It goes without saying that anyone involved with a construction project provides their service or materials with the expectation of getting paid.
But what if a payment is late — or worse — is never received at all?
What recourse do construction companies or suppliers have to recoup payments that are owed to them?
Many construction companies turn to construction attorneys, but they often come with a hefty price tag.
In this article, you’ll learn what construction law attorneys do as well as the benefits and difficulties that can come with hiring them.
Delayed payment or non-payment, unfortunately, is very common in the construction industry because of complicated payment schedules.
One party may be waiting for payment from another party in order to pay a supplier or subcontractor. Things can get backed up quickly, and it can have a domino effect that influences your cash flow.
Flexbase is equipped to help keep construction companies cash flow positive with our automated processes that aid you in:
- Sending invoices
- Receiving payments
- Filing compliance forms like:
- Lien waivers
- AIA forms
- Schedule of values
- Insurance documents
- Integrating construction ERP, accounting, and project management software
In addition to all these services, Flexbase can help you steer clear of huge attorney’s fees by filing the following actions for you:
- Preliminary notices
- Intent to lien noticies; and
- Mechanics liens.
And we do these on your behalf without payment upfront.
Flexbase gets paid when you get paid. Fees start at 0.5% per payout, which means lower fees for higher payment volume.
Need help securing payment for past-due invoices? Flexbase has you covered.
What Does a Construction Lawyer Do?
Construction lawyers may perform a variety of services for a variety of clients, but most construction attorneys are hired to deal with issues of payment or defective work.
In addition to these services, a construction attorney may offer services regarding:
- Claims submissions
- And more
Construction attorneys may represent the following parties:
- Large or small construction companies
- Property owners
- Individual laborers
- Surety companies
Related to Cash Flow Challenges, When Is a Construction Attorney Typically Needed?
Making a payment late — we’ve probably all experienced it at one time or another.
Though some late payments come with a fee, sometimes you can avoid making a late payment when it’s made within a certain window or grace period.
A few days or even a week late? No problem.
But what happens when payments are months or a year late — or when payments are never received? Perhaps you’ve tried everything you can to recoup your payment but to no avail.
That’s when construction attorneys are generally called on.
After exhausting all other efforts, hiring a construction attorney may be the only alternative, even though it may come at an exorbitant cost.
Who Typically Benefits From the Work of a Construction Law Attorney?
Of course, any company that hires an attorney and wins a settlement will benefit. After all, winning means finally getting the funds that are owed to you. But at what cost?
Huge companies that have the means to pay expensive legal fees or have in-house counsel are usually the ones who benefit from working with a construction attorney.
It’s the little guy that can be left high and dry and feel taken advantage of because they simply don’t have the funds and resources available to them.
Why Do Small to Mid-Sized Construction Companies Often Struggle to Retain a Construction Attorney to Fight Non-Payment Issues?
It’s a catch-22 — You need money to hire an attorney because a client hasn’t paid, but you can’t afford the attorney because the client hasn’t paid.
Small to mid-sized construction companies may find it difficult to hire a construction
Thervo estimates that attorneys’ fees can range from $100 to $300 per hour depending on their expertise and the type of case, and on top of that, most attorneys charge a retainer fee which can be as much as $10,000.
If a case is drawn out or an immense amount of paperwork needs to be filed, the bottom line price can be way out of reach for smaller construction companies.
Smaller companies simply may not have the extra cash set aside that would be needed to be applied to pay attorneys’ excessive fees.
Hiring attorneys can cost construction companies more than time.
When companies have to turn to attorneys to help recover delinquent or non-existent payments, they may need to “pay” in the following ways:
- Time - Taking time off work means your cash flow takes a dive.
- Personnel - Pulling personnel away from their usual tasks in order to deal with a lawsuit means either doing without them at their normal task or needing to hire someone to replace them. Or maybe you need to hire new personnel to specifically deal with the legal proceedings.
- Support - A small company may not have the support and encouragement to stay in a legal battle for the long haul.
Additionally, it’s difficult to be a threat to a large company if you can’t devote a significant amount of time and effort to fighting them.
Chances are, most owners of smaller construction companies focus most of their time and energy on the knowledge they need to get their jobs done. They are thinking about suppliers, subcontractors, schedules, and contracts.
Unless they have had previous experience with legal issues, their lack of knowledge may keep them from being poised to act when legal help is necessary.
They may lack knowledge concerning:
- Their rights
- How to enforce their rights; and
- Filing paperwork.
The whole process may be intimidating, leaving them in a position to either keep fighting on their own or just deal with the loss.
If You Are Currently Experiencing a Non-Payment Issue, Avoid the Cost of a Construction Attorney With Flexbase
Maybe you are like Josh, whose company is facing non-payment difficulties. He and his team provided services and supplies to their client and invoiced them in a reasonable amount of time.
After 6 months and many payment reminders, Josh’s company has still not received payment. He’s now beginning to really feel the pressure and may soon be in a position where he can’t pay his workers or meet other financial obligations.
He’s considered retaining an attorney to help recoup the payment he’s due, but after considering the costs of attorney’s fees, he’s not sure he’ll come out on top at all.
Luckily, Josh decided to use Flexbase.
Because Flexbase is an accounting team and a legal team all in one, within weeks of filing a lien notice, Josh’s client finally paid the invoice that was well over 6 months late.
Instead of paying an attorney a retainer plus hourly fees, Josh was able to pay Flexbase a fraction of the cost — and only after he was paid by his client.
Flexbase offers a free platform, and we are only paid when our customers are paid.
Not only did Josh finally receive his payment and avoid attorney’s fees, but he is also now taking advantage of the many other construction payment management perks that Flexbase offers.
If you find yourself in a similar circumstance, getting set up with Flexbase is simple and straightforward.
To start taking advantage of all that Flexbase has to offer — including the filing of liens — we will onboard your company.
Onboarding involves setup in the Flexbass app and integration with our billing and project management software.
We will walk you through every step of the process and are available to answer questions and troubleshoot any issues you may have.
Once you are all set after the onboarding process, Flexbase is set to get to work for you.
We will start by sending an “intent to lien” notice to the delinquent client — for free. Flexbase will only receive the 0.5 % when you receive your payment.
The lien notice will comply with all legal requirements associated with your location (state, county, etc.). You can rest assured that we will get it done right — the first time.
Hopefully, an intent to lien notice will be all it takes to motivate your client to send their payment, resulting in you receiving your funds in a matter of days or weeks.
But, if weeks go by and your payment is still not submitted, Flexbase will move forward with filing a mechanics lien — on your behalf, at no cost.
Flexbase will only take a small percentage of the payment you receive — after you receive it.
In the meantime, you’ll be benefiting from all the other cash flow management services we have to offer.
Without a doubt, no one wants a lien filed against them, but unfortunately, it’s a step that must be taken to prompt some clients to pay for what they’ve agreed to pay for services that they’ve received.
After Flexbase files the mechanics lien for you, ideally, you’ll receive the funds that are due and you can enjoy being cash flow positive again.
And once you’ve seen how easy and effective the process is with Flexbase, you’ll be equipped with the know-how you need if you find yourself in similar circumstances again.
Are your clients paying you on time?
Super! Celebrate and take the steps now to avoid non-payment issues in the future.
Not only can Flexbase help you recoup late payments, but we can also help you manage your cash flow by streamlining the entire billing process.
Once you are set up with the Flexbase app, you’ll be able to:
- Send invoices
- Submit paperwork
- Generate compliance forms
- Incentivize customers
- Send payment reminders
- Automate expense tracking with Flexbase cards
- Collaborate with customers
All construction ERPs, project management software, and accounting software are integrated, so there will be no more triple entering data.
Get paid faster — 63% faster — with a platform that is unbelievably easy to use.
Get started today by scheduling a demo.