In the last three months, four clients called me about six situations that were causing them to lose sleep. Not surprisingly, in each case, we determined they needed legal advice from a construction attorney.
Two situations were related to problems with subs threatening to file a lien or bond claim. Another was a non-performing sub who wanted more money. The fourth had a project where a third party wanted to add its agreement with the owner to our client’s contract.
The other items were related to a too low bid and an owner (public!) wanting to change the general conditions AFTER the contract was signed and bonds issued!
In each case, I referred our clients to a very experienced construction attorney we know who has helped many other contractors with a wide variety of construction disputes.
All bond agents eventually get calls from their clients about problems on projects. In fact, the NASBP (National Association of Surety Bond Producers) recently published guidelines for agents and their clients on the best ways for us to advise clients when they have problems. The title is Frequently Asked Questions, from Bond Producers About Their Role in the Contract Bond Claims Process. It’s available to everyone at http://nasbp-news.org/pdf/FAQ_Role_in_ContractBond_%20Jan2014.pdf.
It helps explain an agent’s role when things happen that may lead to a bond claim. If you read it, you’ll better understand why we regularly tell clients they need to discuss a problem with their attorney.
Our role as agents is to work hard to be Savvy Issue Spotters, a term I just learned from Martha Perkins, Esq., NASBP's General Counsel. Other than a bond agent who also has a law license (maybe there are some out there), it's best if we just know when and who to refer clients to.
I guess if contractors start calling us to say they need help with "the lump, lesion or lobotomy" they just discovered (I hope not - but health can affect bonding, too - the reason for Continuity Agreements - maybe a future blog topic), we'll need to add excellent physicians to our referrals lists.
We routinely work to try and help clients understand the most productive way to work with their surety partners. The thing clients need to remember is they have a contract with their bonding company (the General Indemnity Agreement), not with us as agents. I appreciate the NASBP’s efforts in the FAQ document to help explain why a contractor and bonding company are best served by cooperating. They ARE partners!
If you have a current dispute and wonder who to turn to, your agent can help, and the NASBP’s document may help you have fewer sleepless nights. It’s only a few pages, and a very helpful tool when you need it.