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December 7, 2009

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PAGE 8 NEW An online resource tool 1.800.263.3269 Bestcase earlug.indd 1 3/26/08 11:52:01 AM Focus On ADR/MEDIATION Construction leads in use of ADR But industry still needs to promote knowledge of practices BY DARYL-LYNN CARLSON For Law Times alternative dispute resolution in order to save time and money. Professionals ranging from T lawyers to construction in- dustry leaders say alternative means are well-suited to resolv- ing disputes, particularly those that emerge in the midst of a project in development. "The construction industry has adopted ADR practices in a way that a lot of other in- dustries have not," says David McCutcheon, a commercial litigator who practises ADR at Fraser Milner Casgrain LLP. He says that along with the industry's interest in ADR, a lot of professionals working in the field, such as mediators and arbitrators, have established a good base of knowledge of is- sues that trigger construction disputes. "A lot of the issues are re- ally complex. The disputes that arise are not as simple as they he construction industry is leading among sec- tors that have embraced used to be. So the industry is always looking for people who have expertise in those areas to resolve them." McCutcheon, whose cli- ents often are contractors involved in a construction project, says ADR also pro- vides a way for parties within the industry to achieve a quick resolution should a dispute arise within an ongo- ing project. "If you have a problem, you have to get it resolved so you can move on," he points out. "The ADR process is also really imaginative. People come up with solutions to problems in an ADR process that they wouldn't come up with else- where. As well, if you want something to be confidential, you can make it confidential." Finding a resolution through negotiation also pre- serves relationships between parties that inevitably may have to work together on other projects within their region. McCutcheon adds, howev- er, that ADR will never replace the court system in some areas Richard Beifuss of Beifuss International is a profes- sional engineer, arbitrator, and mediator who says more construction industry profes- sionals are beginning to un- derstand the premise of using ADR to resolve a dispute and, as a result, are reading con- tracts more diligently. Beifuss, who designed and ran an arbitration program for the federal Department of Public Works during the mid-1980s until the 1990s, says that through something called partnering, ADR clauses have become ubiqui- tous for all parties involved in a project before it's even awarded. "Essentially what happens David McCutcheon says the construc- tion industry has been more eager to adopt alternative dispute resolution than many other sectors. where, for example, legal chal- lenges arise over the language in contracts. "The courts have a role in interpreting contracts, so it can be appropriate in some circumstances." in the partnering process is all the lead participants agree to meet before contract award. The process, which can take days or weeks, is paid for by the owner and is overseen by a facilitator who is very famil- iar" with both the industry and the project, he says. Beifuss will be speaking about his experience drafting ADR clauses within construc- tion contracts this week at a conference in Mississauga that is sponsored by the ADR Insti- tute of Ontario, Inc. and the Ontario General Contractors Association. He notes that during his time Clients and Counsel who know Insurance, know us... So should you! with the federal government, while most major contracting companies would indeed read their contracts carefully, many of the smaller subtrades did not. "It was very important for them to read and understand the conditions they had to comply by, so all parties would sit down and run through the contract conditions. . . ." As the former head of the Call us or visit our website for more information. partnering initiative for the federal department, Beifuss says the process aimed to avoid contract disputes that could end up costing taxpayers huge sums of money in legal fees should a lawsuit arise. Including a detailed clause and ensuring the parties are fa- miliar with the terms also helps protect the image and reputa- tion of the project owners, he adds. As part of the partnering process, there were six key areas that were reviewed during the meeting between all the parties that had bid on the project. They included the project plans and specifications, articles of agreement, terms of payment, Gilbertson_LT_Oct19_09.indd 1 www.lawtimesnews.com 10/13/09 3:15:03 PM general conditions, insurance, and labour conditions. The process was beneficial for all parties, one that serves as a model for Beifuss' private practice work. Still, some contractors don't bother to read documenta- tion for work on a government project. "Sometimes, they as- sume the contracts [they] were entering into wouldn't be any different than any other gov- ernment work that they've done," Beifuss says. So, while the construction industry is using ADR as a pre- ferred way to resolve disputes, there still is room to promote more awareness. Clive Thurston, president of the contractors association, agrees there is a need for great- er understanding of the process and the benefits of ADR. He cites as an example the poor attendance record at the ADR institute's construction section meetings and continu- ing education programs. "Unfortunately, the sec- tion is not getting the support that it needs," he says candidly. "We have 76 people who are members of the construction section, and I'm lucky if I get four or five to show up for a meeting." He says the lack of partici- pation is both disappointing and alarming. "If there's one thing that the industry is start- ing to use more and that we get requests for, it's mediation and arbitration. Yet if we don't do something to strengthen the section and people don't get in- volved, it's going to be a Wild West out there, and that could hurt our reputations as arbitra- tors and mediators. "There's just no co-ordina- tion, and nobody's talking to anyone" about developments within the construction indus- try that stand to make a differ- ence in practice, he says. He expects arbitration and mediation clauses will soon be- come standard in contracts, es- pecially since owners commis- sioning building projects are increasingly mandating ADR largely on the advice of their lawyers. "The proof is there — it's very successful," says Thur- ston. "As my dad used to say, the last place you want to be in con- struction is in front of a judge. We need to stay out of the courts and find a different way to settle our differences." LT December 7, 2009 • Law Times

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