LEEDigation and the Y2K Virus
One of my blogging buddies, Shari Shapiro, wrote a piece last week about the lack of green building lawsuits. Her post reminded me of a conversation I had with an attorney when I was in New Orleans for the ABA Forum on Construction event. E. Luckett Robinson is a construction attorney in Mobile, Alabama. During our conversation, Mr. Robinson mentioned that he had heard a lot about the potential for green building litigation for a number of years but that no cases had developed. Mr. Luckett wondered if green building litigation would be another iteration of the Y2K virus.
You remember the Y2K virus right? It was thought that all the computers of the world would stop working on January 1, 2000. Lawyers also expected Y2K litigation to follow. Of course, computers kept working and the Y2K litigation never developed.
Green building litigation, or LEEDigation, will not go the way of the Y2K virus litigation. Why?
1. Motives for seeking LEED certification are changing. Previously, many owners built to LEED certification for environmental reasons, or to develop goodwill with the public. Now, owners see reports that LEED certified buildings lead to greater profit, and these owners then seek LEED certification for monetary reasons. Owners seeking LEED certification for monetary reasons are much more likely to litigate if problems arise.
2. Regulations are requiring LEED certification with greater frequency. Many of these regulations come in the form of mandates. When you create a mandate, you are requiring all parties to comply. Not all parties will want to comply, and not all parties will be able to comply, resulting in further opportunities for LEEDigation.
3. Risk mitigation to avoid LEEDigation is not as easy as risk mitigation to avoid the Y2K virus. To prevent the Y2K virus, patches simply had to be installed on computers. Unfortunately, there are an infinite number of ways that a LEED project can run into problems.
3. Risk mitigation to avoid LEEDigation is not as easy as risk mitigation to avoid the Y2K virus. To prevent the Y2K virus, patches simply had to be installed on computers. Unfortunately, there are an infinite number of ways that a LEED project can run into problems.
Or maybe I am just making this all up. What do you think?
Chris,
Great points. I think #3 really sums up why it will not disappear. The Y2K problem was a problem with a clear cause, 0's and 1's were not arranged in a way that would recognize the change of a millennium. With green construction there are a variety of certification systems available and thousands of possible combinations to achieve the required points needed for certification.If any one piece of the puzzle does not fit together properly there is the potential for enormous financial losses, which will in turn lead to LEEDigation.
Sounds like a great place to be in for a lawyer. As always great insight.
As I have stated on numerous occasions, as an insurance professional involved in the sustainable building industry, proactive risk management regarding the rapidly emerging unique risks of green building is crucial to avoid my industry's demand to finance the interpretation of poorly drafted or antiquated contract language. We are all in this together and the risk management industry should work diligently to avoid this risks at all costs.
Social capitalism is driven by Robert Kyosaki's notion of having both. Sustainable buildings hope to reduce negative social and environmental impact AND provide for positive economic development. The risk management community wants to avoid risks AND allow progress. For all of us in the middle of the argument, we want to be good stewards of the environment AND provide for our families and future generations.
How can we have both?
I tend to agree with the USGBC's memo or report that says green litigation is nothing but old wine in new bottles.
The people that are constantly telling others to watch out for green building litigation, and I mean no offense, are simply stating the obvious because we all know there will be issues. It's like saying: "If you try sub out your own house, you're going to have issues." Rather, let's say: "here's the issue and do this to avoid it."
Building or renovating a structure necessarily involves a number of parties. Cities. Planners. Architects. Contractors. Subcontractors. Inspectors. Lenders. Guarantors. Etc. Building or renovating a structure for sustainability adds another layer to an already complex situation. And as you say, these parties are involved for a monetary reason. If something doesn't go right and the parties didn't have clearly defined roles, contracts, and expectations, there will be litigation.
Rich - thanks for explaining the Y2K virus in a more succinct manner. What is interesting to me is that some owners may view the LEED certification process as simple if they simply look at the LEED scorecard. But as we know, this is not a simple process.
Chris - as always thanks for reading!
Mark - I think they key to having both is bringing all the parties together now to try and assess the risks and mitigate potential problems. Both sides have been slow to do this. We need your help!
Preston - Thanks for the comment. Keep up the great work at Jetson Green.
I have been meaning to post about the "old wine in new bottles" paper. I don't think the paper entirely tells the story. The legal issues surrounding LEED certification are not "old wine in new bottles."
Everytime I make a presentation and discuss LEEDigation and Shaw Development, I am asked "how would you structure a contract to apportion risk for LEED certification." Unfortunately, I can't answer that question. As an attorney, I can't advise non-clients as to specific contract language or I am setting myself up for malpractice lawsuits.
What I can say is that the contracts as they are currently written are not going to be good enough. Declaring an "intent" to obtain LEED certification is not enough and, frankly, I don't think most people even knows what that means.
As more regulations require LEED certification, more owners are going to require a guarantee of LEED certification from architects or contractors. When these guarantees of certification are made, the stage is set for LEEDigation.
Remember - construction contracts that identify guarantees of LEED Certification are NOT BONDABLE BY SURETIES!!! So even if you were successful in drafting contractual risk transfer, surety bonding companies would strike or exclude that specific language from the contract.
Mark,
I just worked on state project where the state required a warranty of LEED Silver and an ongoing warranty post-completion that design-builder would continue all efforts to obtain the certification. That project was bonded as are all other state projects.
Brian D. Anderson
PS Incidentally, the municipality in question also required, as a condition of granting our zoning approvals, that the project obtain LEED Silver or above.