Partnering legal backfire looms

Contractors who sign partnering arrangements with clients are making a big mistake, a leading construction industry solicitor told CJ this week. He warned that contractor's legal bills will rocket when tie-ups turn sour.

John Bolton, a partner with Davies Arnold Cooper, said: "Like apple pie and motherhood, partnering sounds like it should be good, but lawyers will have a field-day in a few years' time. Partnering doesn't align itself with the normal British contracting approach."

Bolton pointed to two current contractor-v-client disputes in the UK that DAC is handling. The first is a œ50 million dispute, the second a œ6 million conflict. In each case, the first project was completed successfully and both parties shared the cost savings on the project.

"But in the second, the client tried to ratchet the contractor down," said Bolton. "The contractor had beaten the initial figure for the first contract by 20%, the savings having been shared on a 50:50 basis. The client then wanted similar further savings from the second project - but from the beginning, so he kept them all."

Construction clients were quick to pour cold water of Bolton's gloomy partnering forecast.

Bernard Rimmer, general manager of construction with developer Slough Estates, said: "Partnering has worked well for us. Litigation results from a lack of clarity in contractual relationships. I disagree with Bolton."

However, Rimmer agreed that some clients play by different rules. "They want to be smart by putting onerous conditions in for risk shedding," said Rimmer. "Partnering could then be a disaster."

Simon Murray, md of group technical services at BAA, said: "We have nailed our colours to the mast. Working in partnerships in our Framework Agreement is the way we seek efficiency and quality in our projects.

"We want to work with profitable suppliers and contractors. By working with people you ensure that your goals are aligned, you identify key issues up front."

Murray thought it was about time the industry saved money by ridding itself of solicitors. "Construction should set itself the target of removing the need for all lawyers," he said.

David Freeborn, director with contractor group Jarvis, said: "Partnering has helped us to reduce our litigation costs. Jarvis's construction turnover is œ130 million and that portion of turnover from partnership arrangements incurs less legal costs."