Own A Construction Company? What To Do When Facing A Lawsuit

Posted on: 8 June 2022

If you're a contractor, and your construction company is being sued, don't take the situation lightly, even if it seems like a minor issue. You might not realize this, but even a minor issue can turn serious if it's ignored. To avoid serious problems, you need to take action as soon as you find out about the impending lawsuit. If you're not sure what steps you need to take, read the list provided below. Here are four steps you should take if you find out that your construction company is being sued. 

Read the Construction Contract

If you're being sued for construction work that you've provided, the first thing you need to do is read the contract. You might not know this, but most construction contracts include provisions for arbitration. If there is an arbitration agreement in your construction contract, and both parties have signed, you might be released from the threat of a lawsuit. That's because arbitration agreements prevent clients from suing you before they've gone through the appropriate channels. 

Notify Your Insurance Company

If your construction company is about to be sued, and you've determined that it's a valid threat, you need to contact your insurance company immediately. It's not uncommon for commercial insurance policies to provide liability coverage for lawsuits. If that's the case, any settlement might not need to come out of your business accounts. If you determine that you don't have that type of coverage, be sure to add it as soon as possible. That way you're covered the next time a client decides to sue your construction company. 

Hire a Construction Attorney

If you've been hit with a construction lawsuit, it's important that you hire a construction attorney as soon as possible. You may have options that will limit your liability. Not only that, but you may have counterclaims that you can bring against your client. Counterclaims can limit your liability, or release you from liabilities altogether. However, you'll need an attorney to help you address those issues. Your construction attorney will also ensure that all mandatory filing dates are met, which can help reduce your risks. 

Gather All Relevant Documents

If your construction company is facing a lawsuit, you need to gather all of your relevant documentation. This should include contracts, work orders, photographs of the worksite, and copies of any communications between you and your clients. This information can help your attorney put together the best defense against the lawsuit. The information can also be used to bolster any counterclaims you may have.

For additional information, contact a construction attorney in your area.