It’s a common thing we see here at Smiley Law Firm. Contractors, subcontractors, and suppliers are used to doing business in a certain way, then get caught by surprise when issues come up that they didn’t anticipate. The good news is that you can take certain steps to both educate yourself on construction law changes and make adjustments to your construction business practices that will shield you from liability or loss. It is essential to know about changes in the law and then adjust your standard operating procedures to ensure your claims are secured.
Let’s take a look at a bill currently being discussed in the Louisiana legislature, HB 334. If passed into law, HB 334 has the potential to significantly reduce the rights of suppliers, equipment lessors and sub-contractors. We recently wrote an in depth post about HB 334 on the Smiley Law Firm Blog – click here to read that now. Basically, what HB 334 does is the following:
- Changes R.S. 9:2784, which removes the right of suppliers to require timely payment on construction projects, and eliminates the 15% penalty traditionally in place for late payments. This is a great statute, as-is, and should not be changed to the new proposed language. Prompt pay is essential to holding general contractors and surety’s responsible for timely payments.
- Changes R.S. 9:3902, which removes the right of suppliers to require timely payment by bond sureties, and eliminates the 10% attorney’s fees traditionally in place for sureties that fail to pay on time. Another important statute that imposes penalty on a surety when it does not timely pay claims. You can tell that the insurance lobby is working hard to get this bill passed.
If HB 334 passes then subcontractors and suppliers will find it difficult to enforce payment for work completed or materials supplied. These parties will still be entitled to payment, but the timing mechanism will be changed in a negative manner for subcontractors, equipment lessors and suppliers.
The best thing that suppliers and sub-contractors can do to prepare for something like HB 334 is to consult with an experienced Louisiana construction attorney. Here are the key items that an attorney will help you review:
- Identifying areas of potential conflict in current and upcoming construction projects contracted for.
- Developing an action plan to deal with issues that arise.
- Drafting agreements and workflows with reasonable precautions to protect against issues under current and potentially future laws.
- Ensuring that you incorporate good business practices for keeping complete documentation on a consistent basis.
- Sending required notices and perfection of lien rights will become important to a successful collection under the new statutory scheme.
- Mediating and providing counsel for any disputes that arise to prevent the need for expensive litigation.
Most contractors see the involvement of an attorney in construction projects as an expense. Here at Smiley Law Firm our clients are encouraged to think of it as “an investment.” We cannot begin to tell you the hundreds of thousands of dollars saved by our more proactive clients.
If you are a supplier, equipment lessor or subcontractor doing business in Louisiana then we strongly encourage you to have a construction law attorney review the current state of your business procedures regarding collection on projects. We will waive our initial consultation fee to help you get started, so contact us today.