Contractors Center Point

Contract Litigation Insurance - A Confidence Booster

Litigation you might say holds no certainty but uncertainty.  From the strategies of your opponent, to the ultimate outcome, the process of litigation is laden with events and decisions over which the participants may have little or no control, and as such it cannot be accurately predicted.  Even the costs and amount of attorney fees to be expended cannot be estimated with certainty.  This is the nature of litigation.  In some cases, a litigant may even be on the hook for its opponent’s attorney fees if he loses.  When a party is faced with the possibility of paying the attorney fees of the other side, the decision to commence litigation or to defend a lawsuit rather than settling is daunting, possibly to the point of total surrender.  Because attorney fees could exceed the amount of the original claim itself, this possibility can be paralyzing. 

Of course you don’t have to worry about any of this if your attorney has assessed your case as a “slam dunk” or a “guaranteed winner”.  Unfortunately, like unicorns and the tooth fairy, such things do not exist in the real world.  Business owners, along with the assistance of wise counsel, must make a realistic assessment of their litigation exposure and risk of loss: a sober, unvarnished review of the strengths, and yes, the weaknesses too.  Studies support this prudent approach, as statistics developed by the Bureau of Justice Statistics have shown that 33% of plaintiffs and 66% of defendants end up on the losing end of their contract disputes at trial.  Although Pennsylvania law generally requires that each party in ligation pay their own attorney fees, it is becoming increasingly common for parties to shift the risk of attorney fee costs to the other side by including an attorney fee provision in their contracts.  

Now it is possible to insure against the possibility of paying one’s opponent’s attorney fees in breach of contract lawsuits by purchasing Contract Litigation insurance.  This relatively new insurance product may provide just the leverage and confidence necessary to initiate litigation to pursue claims or to defend against dubious claims rather than capitulating under the risk of paying your opponent’s attorney fees in the event the court sides with your adversary. 

To learn more about Contract Litigation Insurance and its benefits, please contact Tom Williams of Reager & Adler, PC. Tom can be contacted at twilliams@reageradlerpc.com. To learn more about other trends impacting the construction community contact your construction professionals at McKonly & Asbury, LLP.

Save The Date - Spring 2012 Construction Seminar - Friday, May 18th

McKonly & Asbury, LLP along with Murray Risk Management and Insurance, Woolford Law and Fulton Bank will be hosting the Spring 2012 Construction Conference on Friday morning, May 18th at the Sheraton Harrisburg/Hershey. This morning program will feature timely subject matter impacting the construction community. Registration and and breakfast will begin at 7:30 AM with the seminar running from 8:00 AM to 11:30 AM. CPE credits will be available. The cost of registration is $35.

To register for this event, please contact the events staff of McKonly & Asbury, LLP at events@macpas.com or by calling 717-972-5822. More details regarding topics and speakers will be announced shortly on Contractors Center Point. Stop back to www.contractorscenterpoint for more details.

 

SBA Surety Bond Guarantee Program - Can It Benefit Your Construction Company

The SBA (Small Business Administration) has a very efficient, little known program to helps small and emerging contractors get surety bonds up to $2,000,000.  After gathering and signing some initial paperwork – the system is web based and the program is handled by your surety professional.  In the paragraphs that follow is an outline of the program, eligibility requirements and the paperwork required.

At its core the SBA Surety Bond Guarantee Program is set up like reinsurance and participates with many insurance companies across the country.   XYZ Excavating needs a bond and has trouble in the standard market do to a variety of reasons including lack of working capital to not enough net worth.  They go to their local surety professional and he/she recommends them for the SBA program.  The insurance company at that point can take more risk because the SBA will guarantee up to 90% of that bond in case there is a loss.  In a $1,000,000 claim situation the surety is only $100,000 at risk.  They and the SBA underwriters (less strict underwriting guidelines) approve the bond and the local insurance company issues the bond on THEIR paper. The owner or GC does not know that the SBA is guaranteeing the bond.  It’s all behind the scenes.   As stated earlier, the maximum bond amount at this point is $2,000,000. 

For most general building contractors revenues that are less than $33,500,000 will qualify for the program and specialty trade contractors that are $14,000,000 and under are also eligible.  If a bond of over $1,000,000 is requested a CPA reviewed statement is required.  From $501,000 to $1,000,000 a CPA compilation will be needed and under $500,000.00, high quality internal statements will be needed.

At initial request the contractor will need the following:

• Current WIP (Work In Progress) Schedule with start and end dates of each job
• Personal Financial Statement
• Bank Line of Credit Term Sheet
• Contractors Questionnaire (provided by surety professional)
• Most recent 3 years Financial Statements
• Internal 6 month numbers (if applicable)
• Copies of Tax returns on all affiliates/subsidiaries – first 4 pages will suffice

To learn more about this program, contact Greg Marco, Surety Bond Executive with McConkey Insurance and Benefits. Greg can be reached at gmarco@ekmcconkey.com or contact the construction professionals of McKonly & Asbury, LLP.

 

Stronger Existing Home Sales Confirm Housing Market Recovery Finally Underway

According to the National Association of Realtors, sales of existing homes rose 4.3 percent from December, to 4.57 million at a seasonally-adjusted annualized rate, with gains in all four regions for the month. Sales have increased in three of the past four months. Sales for December 2011 were revised down substantially, to 4.38 million, from 4.61 million. On year-ago basis, sales were up 0.7 percent in January.

 

The median sale price for an existing home was $154,700, not seasonally-adjusted. This was down 2.0 percent from January 2011. This is actually a smaller decline than in recent months. Sales of existing homes are definitely moving higher as mortgage rates remain near record lows, the labor market recovery picks up steam, consumer confidence improves, and access to mortgage credit eases. Sales will gradually increase in 2012 with the combination of high affordability, an improving job market, and greater availability of credit. However, prices will continue to fall through the first half of 2012 due to the high share of distress sales—short sales and foreclosures accounted for more than one-third of sales in January. The recent agreement between the big mortgage servicers, state attorneys general and the Obama administration will also result in more homes going to foreclosure over the next few months, adding to downward pressure on prices.

But the housing market recovery is underway, although it will remain a long process. The National Association of Homebuilders housing market index is up sharply in recent months, and residential starts and permits are also improving. Housing activity has been very low over the past few years, and pent-up demand has developed. Households will release some of that pent-up demand this year, and more in 2013.

For more information on this report, contact the Economic Division at PNC Bank or the construction professionals of McKonly & Asbury, LLP.

Webinar Recap: Claim What You Deserve

We had another great webinar presented by alliantgroup’s Managing Director, Michael Siegel. alliantgroup is a national advisory firm serving a broad spectrum of clients, from individuals and start-ups to Fortune 1000 corporations.

We learned about the R&D Tax Credit and how architects, engineers, software developers, contractors, and job shops are among the dozens of industries now taking advantage of this powerful incentive. We also reviewed recent changes and tips to help you take maximum advantage of the credit.

Check out our Upcoming Events page for news and updates on our future seminars and webinars.

Below, you will find the link to replay the presentation, enjoy!

 

Watch on YouTube