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Excerpted from Verdicts & Settlements
Verdicts & Settlements (front page), May 12, 1995

"CONSTRUCTION EXPERT CAN BUILD,
OR DESTROY, A CASE"

By Michael Solender


Insurance claims on construction projects used to be so simple. A claim was made and the adjuster would visit the job to ascertain the damage. A brief report would be developed and, depending on the validity of the claim, a check would be issued to the claimant.

How times have changed. Now, most often, the claimant hires an attorney, who in turn consults with a small army of forensic experts, who perform destructive testing to prepare reports that show the building owner would be best served if he were to tear the building down and rebuild it from scratch.

Or, conversely, the defense experts will state that there's nothing at all wrong with the building. Does the truth lie somewhere between the two, or is the case weighted heavily on one side rather than the other? The combined skills of the experts and the attorneys will determine the comparative strengths of the case over the next two years or so.

Now is the time for the prudent law firm to take appropriate action to properly protect the client's purse strings against outrageous claims, or, on the other side, a refusal to pay just claims. Far too often, the insurance carrier on defense, in an effort to keep costs down, inflicts on its chosen counsel inefficient or unqualified low-costs experts. After reading a copy of both sides' experts' report, these carriers often concede to the claimant and settle in order to avoid a lengthy and costly trial. If they'd listened to counsel, a more reasonable settlement could have been achieved.

The following simple strategies will help attorneys make the most of their construction cases - whether representing the plaintiff or the defense - through effective management of experts and claims processes.

Check out the expert's references with a particular emphasis on learning whether the expert has experience in similar cases. Expert witness firms usually advertise in trade papers, but most of their cases are generally obtained through referrals from satisfied lawyers and insurance companies. Still, references must be carefully checked.

When choosing expert witnesses, ask to see some of the reports they have prepared for previous cases. As a witness with many years' experience, I can count on the fingers of one hand the times I've been asked to show this most important aspect of my work.

Many experts can discuss a case intelligently, but the expert's ability to write a cohesive report in collaboration with other experts and counsel - a report especially designed to describe selected elements of the client's case at issue - can be critical to the outcome of the case.

When both sides have a chance to see certain cards that heretofore had been lying face down - the expert's report - the chances of a settlement are more realistic.

Get the experts on the case as early as possible. If an insured client's property has to be demolished because of substantial damage, such as after an earthquake, the experts should be brought in early to watch the demolition.

To a construction expert, there's nothing quite so illuminating as to be able to watch the "unpeeling of the onion" - that is, the building is being demolished. After it's completely torn down, there's nothing more to see or to learn. However, during demolition, all construction elements are revealed as the building is "unbuilt", with its many component attachments uncovered and exposed. Knowledge is paramount, but it's how that knowledge is handled by capable experts and counsel - and not necessarily the information it self - that affects the outcome of the case.

Ensure that the carrier provides a workable budget sufficient to fund thorough case preparation and forensic investigation. Recently, on a multi million-dollar case, one side was given a budget sufficient to fund only two days of destructive testing, instead of the 10 days needed for a complete analysis.

Also, instead of having the six different specialty experts the task required, only two were permitted. As a result, the work was incompletely performed.

When deposed by plaintiff's counsel in this case, the defense experts were unable to answer certain important questions because of the lack of a thorough forensic investigation. Subsequently, the judge granted permission to go back and perform additional testing. This time the insurance company permitted a more complete job of investigation, and with the additional information gathered, the experts were able to amend their report. A fiscal tragedy was narrowly avoided.

Make sure that the experts selected understand their assignments and know which side they are representing. This sounds too simple, many experts actually make the case for the other side without giving proper consideration to their own client's issues. While an expert must never lie, of course, it is not his job to make the other side's case.

Make sure that the experts are given the opportunity to investigate the issues appropriately. One recent case involved a framer who was being sued for failing to install certain rough hardware items and for supplying improperly sized lumber. The framer's construction expert was given the opportunity to examine his books and records. From this investigation, the expert was able to find the delivery slips and purchase orders that fully described all the purchases delivered to the job-site in question.

In reviewing the lumber and rough hardware list against the framer's building plans, the expert was able to determine that sufficient appropriate materials were delivered to the job site in order to build the project satisfactorily as per plans. Later, through destructive testing, the expert was able to confirm the actual "as-built" conditions, which closely approximated the approved plans.

When representing the defense, coordinate destructive testing with other defendants. In some cases, hundreds of thousands of dollars are needlessly spent on duplicating testing done by other subcontractors. If destructive testing procedures are coordinated among all the subcontractors on a case, it is possible to share the expenses pro rata with other defendants.

When destructive testing is being performed, make sure the general contractor doing the testing has more than enough labor on the job. It is far less expensive to hire extra workers from the general contractor at $30 to $50 an hour and have them standing by than to have a half-dozen experts, each averaging close to $200 per hour, standing around waiting for the laborers to open up walls.

When representing the plaintiff, make sure to permit the defense to make random tests, within reasonable limits, of course. Most important, let the defense watch when intrusive testing is performed. A recent defense case was greatly helped by the fact that the plaintiff performed all its tests in secret, without bothering to invite the defense. When this happens, the task is much easier for the defense, which really only has to counter punch. Plaintiffs' experts should study the plans and specifications carefully in order to avoid the charge of going on a fishing expedition during destructive testing.

Pay bills promptly. Many experts complain that they are involved in a number of cases in which companies have delayed payment of due bills for as much as six months. When consideration is given to the many out-of-pocket costs such as payroll, hotel accommodations, airline tickets and dozen of other, seemingly insignificant expenses, payment delays can cause severe hardship for the recipients.

Don't give up the ship. Construction defect cases are a lot like poker. On a recent case, my cost estimate to fix certain construction defects was $250,000, while the plaintiff's was almost $15 million. Our insurance carrier offered $3 million during the trial, which was rejected out of hand. The jury came back and awarded the plaintiff $290,000 - and we, the defense experts, are now suing the plaintiff for our costs and expenses. On the other hand, when the plaintiff has a well prepared, well documented case showing substantial construction deficiencies, the defense is best advised to "muscle" it through.

Co-ordinating these management factors is sometimes like keeping 10 balls in the air at the same time - and that is when a lawyer finally knows if he's delegated authority to the right expert. When you have a strong case and believable experts, don't be bulldozed by the opposition.


MORE ARTICLES:

- THE CONSTRUCTION-EXPERT INDUSTRY: NEW DEVELOPMENTS

- CONSTRUCTION EXPERT CAN BUILD, OR DESTROY, A CASE

- EXPERTS CAN RESOLVE THE CONSTRUCTION CONUNDRUM
   Standard Construction Seldom Is Really Standard

- IN CONSTRUCTION CASES, BEWARE THE HIRED GUN

- THE COMPOUND CONSEQUENCE OF ONE SMALL
   DISCERNABLE LEAK INTO THE BUILDING ENVELOPE

- THE PANDORA'S BOX OF WATER INTRUSION LITIGATION

- CONSTRUCTION DEFECTS:
  How To Avoid the 'Big Hit' And Costly Litigation

- BUILDING A REMEDY

- WATER TORTURE

- THE WATCHER
   A third party may be helpful in monitoring the expert when figuring
   the cost of repairs

- KNOW-HOW
   A general contractor should have knowledge in related
construction areas to be effective as an expert witness

- EXPERT EASE
  OPINION: Construction defect experts provide lists of failures in
  preparation for litigation, and counsel must verify reports for accuracy

- MAKE READY
  Properly prepared expert witnesses will save both time and money.

- ON THE WATCH

- THE NUMBERS


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