In this useful article by Berding Weil Attorneys from California they cover the issues facing strata corporations when deciding how to pay the legal costs of building defect litigation.
It's an interesting exposition in the 2 main options: Pay for Service or Contingency Fees - and I recommend it to anyone running a strata building defect claim.
Leaving aside any legal restrictions on contingency fees in Australia, it's important to understand that many US strata corporations agree to contingency arrangements because they simply can't afford to fund the defect case themselves. So, unless they are prepared to abandon the building defect claim or accept whatever settlement is offered, they have to agree to give away part of their recovered damages to successfully run serious defect claims.
In my view, that's a situation many Australian strata corporations are now finding themselves in for the following 4 reasons.
1. Since builders, developers and insurers are fighting claims harder, it's getting more difficult (and therefore more costly) to successfully run those claims.
2. Strata corporations don't have the funds to run these harder claims (without owners paying special levies) and so don't do so, or run them poorly (and cheaply) and lose.
3. That also leads to strata corporations settling building defect claims early and more cheaply than they could or should.
4. And, because commercial viable contingency arrangements are not permitted in Australia (contingency arrangements being mostly limited to a 10% surcharge on normal fees and not related to outcomes) there's no low cost option for running those cases.
It's a difficult cycle for strata corporation with building defects and we need some innovative solutions. Any ideas ???
Francesco ...
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I never read this type of article before about Estate Litigation . I appreciate you for the article you have written. Thanks.
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