“ “ALL TOGETHER NOW:  INNOVATIVE ALL TOGETHER NOW:  INNOVATIVE CONTRACT MANAGEMENT WITH CONTRACT MANAGEMENT WITH

DISPUTE BOARDSDISPUTE BOARDS” ” PRESENTERS:PRESENTERS:

• Adrian BastianelliAdrian Bastianelli, , ModeratorModeratorPeckar & Abramson, P.C.Peckar & Abramson, P.C.

Washington, DCWashington, DC

• Warren BullockWarren BullockSebastopol, CASebastopol, CA

• Doug HolenDoug HolenSanta Fe, NMSanta Fe, NM

American Bar AssociationAmerican Bar Association

Forum on the Construction IndustryForum on the Construction Industry

2012 Fall Meeting2012 Fall Meeting

OVERVIEW OF DRB PROCESSOVERVIEW OF DRB PROCESS

• ObjectiveObjective• Selecting the DRB MembersSelecting the DRB Members• Site VisitsSite Visits• HearingsHearings• RecommendationsRecommendations• BenefitsBenefits• StatisticsStatistics• DRB FoundationDRB Foundation

• www.drb.orgwww.drb.org

• The Washington ExperienceThe Washington Experience

DRAFTING THE CONTRACTDRAFTING THE CONTRACT

• Specification provisionsSpecification provisions• Three Party AgreementThree Party Agreement• DRB proceduresDRB procedures• What should be included?What should be included?

– Qualifications of DRB membersQualifications of DRB members– Ethics requirements (neutrality)Ethics requirements (neutrality)– Selection process for DRB membersSelection process for DRB members– Timing of selection of DRB membersTiming of selection of DRB members– Payment of DRB membersPayment of DRB members

DRAFTING THE CONTRACTDRAFTING THE CONTRACT

– Timing of regular meetings and site visitsTiming of regular meetings and site visits– Method of referral of disputes to the DRBMethod of referral of disputes to the DRB– Pre-hearing submissionsPre-hearing submissions– Hearing proceduresHearing procedures– DRB recommendationsDRB recommendations– Binding or non-bindingBinding or non-binding– Admissibility of DRB recommendationsAdmissibility of DRB recommendations– Informal or advisory opinionsInformal or advisory opinions– Clarification and reconsiderationClarification and reconsideration

SELECTING THE DRBSELECTING THE DRB

• How do you select the DRB members?How do you select the DRB members?

– Party appointed with right of each party Party appointed with right of each party to reject member without causeto reject member without cause

– Mutually selectedMutually selected

– Parties designate several and other Parties designate several and other party selects one from that groupparty selects one from that group

• Are attorneys allowed to be members of a Are attorneys allowed to be members of a DRB?DRB?

SELECTING THE DRBSELECTING THE DRB

• Can DRB members appointed by a party Can DRB members appointed by a party really be neutral?really be neutral?

• Are DRB members governed by any Are DRB members governed by any ethical standards?ethical standards?

• Is a DRB member required to have DRB Is a DRB member required to have DRB training?training?

• How much do DRB members get paid?How much do DRB members get paid?

REGULAR MEETING AND REGULAR MEETING AND SITE VISITSITE VISIT

• How often?How often?• What is discussed at the regular meetings?What is discussed at the regular meetings?• Why make regular meetings?Why make regular meetings?

– Observe the work in the event of a future Observe the work in the event of a future claimclaim

– Observe the peopleObserve the people– Develop a relationship of trust with the Develop a relationship of trust with the

partiesparties– Force a real time discussion of the issuesForce a real time discussion of the issues

REGULAR MEETING AND REGULAR MEETING AND SITE VISITSITE VISIT

• Does the DRB become involved in the Does the DRB become involved in the construction process?construction process?

– What if the DRB member observes a What if the DRB member observes a construction defect?construction defect?

• Does the DRB try to help the parties Does the DRB try to help the parties resolve future problems?resolve future problems?

• What happens if the parties decide to save What happens if the parties decide to save money by canceling the regular meetings? money by canceling the regular meetings?

THE DISPUTES PROCESSTHE DISPUTES PROCESS

• What kind of discovery do the parties get?What kind of discovery do the parties get?

• What do the prehearing submissions look What do the prehearing submissions look like?like?

• Who should make the presentation?Who should make the presentation?

– Project personnelProject personnel

– Home office personnelHome office personnel

– Consultant or expertConsultant or expert

– LawyerLawyer

THE DISPUTES PROCESSTHE DISPUTES PROCESS

• What is the place of the lawyer in the What is the place of the lawyer in the presentation of the dispute?presentation of the dispute?

• How can you decide a claim without cross How can you decide a claim without cross examination?examination?

THE RECOMMENDATIONSTHE RECOMMENDATIONS

• Why recommendations and not a decision Why recommendations and not a decision or award?or award?

• Should the recommendations be binding?Should the recommendations be binding?

• Should they be admissible in court? Should they be admissible in court?

• What do the recommendations look like?What do the recommendations look like?

• What is the key to drafting the What is the key to drafting the recommendations?recommendations?

THE RECOMMENDATIONSTHE RECOMMENDATIONS

• Can the DRB do equity or is it bound to Can the DRB do equity or is it bound to enforce the contract language and the enforce the contract language and the law?law?

THE ADVISORY PROCESSTHE ADVISORY PROCESS

• Why have such a process?Why have such a process?

• Can the DRB fairly consider the claim in Can the DRB fairly consider the claim in the formal process once it issues the formal process once it issues recommendations in the advisory recommendations in the advisory process?process?

OTHER ISSUESOTHER ISSUES

• What do you do if one party becomes What do you do if one party becomes dissatisfied with a DRB member?dissatisfied with a DRB member?

• Should the DRB act proactively?Should the DRB act proactively?

• Should the DRB mediate or assist parties Should the DRB mediate or assist parties in negotiation?in negotiation?

• Can the DRB handle subcontractor or Can the DRB handle subcontractor or design professional claims?design professional claims?

OTHER ISSUESOTHER ISSUES

• Can the DRB be effective on a small Can the DRB be effective on a small project and what is a small project?project and what is a small project?

• Should stepped negotiations or mediation Should stepped negotiations or mediation precede the DRB process?precede the DRB process?

TO DRB OR NOT TO DRBTO DRB OR NOT TO DRB• Reasons to include a DRB provision in the Reasons to include a DRB provision in the

contract?contract?– Results in discussion of issues regularly in Results in discussion of issues regularly in

front of 3 neutrals whom the parties want to front of 3 neutrals whom the parties want to impressimpress

– Avoids disputes even reaching DRB hearing Avoids disputes even reaching DRB hearing stagestage

– Provides recommendations from 3 experts Provides recommendations from 3 experts who the parties trust and who have seen the who the parties trust and who have seen the work work

– Real time resolutionReal time resolution– Expeditious and low costExpeditious and low cost

TO DRB OR NOT TO DRBTO DRB OR NOT TO DRB

• Reasons to include a DRB provision in the contract?– Non-adversarial proceedings, allowing the

parties to maintain good relations during the project

– Avoids the end of job omnibus claim– Avoids litigation

TO DRB OR NOT TO DRBTO DRB OR NOT TO DRB

• Arguments against including a DRB?Arguments against including a DRB?

– CostCost

– Time commitmentTime commitment

– Non-bindingNon-binding

– DRB may do equity and not enforce the DRB may do equity and not enforce the contractcontract

– No discovery or cross examinationNo discovery or cross examination

– Recommendations could sway court or juryRecommendations could sway court or jury

SUMMARYSUMMARY

• Do DRB’s really work?Do DRB’s really work?

• Will they put the construction litigator Will they put the construction litigator out of business?out of business?