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Legislative Update on Bill Regarding Lien Process Change

There is a bill currently pending in the Senate Business and Commerce Committee regarding a change in the lien process in Texas. Senate Bill 1506, sponsored by Senator Juan Hinojosa of District 20, would overhaul the complex system of procedures in place for asserting and perfecting any lien claims by contractors or subcontractors. The bill would also restructure the current system of giving notice about the liens to owners and the public, which is one of the toughest and most complex in the country.

Under the new bill, notices of liens would be sent to a central registry, which would simplify the process by which contractors can be paid. Under the current system, there are a number of trap doors and the ability to perfect a lien is lost. The number of different documents under the notice system is overwhelming: Lien Notices, Preliminary Notices, Pre Lien Notices, Two Month Notices, and Three Month Notices, just to name a few. The timing and number of notices needed creates these trapdoors of requirements and deadlines, creating an impossible situation and a number of dead claims.

The new notice system would require a subcontractor or supplier to file only one document at the beginning of the project, called a Notice of Furnishing, which would preserve a potential claimant’s lien rights. This eliminates the web of documents needed under the current system.

This overhaul is desperately necessary. Improved communication could be the key to addressing the payment problem in construction. With all information published at the outset of a project, many procedural missteps would be eliminated. 2017 is the first year the bill was introduced and it is not yet scheduled for public hearing.


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Gordon&Sykes Construction Law Discovery

The Middle: Discovery

Discovery in construction law is a set of procedures used to gather information and evidence in a court case. Discovery is obtained before the case goes to trial in an effort to gather as much pertinent information as possible that could build a strong case. When discovery is requested within the rules and the time guidelines of the courts of Texas, the responding party must provide the information. There are a few different types of discovery: written discovery, depositions, and examinations of property. I will outline the different types below.

Written Discovery

There are four types of written discovery in a legal case. These documents assist attorneys in finding all relevant facts that could be used in trial, as well as any information about the individuals or companies involved in a case.

First, there are requests for disclosure. These requests permit both sides certain information from the opposing council without an argument over whether or not the information is discoverable or must be provided. There are twelve different categories in a request for disclosure, ranging from the correct names and contact information of each party involved and any theories or facts about faults or defenses, to the amount and calculation of the financial damages, any information on witnesses or experts, and any medical records associated with the case.

Next up are written interrogatories. These are written questions which are required to be responded to in writing, under oath. Generally, each side is permitted 25 questions that dig deeper into facts about the case. Every question must be answered, but each party is able to respond by providing where the answer may be found in public records.

Requests for Production is done for the purpose of requesting any documents and inspecting any tangible things. This could cover anything from emails, letters, bank statements, tax returns, photos, payroll stubs, and more. Responses to these requests are due in 30 days. While you aren’t expected to produce any documents that do not exist, you are expected to provide anything requested that you can reasonably obtain.

The last form of written discovery is Request for Admissions. The purpose of these requests is to eliminate matters of which there is no controversy so that the litigation process can be streamlined. The statements cover information about whether you were at the scene of the incident, what your relationship is to the case, and other admit or deny situations related to the incident. These admissions are specific, written questions that must either be admitted or denied. If the requests are not answered within 30 days with either admit, deny, or challenge, then the statements are automatically admitted as true.


Depositions are another form of discovery that take place prior to trial in order to gain pertinent facts and information about the case. There are three types of depositions: oral, video, and deposition upon written questions. Specifically, a deposition is an interview of a party involved in a lawsuit. Attorneys depose the opposing parties by asking questions related to the case. Depositions are always recorded and the transcript must be signed off by the deponent as true. Depositions are sworn testimony, meaning that they are made under penalty of perjury and can be used in court. These sessions allow all parties involved to share all important information that will be used if a trial is necessary and to prepare for and assess all aspects of the case. All information related to a case should be shared in a deposition, which encourages settling out of court because each party understands the strengths and weaknesses of its case and therefore can determine their chances of a trial win.

Examination of Real Property

In many construction law cases, the lawsuit may be due to an accident or a breach of contract at a construction property. In these cases, parties involved need to visit said property in order to assess the situation. In this case, permission needs to be granted for any involved parties to be able to gain access to the property, whether it is a finished building or a construction site. The results of the examination can then be used in the case.

Discovery, though generally a lengthy and tedious process, is an important step in building both sides of a case. Truthful answers and prompt responses are required and can encourage settling out of court, saving both parties time and money.


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The Beginning: Experts

In a court of law, the standard of care applicable to a professional is generally established by an expert testimony. A malpractice case cannot be won by the plaintiff without expert testimony that can persuade the judge or jury that the defendant failed to meet the appropriate standard of care. In construction law, the expert has extensive knowledge and expertise in the construction industry.

Their testimony provides the necessary parties with facts on any issues relating to construction law, such as building schedules and delays, codes and compliance, construction costs and construction defects. The construction process is long and complicated and involves several different people and procedures, including contracts, financing, bonds and insurance, management, liens, land use and zoning, licensing, regulatory compliance, and permits. The construction expert will explain industry standards for all of these factors and explain any technical terms.

Because construction law encompasses such a wide range of issues, a legal claim on a construction project could involve contract law, torts, and/or property law. There could be a breach of contract, a wrongful death from a construction site accident, or a government permit issue.

Types of Experts

The construction expert needs to be up-to-date with all of the new technologies and methodologies in construction, as well as any materials or processes that were used in the particular case. Depending on the case, a specialist may be required that is an expert in a specific aspect of the construction process. This could include electricians, demolitionists, architects, contractors, safety managers, or real estate developers.

Damages are a common part of negligence and personal injury claims. A financial expert will assess the damages resulting from problems in a defect claim, as well as auditing and calculating the costs of the negligence.

When injuries occur at construction sites, a medical expert is brought in to assess the cause, the damage, and the resulting injuries. The medical expert can explain whether the resulting injury would commonly be caused by the alleged incident. The expert could also speak on the length of recovery typical for the specific type of injury, which is useful in cases of Worker’s Compensation.

Overall, experts in construction law are an important aspect of the case, whatever kind of expert they may be.

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James C. Gordon Board Certified in Construction Law

Gordon & Sykes is thrilled to announce that attorney James C. Gordon received Board Certification in Construction Law, as confirmed by The Texas Board of Legal Specialization.

Board Certification is a voluntary designation program certifying Texas attorneys in specific areas of law. Board Certified attorneys must be licensed for at least five years, devote a required percentage of practice to a specialty area for at least three years, attend continuing education seminars, pass an evaluation by fellow lawyers and judges and pass a 6-hour written examination.

The written examination, the first ever in Construction Law, was given on October 18, 2016. Out of the 112 candidates for certification, 82 attorneys passed the written test. Gordon said, “I am pleased to be in the first group to be Board Certified in Construction Law. My practice focuses on representation of contractors, subcontractors, architects, engineers, developers, and others involved in commercial construction, and this certification will enhance my knowledge and my representation skills in this area.”

Gordon is a graduate of the University of Texas School of Law and was licensed by the State Bar of Texas in 1976. This is Gordon’s second certification in a specialized practice area, as he was also Board Certified in Civil Trial Law in 1999. He formerly served as Director of the Tarrant County Bar Association and as Director and President of Dispute Resolution Services of Tarrant County.

Board Certification is offered to attorneys in 22 specific areas of law. Initial certification is valid for five years. To remain certified attorneys and paralegals must apply for recertification every five years and meet substantial involvement, peer review and continuing legal education requirements for their specialty area.

The Beginning: Working with the Attorney

When you have a contract dispute, it is smart to hire an attorney to guide you through the dispute resolution. Hiring and working with an attorney may seem daunting, but there are certain things you can expect and prepare for throughout the process.


The most important aspect of hiring an attorney for a contract dispute is to research those in your area who specialize in dealing with your specific area of need. For construction contract disputes, you want to hire a lawyer with experience in construction law and civil cases.


Generally, your lawyer will be upfront and frank about your case, the process of handling a contract dispute, and what will be expected of you. Ask your lawyer how they prefer to communicate, whether that is phone calls, email, or face to face meeting. Be sure to ask questions and communicate any concerns you have with your case, and keep records of all communication. You need to work with your lawyer by being truthful and responsive in order for them to have the ability to create the best case and the best possible outcome for you.


Your attorney should lay out upfront the billing and payment plan, whether he or she charges hourly or flat-rate, and when you are expected to make your payments. Delays in payment can lead to work being stopped on your case, so you need to closely manage the financials of your case.


Attorneys are bound by a strict code of ethics. They should maintain attorney-client privilege, meaning that whatever you say to him or her is confidential. The attorney needs you to be honest at all times to allow him or her to best represent your case. They should also always act in your best interest and work within the confines of the law. If you believe that your attorney is acting unethically, there are specific agencies available to assist you.

Overall, working with an attorney will be a smooth process as long as you keep the above issues in mind throughout the working relationship.

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Negotiation: Design Bid Build

There are two delivery methods commonly used in construction in order to secure contracts: design build and design bid build. Today we will explore the benefits of the design bid build method. Click here to read about the design-build process.

There are three phases in this method: the design phase, the bid phase, and the build phase.

Design Phase:
During the design phase, the owner retains an architect to design the construction drawings and technical specifications of a project, which various general contractors will then bid on to construct. The architect and owner will work together to develop a program to document the needs and produce a design. Once a design is created, other professionals will be brought on to complete the technical and safety specifications, such as mechanical, electrical and plumbing.

Bid Phase:
Bidding may be either open, where any qualified bidder can participate, or select, where a limited number of pre-selected contractors are invited. The general contractors then work alongside their subcontractors to compile a complete bid on the project, which includes price, closing date, and all operations. The bids are then reviewed by the architect and one contractor is chosen for the project.

Construction Phase:
Once the project has been awarded to the winning contractor, the bid documents may not be altered. The permits are then applied so construction may begin. Should any design changes arise during construction, the architect may issue sketches or written clarifications. The contractor may then be required to document “as built” conditions to the owner.

Most of the work is then done by subcontractors and managed by the general contractor. The architect acts as the owner’s agent to review the progress of the work, to issue site instructions, change orders, or any other necessary documentations.

Benefits and Issues of Design-Bid-Build
Because the design team is impartial, the process is almost always in the interest of the owner. The process also allows the owner to establish reasonable prices in the build due to the competitive nature of the bidding, and the open bidding process allows for new general contractors to receive projects. One potential issue of the bidding process is that it can lead to the “cheaper is better” mentality, because the winner of the bid is oftentimes the one who presents the lowest price. This can compromise of quality in the construction process.

There are pros and cons to both the design-build process and the design-bid-build process, so it is important to weigh the options of your particular project to discover which is right for you.

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Negotiation: Design/Build

There are two delivery methods commonly used in construction in order to secure contracts: design build and design bid build. Today we will explore the benefits of the design build method.

Using the design build process, the owner hires one party to do both the design and the construction for a single project under one contract. The work is then performed by the contractor or subcontracted out to other companies. This method requires high levels of collaboration between all parties, while the risk and responsibility of the project is held by the general contractor.

There are several benefits to this delivery method:

Single Point of Contact
For the owner, there is only one point of contact for the project if any questions or concerns arrive.

Quicker Delivery
The design build method eliminates the bidding process, taking a significant portion of time off of a project.

Single Contract
Instead of dealing with different contracts with a designer and a contractor, there is only one contract in place, removing some risk for the owner.

Combined Services
All parties involved are working together under the same contract, eliminating possible conflict and miscommunication between separate parties.

Design and construction are being done concurrently, which allows the designs to be created with the most cost-effective materials and methods.

But Not Perfect for Every Project…
The design build process is an effective delivery method, but it is not perfect for every job.

Design Professionals are Not Independent in Design Build
An architect or engineer may want to be cautious about design build projects. In a design bid build format, the economic loss rule bars claims by subcontractors against design professionals for negligence or misrepresentation, but in a design build format, there may not be a defense.

Owner Risks from Design Build
Some of the savings promised by design build may turn out to be illusory, because the owner may need to hire other experts to keep the project on track. In a design bid build format, the architect plays an important role is resolving disputes between the owner and the general contractor, and may have duties to observe the progress of the work. When the architect works for the design builder, its allegiance is to the builder and not to the owner. And in a design build project, the architect hired by the builder is rarely paid to perform any construction observation services, much less to inspect the work. The builder observes the work itself. This creates some interesting problems for dispute resolution. “Interesting” means expensive to resolve and involving lawyers, courts or arbitrators. As a result, an owner may decide it needs a construction manager to protect the owner’s interests, and to perform tasks the architect traditionally performed. The cost of an independent manager adds to the cost and reduces the net savings to the owner.

Weigh the benefits of each process in order to decide the best choice for your project.

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Construction Manager at Risk

Construction Manager at Risk or CMAR is a delivery method in which the Construction Manager guarantees to deliver a completed project within a Guaranteed Maximum Price (GMP) based on construction documents and specifications at the time of the project.

During the construction process, the CMAR acts as a consultant to the owner throughout all phases of the project—design, development, and construction. The CMAR may also provide some actual construction services, depending on the availability of the contractors involved. Any construction costs that exceed the GMP of the project become the financial liability of the CMAR, so he acts in both his and the owner’s best interest by controlling construction costs.

Benefits of CMAR:

The CMAR method has several benefits to the owner, including decreased cost, decreased risk and having a project manager working in your interest.

The cost of the project is controlled from the start. Because the project begins with the hiring of a CMAR, the budget is established in the beginning. The risk then falls on the CMAR due to allowances and contingencies being built into the GMP. The CMAR then works as the owner’s advocate during the entire process to keep the project on schedule and within budget, so there is no burden on the owner. Another benefit is that the CMAR gives the GMP prior to the bid, he does not have to select the low bid, which can lead to a higher quality process and lower long-term costs.

Potential Issues:

Many of the same issues that arise in the design-bid-build method (link to previous blog post) can arise in the CMAR process if a negative relationship between the CMAR and the architect exists. By hiring the CMAR in the beginning and allowing them to help select the architect, that risk is minimized.

In the Construction Manager at Risk delivery method, just as in any other delivery method, there could be change orders. One misunderstanding is that the GMP will not be exceeded due to change orders that arise from inaccurate construction drawings. The GMP is based on the specifications at the time of the GMP. Any major changes that are in scope will result in a change order, which increased the GMP. In order to minimize this risk, the documents should be required to be 100% complete prior to receiving the GMP.

If you have a large project with many phases and technical complexity, the Construction Manager at Risk may be an efficient delivery method.


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Dispute Resolution Through Lawsuits Filed in Courts of Law

Disputes are still resolved by courts of law, although the recent trend has moved toward arbitration being required by contracts and the waiver of jury trials. A contractor, designer, or project owner involved in resolving a dispute in court should consider a two-part question at the start of the process, and build a strategy around the answers to those questions. What do courts do well? What are they incapable of doing well?

A court can choose to award monetary judgments for damages caused by a breach of contract or negligence, it can declare the rights of the parties in some disputes where the damages are hard to calculate, and it can issue injunctions to stop harmful action or to compel the performance of certain acts.

Courts are good at imposing their will on the participants. As the third branch of state and federal government systems, they have the resources and right to initiate judicial proceedings and find a resolution, by force, if necessary. Courts have the ability to compel witnesses and parties to show up and be examined during a dispute and even after the dispute is resolved. They can enforce their decisions by the seizure and sale of property, or require a liable party to hand over property and disclose confidential and embarrassing information to a party’s most bitter opponent.

A party with a claim against a wrongdoer will plan to use the force of the court to compel answers and disclosures that will support the claim. The party will want a court date to be set as soon as possible, while it is still possible to prove the circumstances.

Courts are inefficient. Resolving disputes takes time and money. Procedures designed to allow the parties to discover facts and prepare for trials are routinely gamed by opposing parties. The party at fault will defend itself by all means available, including delay and obstruction, to achieve a stand-off or a favorable settlement.

Fortunately, state and federal legislators, as well as the courts, are constantly revising procedures to make the courts accessible and effective at reduced costs to the participants. The goal is to allow cases to reach the point of trial sooner and at lower costs.

A party has to develop a strategy to prove or defend its claims. While the strategy is developed, it is beneficial to avoid unnecessary skirmishes along the way. The point is to begin with an understanding of the claimant’s rights and to not waste time with objections that those rights are either too restricted or too broad. Next, evaluate how to prove and explain the events leading up to a dispute, and finish by presenting the facts in the dispute as a believable story by educating and persuading the judge or jury.

In later posts, we might consider in more detail some important and interesting aspects of the preparation for trial, and how trials are conducted. In the beginning, it’s more important to start with a definite idea of the desired outcome and the facts of the dispute, so that the desired outcome can become the actual result.


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The Beginning: Courts of Law

Disputes may be settled in one of the different levels of courts in Texas. Depending on the presiding judge and his preferred method, an alternative dispute resolution is generally required before a case is tried in court. Mediation and arbitration (link to blog posts on the subject) are two of these methods. If a settlement is not reached in one of the alternative dispute resolutions, the case will go to trial in a court of law. In the court of law, your case will either be decided by a judge or a jury.

In a court of law, witnesses are heard, testimony is received, exhibits are offered into evidence, and a verdict is rendered. The level of trial court the case is heard in depends on the scope of the case.

District Courts:

The district courts are the trial court of general jurisdiction in Texas. Each county must be served by at least one district court, and is sparsely populated areas of the state, several counties may be served by a single district court. Alternatively, an urban county may be served by many district courts. District courts have jurisdiction over civil matters in which the amount of money or damages involved is $200 or more.

Constitutional County Courts:

Constitutional county courts are provided by the Texas Constitution in each of the 254 counties of the state. They have original jurisdiction over all criminal cases involving Class A and Class B misdemeanors. The constitutional county courts also have appellate jurisdiction in cases appealed from justice of the peace and municipal courts, except where county courts of law have been established.

County Courts at Law:

The Legislature has created several statutory county courts at law in the more populous counties of Texas to aid the single county courts. The legal jurisdiction of the special county-level trial courts varies from county to county and is established by the statute that creates that particular court. While the jurisdiction varies, the county courts at law also usually have appellate jurisdiction in cases appealed from justice of the peace and municipal courts, similar to the constitutional county courts.

Justice Courts:

The Texas Constitution requires that each county establish at least one justice of the peace court. These courts have jurisdiction in both minor criminal cases and minor civil matters. The justice of the peace may issue search and arrest warrants and may serve as the coroner when there is no medical examiner. The justice courts also handle small claims matters.

Municipal Courts:

Municipal courts are created by the Texas Legislature in each of the incorporated cities of the state. These courts have exclusive jurisdiction over violations of city ordinances. When those city ordinances are related to fire safety, zoning, public health or sanitation, fines of up to $2,000 may be charged. Municipal courts may also issue search and arrest warrants, but do not have jurisdiction in most civil cases.


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