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Industry Updates

Follow the Checklist: Lawyers Advise Firms on How to Survive the Pandemic

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Many contractors were unprepared for the blows the coronavirus pandemic dealt their businesses. Now, builders are asking themselves, “What should we do next? How can we avoid further disaster?” For starters, read the fine print on your insurance coverage, say lawyers L. Conrad Anderson IV, Charles A. Burkhart and Joseph Leavens.

The three — partners in the Birmingham, Ala.-based law firm Balch & Bingham LLP — wrote “COVID-19 Checklist for Contractors.” The list appeared on their firm’s blog and was meant to help protect owners, developers, general contractors, subcontractors and others during this time of uncertainty. “We really sat down and were thinking about what impacts the industry will suffer,” Burkhart recalls.

One of the most important points on the checklist, Burkhart notes, is that builders should check their insurance coverage. For example, if a contractor has a supply chain issue that prevents them from completing their work, they might be covered. However, “Contingent business interruption insurance may offer assistance in limited situations where a contractor’s supplier cannot deliver, but typically only where that supplier has suffered covered physical property damage at its business location,” Burkhart cautions. “Supply chain insurance is far broader and is oftentimes written to cover, among other things, supply chain and labor disruptions or shortages stemming from natural disasters, production process problems, labor strikes and public health emergencies like the COVID-19 pandemic and resulting quarantines.”  

But the contractor needs to prove that loss. “You’ve got to be able to document how those losses have impacted your ability to do business,” Leavens says, noting that the firm also needs evidence to prove a claim, or disclaim one.

Burkhart agrees. “Construction cases are won and lost on documentation,” he says. “If you don’t have evidence to present, you’ve got nothing.”

The authors also advise their clients to review and adapt their contracts to make sure they are covered in future situations like the current pandemic. Although builders might not be thinking too far ahead, “Reviewing their contracts and writing new provisions into their contracts into the future is going to be very important. It’s all about managing risk,” Burkhart advises.

He also expects he and his partners will be writing more articles to guide clients through the COVID-19 crisis. “The longer we go on with this, the more and more unique issues are going to pop up and there’s going to be more things to write about,” he says.

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