Like it or not, lawyers are tending to intrude into the adjudication process. Perhaps the industry should stop resisting and treat them as a guiding hand
So much of this section of Building is devoted to adjudication cases that I hesitate to add another column. But, prompted by a wise and sensible piece from Paul Letman in the Tecbar Review, I thought it was worth looking again at lawyers’ involvement in adjudication.
Before the Latham Review in 1994 adjudicators were pretty well unknown.
The system of bringing in an impartial “expert” (rarely a lawyer) with specialist expertise to determine disputes on a “final and binding” basis was, however, very familiar - particularly in the property industry and in relation to valuation and rent review issues.
It is perhaps therefore not surprising that the BPF contract published in the 1980s contained provisions for adjudication in terms very similar to the statutory regime now imposed. Yet what the BPF envisaged and what Latham echoes is not a “legal” forensic process, rather a swift way of resolving disputes on site, to ensure that cash flows speedily, but with the possibility of the dispute being opened up again in arbitration/the courts after practical completion, to avoid serious injustices.
Because of the distinction being made between a relatively arbitrary but temporary decision and a full legal process, there was much discussion in the context of the drafting of the Scheme for Construction Contracts regulations as to whether parties should be specifically prohibited from being legally represented in any adjudication process. In the event, it was concluded that this was not practicable; nevertheless that was the trend of the industry’s thinking.
Philip Letman argues that lawyers should be involved because if an adjudicator gets the law wrong, there is a risk that the resulting decision will not be enforced. This risk affects both parties to adjudication, particularly where the error relates to mistaken decisions by the adjudicator on his jurisdiction.
As Letman notes, there is “an increasing risk of case law affecting the outcome of any adjudication”.
He cites a number of examples, focusing specifically on cases where the adjudicator had incorrectly decided whether he should address cross-claims and where adjudicators had attempted to correct their decisions under the “slip rule” but in fact overstepped the line. He even managed to find an adjudicator - a qualified solicitor, no less - who gave an award which failed to mention a main contractor’s set-off and cross-claim in defence of its client’s claim for LADs.
Letman’s response is to suggest that parties have “appropriate” legal representation. He recommends involving a lawyer in preparing the referral notice and to provide “a guiding hand” during the adjudication. Alternatively, parties can wait and see whether they need legal advice and assistance if any jurisdictional, or similar, issues arise. Sometimes, he suggests, a legally qualified adjudicator may be appropriate. He reminds us that a non-legally qualified adjudicator can enlist the assistance of a legal adviser, provided he notifies parties accordingly pursuant to paragraph 13 of the scheme - a power which, he notes (and I agree) is “surprisingly underutilised”.
The reason I have quoted Paul Letman’s piece at length is because it may be time to review the industry’s original “no lawyer” position, which I have previously supported. Whatever may originally have been intended, and however undesirable this is, the intrusions which lawyers have already made into the process means there is probably a sensible role for an expert legal hand on the tiller to guide the unwary away from the traps.
Letman does not unthinkingly advocate - as many lawyers would - that lawyers trample all over the process. Instead, if I have understood him correctly, he suggests a thoughtful, sparing and cost-effective use of lawyers. The most effective use of lawyers is to provide advice to a non-legally qualified adjudicator.
But what do others think? Should we be trying to recast the adjudication process so it reverts to something more akin to the industry’s original intentions? Or should we move it forward so that it becomes closer to a legally driven mini-arbitration? Or, finally, should we just resign ourselves to what we have now, warts and all?
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