Some recent columns by Rudi Klein have focused on how legal wrangling in contracts can mangle the procurement process. But is it really the lawyers who are at fault?

Ann Mingoue

Rudi Klein has certainly been fretting about non-contentious lawyers recently - his columns on 14 September and 23 October 2015 both end with the warning that: “Over the longer term [the bill ends up charged to] the industry’s clients.” Since the cost of the whole procurement process ends up “with the industry’s clients” this is hardly a revelation but, as one of those accused, do I need to re-examine the way we work? 

The thrust of the first column is that lawyers do not distinguish between procurement and contractual processes and that we focus only on maximum risk transfer and not collaboration and partnering. The supply chain - says Rudi - picks up the massive bill. It then descends to the micro level and recites a clause, presumably from a subcontract, which requires the subcontractor to co-ordinate its design with the designs of the employer’s consultants and the contractor.

Even the dumbest lawyer understands that unreasonable risk transfer results in premium pricing

So, yes, now the supply chain is picking up the bill but I think there are some unwarranted accusations in here:

  • Even lawyers understand that the choice of procurement route is different from the process of drafting a contract. Indeed, while lawyers may sometimes be involved in discussion of the procurement route, they rarely determine it and more usually the choice is made by the project team and/or client. My experience is that project managers/quantity surveyors are often very concerned about the need to maximise risk transfer and it is the clients themselves who push for more collaborative forms of procurement - construction management, management contracting, and so on - because they recognise that single stage design and build might maximise risk transfer but is inflexible, inimical to the highest quality of design, expensive and potentially unsuitable for many complex projects.
  • I do not think all lawyers involved in drafting contracts are driven by the need to maximise risk transfer. Again, even the dumbest lawyer understands that unreasonable risk transfer results in premium pricing and, while 100% retention might be a whizz of an idea, it might not be commercially very sensible. But again a lot of pressure comes from the need to drive price certainty on outturn cost. Rudi’s piece also ignores the fact that in the current market maximising risk transfer is a pipe-dream. It is the market, not any wish of lawyers, which drives the allocation of risk under current construction contracts.
  • Clients of the industry have not abandoned collaboration and partnering - they do it all the time - though sometimes they do feel a bit let down by their partners.

The specific examples cited seem to boil down to a complaint about some rather silly drafting included in a subcontract. Suffice to say that, where the industry’s clients have an opportunity to examine and approve the terms of the subcontract, this is precisely the sort of provision to which they would object on the basis that a focus on drafting provisions to pass on risk tends to mean that risk is not being managed properly. We can probably agree on that. But I think that the industry’s clients’ response would be that the supply chain should get its own house in order and not expect the industry’s clients to do it for them. 

I think that the industry’s clients’ response would be that the supply chain should get its own house in order and not expect the industry’s clients to do it for them

The subsequent column suggests that poorly written contracts are costing our industry a fortune every year. It then goes on to Rudi’s own bug bears - and they are a rather eclectic bunch:

  • Throwing everything into the contractual “pot”

If he is complaining about the fact that main contractors unthinkingly pass on piles of documentation to subcontractors then, in my experience, he is probably right. But the drivers for that sit in the commercial teams in the main contractors, not with lawyers.  

  • Lack of drafting precision

Rudi acknowledges that open-ended and loose drafting and the use of terms such as “major” and “pay due regard to” result in disputes and potential unenforceability.  How those play out in terms of risk transfer is therefore equally uncertain. So, no one’s interests are being served. We all make mistakes but this sort of thing is not usually led by a lawyer. As Rudi must acknowledge, preliminaries’ clauses and even amendments to contracts are often drafted by non-lawyers. Maybe more lawyers should get involved?

  • Seeking to write statutory requirements

Rudi talks about extending the seven day notice period for suspension under the Construction Act to 42,000 days and suggests he could excuse quantity surveyors doing this but not lawyers. But since it is unenforceable anyway who cares?

So the criticisms in these columns are hard to follow. As a lawyer, I am not sure of my crime. The charges should be thrown out for lack of evidence.

Ann Minogue is a partner in Macfarlanes