with fair payment. That's more than enough Z clauses for anyone.....!

Rob

http://www.neccontract.com/amendments.asp