Crisis Gets Us Back to Basics

May 20, 2020

ARLINGTON, VA – As senior counsel, Construction Law, for Associated General Contractors (AGC) of America, Brian Perlberg has seen his share of strife within the field of construction law. In the last two months, however, he’s seen an entirely new level of chaos.   

“The virus crisis has turned the world on its head, and it has certainly done that in construction,” says Perlberg, who also serves as executive director and senior counsel for ConsensusDocs, Arlington, Va. “We just got the latest jobs report, and just shy of one million people have left the workforce. We were facing serious workforce shortages, and now we’re worrying about keeping the construction economy afloat.”

According to Perlberg, virus delays began under the force majeur (nobody’s fault) banner, with supply chain disruptions adding additional complications. “Then all hell broke loose,” he says. “And there have been a myriad of responses. In some places, construction is considered essential with safety procedures from the CDC and OSHA.”

AGC of America has added clarity with its own safety template for industry personnel to tailor to their own projects. Some projects are indeed moving forward, while others are proceeding at roughly 60% capacity. Still others are shuttered altogether.  

“One of the first responses to the COVID crisis was that people needed to pay more attention to their contracts,” says Perlberg, who is also a member of the educational advisory board (EAB) at Construction Super Conference (CSC). “Get out your contract and know what it says. If there is a delay, give proper notice and try to figure out the costs involved.

“The best legal advice that I’ve gotten in the context of COVID 19 is almost like non legal advice,” Perlberg continues. “It’s we’re all in this together. Don’t be a jerk. The most important provision of your construction contract is not the payment clause, it’s the blanks where you fill in the parties’ names. This crisis gets us back to the basics. You’ve got to work together, not be a jerk, and figure out what’s reasonable and unreasonable.”

The back-to-basics philosophy brought on by the virus crisis has naturally led to a change in focus for many construction law attorneys. According to attorney Thomas V. Giordano, lawyers focusing on transactional and claims/litigation are experiencing a precipitous decline in business activity.

“Being part of a construction management and development company, certainly our industry has been deeply affected,” says Giordano, who serves as general counsel, Construction, Lendlease Americas, New York, N.Y. “Much of what we do has been deemed by the various jurisdictions as non-essential. That said, our legal departments are extremely busy as they usually are in times of crisis, dealing with strategic adjustment and management of our legal rights, obligations, and responsibilities.” Peering into the future, Giordano sees uncertainly among parties who are seeking to enter into contractual relationships. “An owner doesn’t necessarily know how this [virus concern] is going to be quantified pro forma, and a construction manager is reticent to give a guaranteed price,” predicts Giordano, a CSC EAB member. “We spend so much time making sure our contracts allow for protected interest. We know where we stand, but this is a big bubble of speculation that is preventing new transactions from being consummated because of the sheer inability to guess.”