Construction Disputes in Montana: How to Resolve Conflicts Without Going to Court

Whether you’re building a home, developing a commercial property, or working on a rural infrastructure project, the cause of a construction dispute is as varied as the projects themselves, and a common disruption to the flow of any build project.

Common Types of Construction Disputes in Montana

Construction disputes may be caused by delayed timelines, nonpayment, construction and design defects or other disagreements over the interpretation of specific contract terms. While litigation may seem like the only solution to resolve these issues, there are several ways to resolve construction disputes without stepping foot in a courtroom.

Why Avoid Litigation?

For starters, taking a dispute to court can be time-consuming, expensive, and emotionally draining for all parties involved. Legal fees, expert witness costs, and prolonged work stoppages can significantly increase the costs of a project. By contrast, out-of-court solutions tend to be far more affordable and predictable; fortunately, the resolution of a construction dispute can be as dynamic as the issue that gave rise to the problem in the first place. First and foremost, always have a well drafted, written contract. Many times, this alone will help avoid any issues that come up during construction.

In the event of contract disputes, there are various methods to resolve issues that are more efficient and more cost-effective, including methods such as mediation, arbitration, or informal negotiations. These methods vary in formality, cost, and structure, and offer flexibility depending on the severity and complexity of the dispute. Often, these methods lead to faster outcomes and allow projects to move forward with minimal disruption, preserve professional relationships, reduce stress, keep matters private, and provide more control over the final result, allowing both parties to walk away with a resolution. 

In the sections that follow, we’ll explore these practical alternatives to litigation in more detail, including the pros and cons and how Montana contractors and property owners can protect their interests without sacrificing time, money, or peace of mind with the help of Bozeman-based Construction Law attorneys like KLH Advisors PLLC.

Alternative Dispute Resolution Options

1. Good Faith Discussion and Negotiation

The first and often most effective type of dispute resolution is open, honest conversation.

Before involving third parties, the contractor, property owner, or subcontractor should try to resolve disputes though direct communication and mutual compromise, without third-party intervention. In Montana’s relatively close-knit construction industry, many disputes are resolved this way—through a phone call, a meeting, or a handshake agreement. Approaching the issue early and in good faith can preserve relationships and avoid unnecessary escalation.

The benefits are that negotiations are direct and informal, offer fast, flexible, and often free solutions; preserve the autonomy of the parties, who retain full control over the terms and outcome of the dispute, and improve communication between the parties early on during a construction project.

The detriment to negotiations is that it lacks formal rules or procedures; risks wasting time for the parties if one party negotiates in bad faith; and lacks the involvement of an objective third-party viewpoint.

2. Mediation

If direct communication fails, mediation is often the next logical step.

Mediation is a voluntary process where a neutral third party (a mediator) facilitates a structured conversation between the parties. Unlike a judge, the mediator doesn’t make decisions. Instead, they help the parties reach a mutually agreeable solution.

Mediation is typically non-binding, meaning no one is forced into an outcome. Mediation encourages collaboration over confrontation, and is usually confidential, keeping the details of the dispute out of public record. Overall, mediation is typically faster and cheaper than litigation.

However, because mediation is non-binding, the outcomes are not enforceable and may not be suitable for complex issues.

3. Arbitration

Arbitration is more formal than mediation, but it is still an alternative to going to court.

Arbitration is when a neutral arbitrator (or panel) reviews the evidence and arguments from both sides and then makes either a binding or non-binding decision. This process can resemble a trial, but it’s usually less time-consuming and more streamlined.

Binding arbitration is enforceable in court, and still offers a quicker resolution than going to court while keeping things private between the parties. As an added bonus, an arbitrator can be chosen with subject-matter expertise in the issue relevant to the dispute.

Arbitration tends to be more expensive than the previously mentioned methods, mainly if a panel of arbitrators is used, and offers less flexibility than other methods, especially if it is binding.

4. Partnering and Review Boards

Partnering and Review Boards are two proactive, collaborative processes of dispute resolution, integrated into a project early on and often used in large-scale construction and public works projects. Partnering is a voluntary commitment to working cooperatively throughout a project. On the other hand, dispute review boards usually consist of a panel of individuals established at the outset of a large project, and are dedicated to regular review of the project’s progress, advising or ruling on disputes that arise during the project.

Partnering promotes early identification of issues and builds long-term working relationships dedicated to problem-solving. The drawback to partnering is that, again, it is non-binding, and requires a significant amount of time and dedication to project oversight, and may not be well suited for adversarial projects.

Dispute Review Boards can similarly be used for early resolution of issues and prevent escalation, while providing deep technical project familiarity. Dispute Review Boards tend to be a more expensive option and require cooperation early on from parties in selection for the board, and the boards’ effectiveness depends on the contract terms.

How a Montana Construction Attorney Can Help

A construction attorney who is familiar with Montana construction law, can be the difference between major project disruptions and a smooth resolution. KLH Advisors PLLC can help you reduce the risk of disputes arising in your next project by drafting clear, detailed contracts at the outset, ensuring that expectations, responsibilities, contract terms, timelines, and scope of work are well-defined and legally enforceable. We can help you include language tailored to the dispute resolution method best suited for your project, giving all parties a roadmap for resolving issues efficiently should disputes arise. Our proactive legal support not only reduces the risk of costly litigation but also keeps your project on track. Contact us today to discuss how we can help you.