Reminder: Your Accounting and Other Records Matter

Originally posted 2015-06-30 10:39:36. Republished by Blog Post Promoter

Lean accounting
Lean accounting (Photo credit: Wikipedia)

Recently, I’ve posted on mechanic’s lien changes, mediation and other more “legal” topics here at Construction Law Musings. Today’s post is a practical one and one that will help your friendly neighborhood construction attorney greatly should a dispute arise.

The tip for this week? Keep clean accounting and other records by construction job and in an organized fashion. This tip seems like a simple one, but I run into situations where the accounting on jobs, contracts, invoices and other key documents for a project are either missing or haphazardly kept. In the best of these cases, I have to spend additional time (read attorney fees) to attempt a recreation of the job costs and flow of the project. In the worst, I have had to either release or avoid filing what could have been a valid mechanic’s lien because timing could not be determined from the records. I also thank my friend Craig Martin for another unfortunate horror story of poor accounting that should be a warning to us all.

I understand that as a construction lawyer I spend a lot of time looking back at a project with 20/20 hindsight. I also fully understand that my clients are often under time pressure and that decisions are often made on the fly in the field. However, this does not change the fact that when a claim arises your lawyer was not there with you during the discussions of the change orders or in the office with your administrative personnel as they account for payments and other monetary items. This means that your attorney, and by extension any court or other tribunal, will only have what is on paper to go by.

As shown in Craig’s post referenced above, poor accounting records can and do lead to dismissal of claims when a Court can’t make heads or tails of them. Changes in work without proper procedure can lead to lost money. Even where all of the paperwork is there but disorganized money can be spent unnecessarily because the “file” is presented to your attorney in a haphazard manner that does not lend itself to easy digestion. This last leads to more attorney fees spent and productive “back office” time lost.

To wrap this up, the best way to have a successful claim is a properly documented and organized set of records for each project. Spending what will in the long run be a small amount of time getting these records right will save you time, money and headaches in the future.

As always, I welcome your comments below. Please subscribe to keep up with this and other Construction Law Musings.

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