How far can this wave of reform be extended? There are several principles that I consider realistically achievable:
- Costs should always be proportionate
That means, I believe, that the legal costs to any party of a dispute should not ordinarily exceed 10% of the sum in dispute and should very rarely exceed 20%.
- Adjudication and other intermediate dispute resolution must become the norm
The emerging rule of thumb is that intermediate processes cost about 10% of the amount of full-scale litigation or arbitration. My recent experience of intermediate dispute resolution processes in big cases is that legal costs have been turning out to be about 0.5% of the sum in dispute. Of course, adjudicators have to cut corners. But within their timescale of a month or so, a skilled adjudicator can typically reach a decision that is broadly right. It is absurdly inefficient for the parties to spend up to 150% of the sum in dispute on trying to improve that standard, particularly when the typical result of arbitration or litigation is not a judgment or award but a settlement forced on the parties by a crippling cost burden.
- An end to the cry that adjudication is unsuitable for large or complex cases
Since the summer, I have spent most of my time running adjudication processes in large and complex cases and that experience reinforces my belief that, not only can such cases be dealt with in this way, but that it is in large or complex cases that the greatest savings of time and cost are to be found.
Over the next year or so the Technology and Construction Court is inevitably going to move into a more supervisory role, overseeing and reviewing the work of adjudicators, rather than representing a first port of call. There will be bad adjudicators as well as good ones. Judges must control the bad without hobbling the good.
- Shorter, simpler contracts
Contract documents have become absurdly long, so long that those who run them rarely have any real idea of what the small print says. Unless a project runs into trouble, the parties inevitably look to commercial good sense rather than the small print.
It is time to start again. It is not realistic to abolish contracts, but it is realistic to restrict them to what is agreed by the individuals who make the deal as to price, programme, quality and so on. This should be coupled with a short and simple code. The idea that the parties achieve certainty by lengthy contract provisions is simply not borne out by experience. The longer the contract, the less compatible it is likely to be with constructive and fair dealing, and the more the parties hold themselves hostage to an uncertain legal result.
It would be perfectly possible for the industry to commission the drafting of a short code of main contract conditions and a short code of subcontract conditions. These codes should abolish the excessively complex notice provisions to be found in some standard forms, and should make no attempt to impose a management system. Projects are better managed by an active process than by the dead hand of a contract draftsman.
- Fewer construction lawyers
No purpose is served by lawyers who merely make the wheels grind longer or more noisily. Although it is often the barrack room lawyers who cause the greatest cost and delay, there is a powerful body of experienced construction lawyers well able to build labyrinthine contracts and engage in elaborate battles. But is it not time for the industry to ask us to do something more constructive? In well-run cases that is already happening, and the experience makes one wonder why the industry stayed with the old system for so long.
Robert Fenwick Elliott is senior partner of construction specialist solicitor Fenwick Elliott, and chairman of the Technology and Construction Solicitors Association.