The Impact of LEED on the Practice of Law

LEEDigation

LEEDigation

Scott WolfeWolfe Law GroupLouisiana | Washingtonwolfelaw.comconstructionlawmonitor.comLEED AP

Christopher HillDurrette Bradshaw PLCVirginiadurrettebradshaw.comconstructionlawva.comLEED AP

What isConstruction Litigation?

Construction Litigation?

Unmet Expectations•Cost: The project cost more than

expected

•Scope: The project’s scope was more expansive than anticipated

•Schedule: Completion took longer than planned

•Quality: The workmanship quality was inferior to expectations.

What isLEED?LEED?

http://www.usgbc.org

http://www.nahbgreen.org

http://www.energystar.gov

also known as green construction or sustainable building, is the practice of creating structures and using processes that are environmentally responsible and resource-efficient throughout a building's life-cycle: from siting to design, construction, operation, maintenance, renovation, and deconstruction. This practice expands and complements the classical building design concerns of economy, utility, durability, and comfort.

What is Green Building?

http://en.wikipedia.org/wiki/Green_building

What is LEEDigation?

LEEDigation

LEEDigation

Is it Different Than Ordinary Litigation?

LEEDigation

LEEDigation

The bad news is that attorneys, especially those already practicing in construction law, will soon realize that aside from green design and construction’s sometimes specialized and occasionally ill-defined vernacular, there’s no real novelty in the types of claims that might arise.

No new frontiers of jurisprudence need be explored–a leaky green roof is still a leaky roof–whether it also requires regular mowing and landscape maintenance changes little from a legal perspective.

“

http://www.lawarkbuilding.com/?p=104

Law Ark Building Blog

Cole may be right that there is no novelty to the traditional types of claims (contract, tort, statutory, etc.) that may arise in green construction disputes.

However, the novelty in the green building industry is the new set of standards that will inevitably become part of the legal dispute. In other words, while “a leaky green roof is still a leaky roof” … there will be new risks to be allocated, different types of damages lost, additional players involved, varied proof required and, yes, perhaps a novel cause of action alleged because that leaky green roof system failed. 

“Best Practices Construction

Blog

http://bit.ly/diszmS

Unmet Expectations•Energy Performance: Is the

building’s energy systems performing as expected (or promised)?

•Rating: Did the building achieve the planned LEED rating or other certification?

•Long-Term Sustainability: What is the project’s impact on the environment, and is this as expected?

Still...

Is Litigation Probable?

Is Litigation Probable?

Green Growth is phenomenal across the

globe.Harvey M. Bernstein, McGraw-Hill Construction

“

Green Building Construction Grows 5x ($10b to $49b)

Green Outlook 2009: McGraw-Hill Trends Driving Change Report

2005 - 2008

Could Triple, reaching $140b

2009 - 2013

How’s It Going to End?

Shaw Development v. Southern Builders•Problem: Contract required

building to meet Silver Certification. It didn’t.

•Whose Fault?: Developer sued builder, but there was no clear allocation in contract of who was responsible for certification

•Damages: $700k+ in lost tax credits

•Result: Unknown - Settled.

Washington DC v. Washington Nationals•Problem: Expectations for “Green”

LED Scoreboard wasn’t met. Owner claimed project wasn’t substantially complete and withheld funds.

•Damages: Not too clear in settlement materials released, but $3.5 Million was withheld based in large part on the scoreboard dispute.

•Result: Unknown - Settled.

What Are The Damages?

What Are The Damages?

Show Me The Money!•Tax Credits: Missing a certificate

level can effect tax credit eligibility

•Energy Efficiency: If property is not as energy efficient as promised, damages can include increased energy costs

Unique Damage Situations•Missing Certification: If a property

expects to have Gold certification, but only gets Silver, and this doesn’t have any tax credit implications...what are the damages?

•Goodwill: How will courts calculate loss of good will if green construction misses expectations.

Unique Liability Situations•LEED Responsibility Allocation: Responsibility for LEED points is distributed between architect, owner and contractor. If energy efficiency is not as expected, how do you assign liability?

•Energy Efficiency: Energy efficiency of a building relies on factors: (i) climate; (ii) property placement; (iii) property use; (iv) etc. How do you clearly blame a party for inefficiencies.

Preparing for the Risk

Preparing for the Risk•Control

Expectations

•Limit Exposure By Contract

•Be Careful, and

Keep It Simple

...Expect the unexpected. Always sounds like good advice.

Except, of course, if you are expecting the unexpected, then well then it really isn't really unexpected anymore. Is it? And that leaves you vulnerable to the truly unexpected. Because, you're not expecting it.

“Control

Expectations

Control Expectations•Clear terms identifying scope of

work

•Clear terms in Subcontracts

•Very specific specifications, making them as independent from specific certifications as possible

•Get team together ahead of time (BIM, Charette)

Shaw Development v. Southern BuildersContract required “Silver LEED Certification,” but lacked clear specifications.

Two lessons:

- Builder’s obligation to achieve certification and build to specs must be aligned;

- Certification is not a guarantee, and architects / builders should be weary of promising a certification.

Limit Risk in Contract•Avoid warranties of long term

energy performance

•Set performance expectations at time building complete, not some time in future

•Clearly allocate responsibilities between owner, builder and architect

•Get LEED AP to consult

Things That Affect A Building’sEnergy Performance

A building’s energy performance can be a very complex matter, affected by things out of the builder / architect’s control:

- Climate

- Use and Users of Building

- Third Party Interference

Allocate Responsibility

The LEED Program allocates responsibility for points between the Owner, Builder and Architect.

It is an error to not allocate responsibility for green building design and construction when contracting.

Non-Contractual Actions

•Check and Double Check Subcontractors’ and Consultants’ Credentials

•Be Careful with Advertising. Keep it Simple and Don’t Greenwash.

•Require Communication in Contract

•Consider Green Building Insurance

Greenwashing (green whitewash) is the practice of companies disingenuously spinning their products and policies as environmentally friendly, such as by presenting cost cuts as reductions in use of resources. It is a deceptive use of green PR or green marketing. The term green sheen has similarly been used to describe organizations that attempt to show that they are adopting practices beneficial to the environment

What is Green Washing?

http://en.wikipedia.org/wiki/Greenwash

•Green Washing Insurance

•Green Certification Insurance

•Heightened Risk caused by certain green building practices like Vegetative Roofing, Alternative Energy Generational Systems, etc.

Novel Insurance Products

The Impact of LEED on the Practice of Law

LEEDigation

LEEDigation

Scott WolfeWolfe Law GroupLouisiana | Washingtonwolfelaw.comconstructionlawmonitor.comLEED AP

Christopher HillDurrette Bradshaw PLCVirginiadurrettebradshaw.comconstructionlawva.comLEED AP