Working for private individuals – or how to get blood from a stone

Domestic jobs – extensions, roofs, basements etc, are in my view far more difficult than commercial work. There are a number of reasons for this:

1.    There is unlikely to be any contract between the parties, at best there will be an exchange of emails or a single page draft which is in any event often forgotten once the work has begun. As a consequence, there is often no clear description of what is to be done, how long it is to take and how it is to be paid for.

2.    Domestic clients have unrealistic expectations of what is to be done, the standard of work they can expect and the time in which the work has to be carried out.

3.    Domestic clients are quick to withhold payments realising that the contractor will have little choice but to commence long and expensive proceedings if they want to get paid and will probably settle for less than they are entitled to if forced to do so.

4.    Because there is no proper contract between the parties there is often no dispute resolution mechanism, such as adjudication, which would allow the parties to resolve their disputes quickly and inexpensively.

5.    Finally, Contractors are often asked to undertake additional work which is not properly recorded and the value of which is not agreed.

There are other factors that a Contractor must bear in mind when contracting to undertake domestic works. In particular, if the Contractor agrees the terms of the contract at the customers house, as is often the case the Contractor will have to comply with the Consumer Contracts (Information, Cancellation and Additional Charges) Regulations 2013.  These regulations require that the Customer is given a notice advising that they have the right to cancel the contract in 14 days. The Customer must be given the notice form to send to the contractor and has to be given some prescribed information about the contract and the Contractor.

If the Contractor does not give the required notice then,

1.    It commits a criminal offence

2.    It cannot receive payment for any works undertaken in the 14 days cooling off period.

3.    If the Customer discovers that it has the right to cancel the contract within 1 year and 14 days, it can cancel the contract and may be entitled to repayment of all sums it has paid to the Contractor.

It is therefore essential that the Contractor gives the proper notices before it starts the work if it is not to fall foul of the regulations.

So, faced with the difficulties of working for private individuals with limited funds and un realistic expectations and who are given extensive rights by the law, what should the small contractor do to protect itself as much as possible.

The first and obvious starting point is to have a contract with the customer.

There are a number of off the shelf contracts available for use from the FMB, JCT and others.

I often recommend the JCT Minor Works Contract. That contract provides for the appointment of an independent Contract Administrator whose job it is to monitor the works, issue instructions and issue a certificate valuing the works every 28 days. The advantage of the contract is that the Employer does not deal with the Contractor directly and the Employer does not value the works.

The JCT Minor Works Contract also includes an Adjudication clause which provides that disputes can be referred to an Adjudicator for resolution. Adjudication is a quick and inexpensive dispute resolution mechanism that avoids the expense and cost of court proceedings. Adjudication is not available for domestic contracts unless there is a right to adjudicate in the contract between the parties.

If you do not wish to use a standard form of contract you can get a bespoke form drafted for you by a solicitor. I often draft simple contracts for clients to use. They have the advantage of being shorter than the standard contracts as they provide for the essential clause required in a contract rather than the wider clause in the standard contracts.

A bespoke contract will set out the work to be undertaken, the cost of the work and the manner in which the Contractor will be paid. It will set out a mechanism for completion and for the claiming of additional time by the contractor. Importantly the contract will provide for the resolution of disputes by Adjudication proceedings.

Quite apart from the building contract a Contractor needs to check whether he has to give a notice of the right to cancel the contract and if he does needs to provide the required documentation to be issued to the customer. This includes a schedule of required information, the Notice to Cancel the contract (that has to be given to the Customer) and if works are to commence within 14 days an authority to be signed by the Customer confirming that they will pay for work done within the 14 day cooling off period.

A solicitor can provide the cancellation documents which, like the contract will not cost a great deal. Once obtained they can be used repeatedly and will help reduce the risk of contracting with private householder customers.

David Jackson, Solicitor, National Legal Consortium www.nlc.net or 0800 085 7772.

UKL Projects case study

UKL Projects specialist in modular, retail and commercial fit outs. The Sheffield based business delivers projects across the UK for leading supermarkets, as well as MOD and MOJ. The company was upscaled in 2014 ad has continued to grow rapidly as a second tier subcontractor within the construction industry supply chain.

As the firm grew, it began to face a number of challenges and following a dispute with one client, Directors began to research the commercial aspects and legal implications of the dispute. Unable to resolve the issue with a round table sit down, it soon became clear that a lack of understanding and awareness of contracts put the Directors at a disadvantage.

Having identified CE Law and the National Legal Consortium via the web, representatives from the legal firm met with UKL Projects Directors and were introduced to the subscription based service that the NLC is based on.

Rayno De Kock, Director, explained: “For us, legal challenges were always something that we avoid, as we are well aware of the potential cost implications, however, this approach clearly wasn’t working for us. By signing up to become a member of the NLC, we have unlimited access to legal advice which is fantastic.

“The concept is an absolutely brilliant , we are now in the position of being able to give the NLC a contract which they review and returns with any concerns, which is invaluable. We’ve also been involved in a number of client disputes where they have offered a great deal of sound advice. We’re  currently in a situation of none payment by client which the NLC is supporting us through.

“As a subcontractor, we would not have had the time or money to seek legal advice in all these cases and would undoubtedly have lost money. What the NLC gives us is confidence that we can address legal matters and are being given the best sector specific legal advice available.

“We have already subscribed for a second year and would recommend any other subcontractor in our industry to follow suit.”

Construction Lawyers – why are they so expensive (and what can be done about it?)

Lawyers often charge well over £200 an hour with no guarantee of success. Taking a large claim to court will often cost more than £50,000 and even adjudication, the cheap and cheerful option often costs more than £5,000.

Lawyers have high salaries to pay, pay expensive insurances, run expensive offices, etc. Nothing new in any of that. But what can a company do to limit its exposure to legal costs?

There is now a new solution available to construction companies. The National Legal Consortium offers a monthly subscription service that provides unlimited legal advice (within the scope of the scheme) to its clients. Clients can issue debt letters, take or defend proceedings, obtain telephone advice, get advice on contracts and notices and get to use the scheme’s logo all for the cost of the monthly subscription.

The NLC scheme is like having a Construction Solicitor on your staff at a fraction of the cost.

In practise this means that adjudications and court proceedings cost no more than the monthly subscription so that concerns about whether they can be afforded disappear starting at £150 plus vat per month.

http://www.rcimag.co.uk/digitaledition/rci-may-2018/page_19.html

For more information about the NLC scheme go to www.nlcuk.net or call 0800 085 7772.

Case Study - Commercial Building Contractors

Cannock-based Commercial Building Contractors, deliver a ‘turnkey’ solution for the installation of quality interior fit out projects, refurbishment and internal building works.

The firm offer a complete interior fit out service from simple joinery installations to complete multi-disciplinary projects as well as sub-contracting to larger contractors involved in the leisure, education, health and retail sectors.

Neil Hill, Managing Director of Commercial Building Contractors contacted CE Law several years ago and has utilised their services on an ad hoc basis ever since. Upon formation of the NLC by the team behind the CE Law, a legal service launched specifically for the subcontractor, Neil took the decision to join, gaining unlimited access to construction law advice.

With fees based on turnover, at £500,000, Commercial Building Contractors pay a monthly £180 subscription fee.

Neil Hill, Managing Director explains: “I’ve managed and owned subcontracting businesses for many years and there is a definite notion that the ‘subbie’ should remain subservient to the more powerful main contractor. Withheld payment, unreasonable demands and much more is fairly standard in our industry, often on the basis that the subcontractor won’t be able to tackle any legal or financial challenges.

“What the NLC essentially offers is unlimited legal advice from a construction law specialist. During the past 12 months, I’ve used the NLC many times accessing day to day legal advice over various issues from none payment to concerns with contracts, orders etc. The NLC has issued several letters on our behalf which has undoubtedly prevented the issue from escalating to court, ensuring the client payed before, saving significant time and money.

The NLC is particularly effective if your projects are for end user clients, as the process can be slightly different when it comes to recovering outstanding debt; where construction contracts are not in place and are often based on a simple order or verbal agreement.

We have also found the NLC useful; not just for securing overdue debt from customers, but also for tackling disputes with our own sub contractors/suppliers; ensuring that payless notices are issued properly and responses to court claims are dealt with in accordance with relevant legal procedures and in a timely manner.

“The NLC really makes sense for subcontractors and I've recommended the service to several colleagues. I've recently renewed my membership to the NLC and feel that it’s the best money I’ve spent this year by far!”

Case study - Brital Rkg Ltd

For over 20 years, Brital Rkg Ltd specialises in the installation and repair of high performance Aluminium glazing systems encompassing windows, doors, shop fronts and curtain walling. Continuous growth has seen the company become a major supplier of architectural Aluminium, Glass and Louvre systems throughout the UK and Ireland.

With a workforce of 20-plus staff, the firm works as a subcontractor to many main contractors throughout supplying bespoke systems across a arrange of sectors.

Managing Director, Dave Grigg, has faced a number of legal challenges during his 38 years in construction, a significant amount arising whilst owner/managing director of Brital Rkg Ltd. Being faced with a specific legal challenge last year, Dave was forced to seek legal advice and contacted the NLC. Following initial discussions and having discovered more about the unique service and subscription based approach, he signed up to the consortium for 12 months

Dave explained: “I’ve had lots of experience working with various solicitors but few have specialised in construction. It’s this in-depth knowledge that I have been looking for and have undoubtedly found it in the NLC.

“For a flat monthly fee, we are able to access unlimited specialist construction legal advice. We have had several issues that have been resolved by the NLC via email, telephone and in a formal mediation setting. One of these cases alone has paid for the annual NLC subscription – this is the best money that I’ve spent in quite some time.

“Alongside many other subcontractors in the industry, I find time and time again that customers withhold payment particularly on final payment. In a typical case of subbie bashing, main contractors will ‘try their luck’ in the knowledge that the sub-contractor often won’t have the resources or finances in place to challenge this.

“This is a brilliant concept that enables businesses similar to mine to be able to tackle any legal situation. I have recently renewed my membership for the following 12 months and can’t recommend the NLC more and would suggest any sub-contractor join. By being a member the subcontractor has the confidence and security to address any legal situation and not feel oppressed and overshadowed by the often more powerful main contractor.

It really is a case of David now having the resources to tackle Goliath.

How do you protect a business when faced with a "Carillion" situation

http://www.rcimag.co.uk/digitaledition/rci-mar-2018/ Page 19

NLC Reports 100% Repeat Subscription To Unique Legal Service

The National Legal Consortium (NLC) has reported a near 100% repeat take up by existing clients of its unique subscription based legal service.

Recently celebrating its first year in business, the fast growing legal service has seen all members sign up for a second year.

The NLC is a unique legal firm developed specifically to meet the needs of the subcontractor with fees paid based on turnover.

David Jackson, Founder and Solicitor at the NLC explained: “Having worked in the legal industry and focusing on the construction sector for almost 30 years, I have come across the same issue time and time again and that is the smaller contractor or sub-contractor unable to legally challenge the larger more powerful customer, often the main contractor. This service ultimately allows them to do that by effectively providing an insurance, paid through a monthly fee agreement.

“It’s testament the success of the scheme that we have seen a near 100% repeat subscription rate and demonstrates the belief our customers have in the service. The only exception has been a client considering retirement. We are looking to grow further this year, ultimately doubling the business size, as we continue to take on the smaller builder or subcontractor who are business savvy and forward thinking in their approach.

“All of our costumers agree that the scheme makes huge sense and they are confident in the support they have access to when facing a legal situation, that perhaps in any other circumstance would need significant resources to support and challenge.”

Carillion Liquidation

Nobody knows how many companies will be affected by the liquidation of Carillion, the true numbers will not become apparent for some time.

Most of my clients are small to medium sub contractors. Whilst they are unlikely to have contracted with Carillion directly many will have contracted with companies that look to Carillion for payment.

Most sub contract terms will include a clause that provides that should the Employer, or whoever is responsible for paying the Contractor become insolvent, the Contractor will only have to pay the sub Contractor if it receives payment for the Sub Contractors works from its Employer.

Many small Sub Contractors will never get paid for their works unless the responsibility for payment is taken up under a Collateral Warranty or the contact is novated.

The NLC’s unique subscription service celebrates its first birthday

The National Legal Consortium is celebrating the first anniversary of its unique legal subscription service.

Having spent many years wrestling with legal costs and writing off many thousands of pounds due from clients who were simply unable to pay their bills David Jackson, Solicitor and MD of the NLC decided to change the way his company charged for legal services

Clients pay a monthly fee based on the turnover of their business which can be as little as £150 plus vat per month for a small business.

David Jackson explains: “In return for the monthly fee clients get unlimited Construction Law advice – it’s as simple as that. They can take proceedings, defend proceedings, get advice on contracts, problems on site – whatever they need.

“There are some sensible restrictions on the service – for example clients must pay court fees and other disbursements, the service pays for the solicitor’s time – but the service is popular with the clients who join the scheme.”

The scheme provides access to proceedings to companies that would not otherwise be able to afford them. It allows companies to take advice at an early stage so that proceedings may be avoided all together. Clients know that they will not be charged for doing so and can seek advice without worrying about the costs of doing so. Clients also get to use the scheme’s logo on their notepaper and website to show others that they are part of the scheme.

The growing number of testimonials on the NLC’s website show that the service is popular and new clients are joining every month.

David added: “Once I offer to undertake work at £240 plus vat an hour or for £150 plus vat a month clients usually do not hesitate to join the scheme. Why would they pay by the hour when they can have the same service for a small monthly fee?”

The scheme is only available from the National Legal Consortium and you can find details of the scheme at www.nlcuk.net or by calling David Jackson on 0800 085 7772.

NATIONAL LEGAL CONSORTIUM SEAL DEAL WITH CONFEDERATION OF ROOFING CONTRACTORS

The National Legal Consortium (NLC) has finalised a partnership agreement with the Confederation of Roofing Contractors offering all members access to its specialist Construction Law subscription service.

The NLC, a division of C E Law Construction solicitors, was developed to give sub-contractors and smaller contractors access to specialist Construction Law advice at a fixed and affordable cost. The NLC provides unlimited Construction Law advice for a modest monthly payment based on turnover, guaranteeing access to specialist legal advice should the need arise.

Managing Director of the NLC, solicitor David Jackson, explains: “Having advised subcontractors for many years I know that the biggest problem they face when seeking legal advice is the cost of that advice. I established the NLC to provide specialist Construction Law advice at a price that all can afford and without any hidden costs. The NLC’s services cost less than 1% of turnover for most companies and gives them unlimited access to specialist Construction Law advice for an agreed monthly payment.

“Clients can use the service to get advice on contracts, notices, problems on site and to take and defend proceedings. Most companies do not want to involve themselves in legal proceedings but clients of the NLC are comforted by the fact that they have access to specialist Construction Law advice, at an agreed cost, should they ever need it.”

The NLC membership will be open to all 700-plus members of the Confederation of Roofing Contractors at a discounted rate.

David continued: “I have acted for members of the Confederation of Roofing Contractors for many years and I am delighted to be able to offer the services of the National Legal Consortium to its members. The Confederation of Roofing Contractors is a well respected organisation that provides guidance and support for its members. I am very excited to be able to partner with them by offering legal support in a uniquely affordable and accessible way.”

Mark Williams of the Confederation of Roofing Contractors added: “ Legal fees and costs can put a huge financial strain on anyone wants to defend or fight a case against them in a court of law and can in some instances prevent them from doing so if the fees spiral out of control.

“By joining the NLC you can have peace of mind knowing that you are fully covered not only with the costs but also with any legal assistance you may need to help you in your case.

“Over the years David has given help and advice to CORC members and his input has proved invaluable and we are fully supportive of the NLC and what it stands for.”

C E Law launches the National Legal Consortium - offers a unique way for clients to pay for legal services.

C E Law has developed the National Legal Consortium - see www.nlcuk.net for full details.

The National Legal Consortium allows clients to pay a monthly fee to access unlimited legal services which includes the taking and defending of proceedings.

The National Legal Consortium will allow clients to save tens of thousands of pounds in legal costs and potential clients are advised to enrol as soon as possible as the sooner they enrol the more they will save.

Initial debt letters

Many debtors pay on a properly worded and credible letter from a solicitor demanding payment.

We are now able to issue initial letters claiming sums from your debtors without charge on the basis that we will receive a fee from sums received. We will charge 2.5% of the first £10,000, 1.5% of the next £10,000 and 0.5% of any sums received over £20,000. We hope that is a fair charge for the service. If no sums are received there will be no charge and we shall consider what further steps can be taken to obtain payment of the sums claimed