The Evolving Practice – Construction Law in North Carolina

Forty years ago, construction law in North Carolina was not much to speak of.  “Construction law” as a practice area enjoyed only a slight existence, and you would have been hard-pressed to find a “construction attorney.” Now, when searching for construction attorneys online, you will find hordes of firms and individuals offering a helping hand. “Construction law” as we refer to it today encompasses a wide range of legal issues and services affecting the several participants engaged in developing, financing, designing, and building private and public construction projects.[1] So, how did we get here? I interviewed a number of experienced lawyers to tell us the story. Thank you to Richard Conner, Bob Burchette, and Fenton Erwin for dedicating time to tell the story.

Years ago, construction law was somewhat recognized on a national level, largely relating to federal construction projects. In North Carolina, however, few attorneys considered it possible to focus exclusively on construction work, expecting there would not be sufficient work flow on which to rely. Relatedly, judges were reluctant to hear the specifics of cases, with one judge stating, “I won’t hear cases involving hammers and nails.”[2] After all, there were no pattern jury instructions, scant case law and, back then, judges were required to summarize the positions of parties, and it was difficult for judges to articulate the differing aspects of construction.[3]

An evolution began. To develop and compile what is considered construction law, attorneys started creating academic resources focusing on construction law issues, such as the old Construction Law Digest and Construction Law Advisor, both published by Foster, Conner, Robson & Gumbiner, P.A.[4] A number of attorneys also started focusing more on construction matters, many moving from insurance defense work.[5] With the increase in construction law knowledge and attorneys focusing on construction issues, a practice area in North Carolina entered a nascent stage.

Simultaneously, project delivery systems evolved. Many projects 40 years ago were completed under a multi-prime system, where several contractors had direct contracts with the owner for civil, HVAC, electrical, plumbing work, etc.[6] A general contractor on the project, if any, acted only as a project expeditor. While the multi-prime project delivery system spread out contracting dollars and responsibilities, it resulted in challenges. This system gave rise to a high number of subcontractor and prime contractor claims against the owner, and since the general contractor did not have the ability to withhold payments to down-tier contractors, project completion could be chaotic.[7] Now, project delivery is rarely completed on a multi-prime basis. Design-Build is popular, and single general contractors are almost exclusively preferred.[8] The makeup of general constructor companies has also evolved, in that general contractors are responsible for the schedule and performance of the trades but rarely self-perform any trade work.[9]

As a practice area for attorneys, both construction litigation and contracting have evolved significantly. Formerly, construction trials were more prevalent, since it made financial sense for builders and other construction parties to litigate through trial, given the low number of documents and local access to witnesses.[10] Attorneys would learn much about the case throughout the course of a trial. Now, construction projects generate staggering amounts of data and documents, resulting in an equally staggering cost for attorneys to collect, evaluate, and explain project documents.[11] Litigation now frequently involves a full lineup of delay and engineering experts.[12] The shockingly high cost of litigation increasingly convinces construction parties to engage in varying dispute resolution methods, to avoid costs.[13]

Construction contracts have also evolved, in that previously many contractors used concise, in-house agreement or purchase order forms that effectively set out business terms but did not necessarily address legal or other practical terms. Now, construction contracts address a wide variety of provisions, such as the claims process, warranties, insurance, indemnity, and an equally wide variety of provisions not related to construction issues, like employee anti-discrimination requirements and cyber protections. Construction contracting is now complex enough that groups like the American Institute of Architects and ConsensusDocs have developed a niche commercial industry to provide form agreements for a cost.[14]

There is room for improvement. The bidding process frequently rewards the lowest bidder, which may not provide the highest quality work.[15] The immigrant community in North Carolina continues to face long odds and challenges in building up clout in the construction community, despite putting forth a frequently strong work ethic and quality work. It can be difficult for immigrant contractors to build enough capital to meet bonding needs, and obtaining a small business loan approval can be a struggle.[16]

Construction law in North Carolina has a bright future. The construction bar is populated with preeminent minds and effective attorneys, and North Carolina is extremely favorable for business-minded clients. International and national builders increasingly open local offices or acquire local builders and smaller construction firms continue to crop up. Business is booming in North Carolina, and the state and federal governments continue to let high-dollar projects.[17] Local labor forces are skilled and there is wide access to critical materials. The investor pool is active and strong. Judges are also more receptive to construction matters, showing an increasing willingness to engage in construction matters.[18]

[1] Interview with Richard Conner, Senior Partner, Conner, Gwyn, Schenck, PLLC (Oct. 22, 2021).

[2] Interview with Fenton Erwin, Senior Partner, Erwin, Capitano & Moss, P.A. (Oct. 13, 2021).

[3] Erwin.

[4] Conner.

[5] Erwin;  Conner.

[6] Conner; Interview with Robert Burchette, Senior Partner, Johnston, Allison & Hord, P.A. (Nov. 29, 2021).

[7] Conner.

[8] Conner.

[9] Burchette.

[10] Erwin.

[11] Burchette.

[12] Burchette.

[13] Conner.

[14] Erwin.

[15] Burchette.

[16] Erwin.

[17] Burchette.

[18] Erwin.

This article was originally published on the NCBA's Construction Law Section Blog on Jan. 19, 2022, and has been republished here with the consent of the NCBA.