Presentation at the 2010 Green Matters Conference in New Orleans, LA, scheduled for Friday, October 15th. Scott Wolfe is co-presenting this topic with Chris Hill, focusing on Litigation caused by or associated with the LEED Certification Process. This is the powerpoint presentation that will be used.

1. LEEDigation
The Impact of LEED on the Practice of Law
Christopher Hill
Scott Wolfe The Law Office of
Wolfe Law Group Christopher G Hill, P.C.
Louisiana | Washington Virginia
wolfelaw.com christopherhill-law.com
constructionlawmonitor.com constructionlawva.com
LEED AP LEED AP

2. What is
Construction Litigation?

3. Unmet Expectations

4. Unmet Expectations
• Cost: The project cost more than expected

5. Unmet Expectations
• Cost: The project cost more than expected
• Scope: The project’s scope was more
expansive than anticipated

6. 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

7. 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.

8. What is
LEED?

9. http://www.usgbc.org

10. http://www.nahbgreen.org

11. http://www.energystar.gov

12. What is Green Building?
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.
http://en.wikipedia.org/wiki/Green_building

13. LEEDigation
What is LEEDigation?

14. LEEDigation
Is it Different Than
Ordinary Litigation?

15. Law Ark Building Blog
“ 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

16. Best Practices Construction 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.
http://bit.ly/diszmS

17. Still...
Unmet Expectations

18. Still...
Unmet Expectations
• Energy Performance: Is the building’s energy
systems performing as expected (or
promised)?

19. Still...
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?

20. Still...
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?

21. Is Litigation Probable?

22. “
Green Growth is phenomenal
across the globe.
Harvey M. Bernstein, McGraw-Hill Construction

23. 2005 - 2008
Green Building Construction
Grows 5x ($10b to $49b)
2009 - 2013
Could Triple, reaching $140b
Green Outlook 2009: McGraw-Hill Trends Driving Change Report

24. How’s It Going to End?

25. Shaw Development v. Southern Builders

26. Shaw Development v. Southern Builders
• Problem: Contract required building to
meet Silver Certification. It didn’t.

27. 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

28. 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

29. 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.

30. Washington DC v. Washington Nationals

31. Washington DC v. Washington Nationals
• Problem: Expectations for “Green” LED
Scoreboard wasn’t met. Owner claimed
project wasn’t substantially complete and
withheld funds.

32. 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.

33. 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.

34. What Are The Damages?

35. Show Me The Money!

36. Show Me The Money!
• Tax Credits: Missing a certificate level can
effect tax credit eligibility

37. 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

38. Unique Damage Situations

39. 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?

40. 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.

41. Unique Liability Situations

42. 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?

43. 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.

44. Preparing for the Risk

45. Preparing for the Risk
• Control
Expectations

46. Preparing for the Risk
• Control
Expectations
• Limit Exposure
By Contract

47. Preparing for the Risk
• Control
Expectations
• Limit Exposure
By Contract
• Be Careful, and
Keep It Simple

48. Control Expectations
“ ...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.

49. Control Expectations

50. Control Expectations
• Clear terms identifying scope of work

51. Control Expectations
• Clear terms identifying scope of work
• Clear terms in Subcontracts

52. Control Expectations
• Clear terms identifying scope of work
• Clear terms in Subcontracts
• Very specific specifications, making them as
independent from specific certifications as
possible

53. 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)

54. Shaw Development
v. Southern Builders
Contract 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.

55. Limit Risk in Contract

56. Limit Risk in Contract
• Avoid warranties of long term energy
performance

57. Limit Risk in Contract
• Avoid warranties of long term energy
performance
• Set performance expectations at time
building complete, not some time in future

58. 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

59. 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

60. Things That Affect A Building’s
Energy 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

61. 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.

62. Non-Contractual Actions

63. Non-Contractual Actions
• Check and Double Check Subcontractors’
and Consultants’ Credentials

64. Non-Contractual Actions
• Check and Double Check Subcontractors’
and Consultants’ Credentials
• Be Careful with Advertising. Keep it Simple
and Don’t Greenwash.

65. 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

66. 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

67. What is Green Washing?
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
http://en.wikipedia.org/wiki/Greenwash

68. Novel Insurance Products
• Green Washing Insurance
• Green Certification Insurance
• Heightened Risk caused by certain green
building practices like Vegetative Roofing,
Alternative Energy Generational Systems, etc.

70. LEEDigation
The Impact of LEED on the Practice of Law
Scott Wolfe Christopher Hill
Wolfe Law Group The Law Office of
Louisiana | Washington Christopher G Hill, P.C.
wolfelaw.com Virginia
constructionlawmonitor.com christopherhill-law.com
LEED AP constructionlawva.com
LEED AP