Law Suits – Know When to Hold ‘em, Know When to Fold ‘em

Law Suits – Know When to Hold ‘em, Know When to Fold ‘em

The lyrics from the famous Kenny Rogers song, ‘The Gambler,” have words of wisdom for clients involved in a law suit. “You’ve got to know when to hold ‘em, know when to fold ‘em, know when to walk away and when to run.”

Law suits are incredibly expensive and like gambling, the outcome is uncertain. They are also investments with hope of a return, but like all projects when the cost and risk outweigh potential benefits, perhaps it’s time to “fold ‘em” and take your lumps.

A good expert witness can provide important input to evaluate the potential for success in the lawsuit and what can be done to enhance the chance of recovery. The expert can also help to minimize the overall cost of the law suit by advising counsel where to look for valuable information in the discovery process and what data is needed to support efficient production of the expert report. Becht personnel have been expert witnesses in a large number of law suits including project cost disputes, product defects, crane accidents, patent infringement, OSHA and environmental issues and injury and death cases.

show your cardsIn some of the law suits where we were the expert, it appeared the likelihood of winning the case or at least getting a reasonable settlement was low. Of course, we worked with the entire legal team to discuss whether to withdraw the suit. Terminating the law suit results in loss of revenue for the expert and law firm, but is the ethical path forward for the client.

We have also been involved in cases where the client is on a mission to “get even” with a contractor or other party when the client believes they were abused, cheated or wronged by the other party. Sometimes emotions run high to get back perceived over charges or other issues driving the law suit. Being vindictive rather than being objective can cost hundreds of thousands of dollars in fees. The expert can work with the client to defuse this situation and present a reasonable, objective argument about the expected outcome of the case.

The expert and law firm need to work together to continuously keep the client informed regarding chance of success, developments during discovery, strength of the opposing argument and expected total cost. Another factor to consider is whether the case will stay on schedule or be delayed. Delays can extend the expert and law firm engagement while continuing to explore options, refine expert and rebuttal reports and execute other case related activities. It’s important for the client to recognize the potential extra cost of delays and determine if extra cost to explore options and refine documents is justified.

benefits clearly discussedSome other issues Becht must consider before engaging as an expert witness are conflict of interest and if our expertise will help or hinder the client. We must review all parties in the case and if Becht has a relationship with the opposing party. This could result in a conflict of interest so we must decline the case. We also evaluate the facts around the case and if in our opinion our expertise and sworn testimony would be unfavorable to the client, we disclose this up front and decline the case. These are examples of “know when to fold ‘em,” even before the cards are dealt.

Some examples follow where sound judgement is required “to know when to hold ‘em, know when to fold ‘em, know when to walk away and when to run.”

CASE 1 – Construction of a Heat Recovery Plant

This suit involved construction of a heat recovery plant designed to provide about 35 MW of power for plant use and export. The project was over expended by about 66% of the projected cost and engineering was 4.5 times the estimate. Moreover, it was significantly late. The project was originally envisioned to be lump sum however for various reasons it ended up with engineering and construction divided among contractors, with the owner taking responsibility for procurement, quality control and schedule for critical equipment. The majority of over expenditure was in construction and the law suit in question was between the owner and constructor. When we got involved in the case, we asked questions about the construction contract and how the job was managed. As it turns out it was time and materials and the owner signed off on all work. The plant successfully started up and met performance expectations. After discussions on the contract and management, we advised the owner of the law firm and client we were “swimming upstream” and recovery would be difficult. The response was “We were taken to the cleaners, want our money back and need your help.”

We worked on the case for about 2 years and the legal and expert costs amounted to about 15% of the estimated cost of the plant. This was a situation where the owner had issues managing the project and wanted to save face via a law suit. This was clearly a case of “know when to fold ‘em.”

CASE 2 – Balancing Cost & Quality

In another dispute regarding project cost and quality, schedule extension became an issue as work continued at the request of counsel to refine reports and opinions well after the original deadline. This of course increased cost. While our end product was improved during this delay and refinement period, one has to evaluate the value added of continuing work on essentially a finished product. As they say in project management the first 90% of the project takes 90% of the time and the last 10% takes the other 90% of the time. There has to be a balance of cost and quality in managing the work product. It is necessary to have engagement with the client in addition to the law firm to balance this equation since the client pays the bill. Evaluation of the maximum potential recovery vs. costs of expert and legal fees must continuously be done. You have to “know when to walk away and when to run.”

CASE 3 – OSHA Process Management Rule

This case involved violation of the Process Safety Management Rule, OSHA 1910.119. An operator refused to pay an appropriate fine for various violations of the rule. We performed a quick review of the facts and provided OSHA an opinion. When our CV and credentials were presented to opposing counsel, the fine was immediately paid. This was an example of working closely with counsel to quickly and efficiently resolve the problem with minimum cost to the client. “Know when to hold ‘em.”

CASE 4 – Sub-Contractor Cost & Quality

This was dispute regarding cost and quality of a sub-contractor’s work on a construction project. The sub-contractor was to provide highly specialized equipment critical to the success of the project. There were issues with delays, quality and reliability of the equipment. We were successful in arguing our points and the client achieved a substantial recovery. Although the legal and expert costs were high and the case carried on for some time, the likelihood of recovery was high. In this case the team of client, law firm and experts worked closely together to minimize cost but achieve a favorable outcome. “Know when to hold ‘em.”

CASE 5 – Metallic Expansion Joint

We were brought in by counsel for a metallic expansion joint manufacturer because a new pressure balanced expansion failed by squirm failure.  We were quickly able to determine the design was not proper and failure could be predicted.  This provided counsel information based on which they knew they should settle.  But, further on this, the plant owner was asserting significant damages from down time related to a corrosion failure elsewhere in the system.  We prepared a series of expert questions related to that failure, which we could determine was unrelated to the expansion joint failure.  The two sides quickly settled on damages and down time directly related to the failed expansion joint.  “Know when to fold ‘em.”


The lessons learned on these cases included the following:

  1. The best law suit is the one that never happens.
  2. The expert can provide significant input on the likelihood of success.
  3. The client or owner must develop a comprehensive scope of work for each project to minimize the chance of a dispute.
  4. A seasoned project team must be assembled to execute a major capital project.
  5. Continuous monitoring of the engineering and construction is essential and action must be taken at the first sign the project is off track.
  6. All systems needed for the contractor to monitor the job progress and report costs must be in place at the outset of the work.
  7. A milestone schedule and work breakdown structure must be used to measure progress on the job and be tied to progress payments.
  8. Change orders must be fully justified and include detailed engineering, manpower estimates and execution plans. No work can be done without a fully executed change order.

 

In recent months due to significant activity in the construction business, Becht has been approached on other projects with similar issues. In each case a solid project management plan, detailed specifications, sound vendor surveillance and excellent field quality control could have avoided the issues.

Becht can assist clients with this complex process to build a strong project management team, develop project packages, provide vendor oversight and monitor field execution to help assure a successful project. In the event the project gets off track, Becht has experience in schedule recovery and if need be, litigation support. For more information contact Rick Hoffman – Manager, Litigation and Due Diligence by clicking the link below and for more information, visit: https://becht.com/industries/litigation-support/.

contact becht

|

About The Author

Contact:
Rick Hoffman joined Becht Engineering in June, 2009 as a Senior Engineering Advisor. He has more than 39 years experience in engineering, reliability management and maintenance in the refining, petrochemical and synthetic fuels industries.Prior to joining Becht Engineering he was the Director, Specialty Engineering for LyondellBasell Industries. In this role he had worldwide responsibility for corporate technical support, mechanical engineering and maintenance for more than 40 chemical plants and two refineries. He was also responsible for capital project support, setting the strategic direction for Lyondell maintenance

Authors Recent Posts

Law Suits – Know When to Hold ‘em, Know When to Fold ‘em

Leave a Reply

Let Becht Turn Your Problem
Into Peace of Mind