Owning a business can be uniquely rewarding, but rewards do not come without risk. Perhaps the most dreaded of those risks is a lawsuit. While some contractors who get sued keep that worry in the back of their minds, others avoid thinking about legal issues altogether, or worse; they assume it can’t happen to them. But contractor law suits do happen. Often. While you can’t guarantee that you won’t be sued, you can prepare yourself by having a plan of action in the event of a lawsuit.
Here are the steps contractors should take if they get sued:
- Take notes about service of process. Each jurisdiction has rules governing service of process (how you were informed of the law suit). Take note on how you were served so that you or your lawyer can determine whether there are grounds to challenge service.
- DO NOT ignore the Complaint! Do not throw the Complaint in a drawer and try to forget about it. Failing to respond to a Complaint could result in default judgment against you or your company. The sooner you act, the more control you have over the situation.
- Review the Complaint. Read the Complaint to gather some basic information about the suit. Who filed the suit? Is the plaintiff suing your company, you, or both? Why has the plaintiff filed suit? How much money is the plaintiff demanding?
Contact a lawyer. Do not attempt to engage the plaintiff on your own. Contact an attorney experienced in construction law. Your attorney will help you analyze and understand your risks. If the amount in controversy is small, your attorney can advise you on how to best represent yourself. After consulting an attorney, you will be able to make an informed decision about how to proceed with the lawsuit.- Contact your insurance company. If you think that you may have insurance coverage for the plaintiff’s claims, contact your insurance company immediately, since most insurance companies require prompt notification of the claim. Your attorney can also assist you in reviewing your policy and obtaining coverage.
- Collect and preserve documents: Collect all documents, photographs, correspondence, etc. (electronic or paper) related to the case so that you can review them with your lawyer. Do not delete or destroy anything. Hiding information from your lawyer can only hurt your case. You could also face severe sanctions from the court for destroying or withholding information during the case.
- Be careful who you speak to. Your conversations with your attorney are generally privileged. However, anything you say to a third party could make its way to the other side.
- Consider whether you can settle the case right now. The vast majority of lawsuits end in a settlement. Settling the case at an early stage can save a lot of cost and
You can’t guarantee that you won’t ever be sued but you can prepare yourself by having an action plan in the event of a lawsuit.
Note: This article is for informational purposes only and is not intended to serve as a substitute for consultation with a legal professional.
Guest Blogger: Renee Schwerdt, Esq., Owner/Attorney at Plumb & True Legal Consulting and Representation. Renee is an attorney and the owner of Plumb & True Legal, a law firm that serves contractors, architects, vendors and others in the construction industry. Her new blog, Level Up, is available here.
Mold remediation experts are not the only contractors who encounter mold on a fairly regular basis. Often times, the homeowner does not learn that there is mold in their house until a contractor points it out. This may be a restoration contractor, an HVAC contractor or even a plumbing contractor. Read on to find out how contractors can handle mold at their job sites and avoid liability.
Contractors are not advised to leave their career up to chance. Instead, contractors should consider investing in new insurance policies that are specifically designed to cover mold and pollutants. (As well as the standard GPL policy) Contractors Pollution Liability (CPL) covers liability for such pollutants with a clear definition that includes mold or fungi.
With a well thought out strategy for offering design services contractors can differentiate their businesses and attract better quality clients and projects. However if their offering is not well thought out contractors can lose a lot of money and waste a lot of time. 
#4: Use a supporting marketing and sales strategy
If your goal is to grow your remodeling business past the $1Million installed sales volume threshold the business will need a design and or specification process. That process must support the ability to perform a "handoff" between the salesperson and the production team that will build sold projects. Without adequate plans and specifications the production team and a project's lead carpenter will be constantly contacting the salesperson for the information needed to build what the customer is expecting.
Be honest not only to your customers, but also with yourself. I fortunately recognized very early in the building of my business that I was not a designer. I can build any design you give me, I just don't have the right talents to design renovations at the level my target customer expected and deserved. So, if you do offer or plan to offer design services make sure you find the right talent to do so. That person 
First, make sure you can legally offer design service where your business operates. Next, make sure you and or your employees have the right construction, product and building science knowledge and experience to offer design and or specification assistance. Value engineering for a prospect may help you sell a project, but what if you suggest or substitute products that compromise the design, the structure and or the purpose of the project? You may own the end result and it could cost you a lot of money. 
This may seem like an obvious point but here me out. If your goal is to bust past $1Million your plans and specifications should include not just what might be needed to sell the job and or get a permit. Your plans and specs should really be communication tools that your production team will use to build from. Measurements, product sizes, rough opening dimensions, center lines and clearances all become critical when building, and even more critical if you want to protect your margins and project schedules. With the right plans and specifications you can protect your profits and only have to build the project once.
As produced volume increase for a remodeler, that remodeler must decide between being a contractor and a construction business owner. As a contractor you can do all of the above yourself, but breaking $1Million will be challenging, require lots of work hours and may not be practical depending on your target project types. As a construction business owner your role will be to profitably run the business not the jobsite. If that is your goal make sure your team members will be creating the information each department needs to successfully sell profitable projects and perform their assigned responsibilities.
A Hearing on the Rate Filing will be held at 10:00AM on Thursday, January 30, 2014 at the Division of Insurance, 1000 Washington Street, Boston, MA. For more information you can refer to 
I want to thank fellow EMNARI Member 
This language is best used at the beginning of your proposal
I also suggest you consider the possible liability you take on by creating specifications and or project plans and leaving them with a prospect that does not do business with you. By doing so you may have put yourself into a position where the prospect or another contractor actually works from them. If they have challenges when building the project and decide those challenges were caused by your plans and or specs, they may have legal rights to sue you. Regardless of whether you feel you are innocent or guilty, you will need to cover your own legal expenses if you get to court and most likely will not be able to re-coup your legal costs even if you are found innocent. If you are found guilty you may even be required to pay the legal expenses incurred by the person suing you.
“Schemes like this to avoid paying premium undermine the purpose of workers’ comp insurance – to protect workers who are injured on the job – and will result in unwanted attention from our investigators.”
How would you look at that? I know one contractor who had that happen to him. When I asked him about it he told me he was definitely scared about going to prison so he spent big money to hire a good lawyer to try to keep him out of prison. He said the lawyer was successful but he was definitely sweating it right up until the final verdict. He didn’t get any jail time but did have to pay a lot of money in fines. He also told me that when everything was said and done, and based on all the money he saved over the years by cheating, the fine and lawyer fees were far less than the money he saved. He told me he felt it was worth the risk.
A Certificate of Insurance is easier for your client to acquire than it would be for them to see your actual insurance policy. It also provides the information they’ll need if they do need to file a claim without divulging any of your confidential information such as payroll and sales figures.
“Additional insured” is an option to add coverage for another party to your policy. For example, your client will likely request to be listed as an additional insured in order to defer liability for any accidents or injuries that occur on their property during your project. If you’re a contractor working with subcontractors on the same project, you may also add a named insured since you share joint liability to pay workers’ compensation if an employee is injured. However, the primary policyholder will remain fully responsible for covering the premium payments.
Since the EPA RRP rule came into effect in April of 2010 renovation contractors have debated and bantered the topic of doing lead testing before they offer to sell and or perform renovations at pre 1978 properties. Due to 
Often discussions on these topics get passionate when contractors express their concerns about the liability they feel the rule exposes them and their businesses to even if they follow the rule and comply with all of its lead safe work practices and documentation requirements. Many contractors feel the EPA should have written some level of protection from liability into the rule for those renovators who abide by it. 
Time it takes to do the testing and fill out the paperwork
There are typically no easy answers to these considerations or guaranteed ways contractors can sell and do their work to prevent the possibility of liability. That said education about the considerations and available options is probably the best way for contractors to protect themselves and their business.
Always remember this: Your customers have plenty of other options. So you need to make sure that you stand out from your competitors. That's easy enough when you've done a job previously for a customer – your work speaks for itself. But what about when the customer has never hired a contractor? How do you differentiate yourself among a group of people who say they can do the same things you can?
When you show your prospective customer your certificate of insurance, what you're really showing him is that you're taking responsibility for the project and anything that happens on the job. Ask the customer whether every contractor he's considering can make that claim. The Better Business Bureau also recommends that customers ask to see a contractor's certificate of workers compensation coverage. Again, you'll be demonstrating that you'll step up in case one of your employees is injured while working on the project. Remind the customer that otherwise, he or she could be held financially responsible if property is damaged or someone is injured while work is being done on their home.
As a responsible contractor, you owe it to your customers to let them know that and to let them know you have the right coverage if there is a problem.
