Avoiding legal land mines

By Emma Peterson. 

Legal expert John Kenney dives into protecting your business in relation to lien rights, deadlines and subcontractors. 

For many outdoor professionals, starting a business was more about their passion for the trade and hard work than it was about wanting to manage a company. This leads to a lot of owners making missteps or mistakes as they learn as they go, running their business – which can be especially costly when it comes to legal issues. To learn how to dodge some of the more common legal landmines that crop up, Karol Weyman sat down with John Kenney, a legal expert and the CEO of Cotney Consulting Group, for an episode of From the Ground Up™. 

John started off talking about liens, which are the legal documentation used when payment has been received, and when they should be filed. He emphasized the importance of legal adherence to your ability to file a lien:  

You have to understand that if you, as a contractor, miss on a deadline or don't follow exactly as the statutory requirements are in your state that you're working in, you're not going to get paid and you can't go before a judge and file...Some of the most common errors that I see include missing the preliminary notice deadlines or not having the correct percentage of work completed.  

And liens are just the start of legal challenges that can come with running an outdoor contracting business. Another area in which contractors tend to run into issues is with subcontractor agreements. John pointed to three areas where subcontractor agreements tend to breakdown:  

1. Risk allocation: Specifically, John pointed to upstream risk as an issue, noting, “Subcontractors are sometimes not understanding how they are bound to the general contractor's contract with the owner.” 
2. Payment flow: An example of a payment flow issue is confusion surrounding terms like paid if paid, paid when paid and pay to pay.  
3. Insurance: As for insurance issues, think of things like holding people harmless, defending them, paying in lawsuits, etc. 

John’s recommendation for managing avoiding all of these mentioned pitfalls? Establishing strong processes. He explained, “Start by auditing your company. Collect any subcontract templates, change order forms, notice forms and lien tracking processes that you may have or may not have and review them as a system.” John went on, “From there, you want to think about how to align your operations, contracts and documentation. I recommend going to a local construction attorney that you trust to review this together.” And once you have those three things aligned, you will have a good start on the path to protecting your business from legal landmines.  

Listen to the episode or Watch the recording to learn more about navigating the legal side of running an outdoor contracting business.  

The information contained in this article is for general educational information only. This information does not constitute legal advice, is not intended to constitute legal advice, nor should it be relied upon as legal advice for your specific factual pattern or situation.