A panel of industry luminaries met this week to discuss the Latham report, 30 years after it was published. The discussion touched on the increasing complexity of disputes and the quality of adjudicators, asking whether reform is needed to meet the lofty goals originally set out by Latham.
It’s been three decades since publication of Constructing The Team – Tony Latham’s 1994 landmark report which led, two years later, to the introduction of adjudication. The process was introduced to the UK construction industry as part of a broader reform to address conflicts, streamline payment disputes, and avoid costly litigation. A panel event in London’s legal district brought together five industry big hitters to discuss how the adjudication process is performing thirty years on.
Trust and money – the heart of the problem
At the core of many construction disputes lies a lack of trust and a tug-of-war over money. This theme came up repeatedly during the panel discussion, Tim Seal, head of construction at event host, law firm Ridgemont, said: “It seems to me that the title of Latham’s an interim report [which appeared a year before Constructing the Team] – Trust and Money – could be an equally apt title to the executive summary that came out of the Grenfell phase two report. There’s very little trust and there’s not enough money for the people who really need it.”
It is clear that the collaborative approach Latham envisaged, has not materialised. An adversarial mindset within construction seems deeply entrenched, with many adjudications feeling more like battles for supremacy than collaborative problem-solving. In practice, “this side wants to win, and so does this side”, veteran adjudicator, Tony Bingham, said. “You want to win, and that doesn’t lead to remaining friends.”
This competitive attitude exacerbates conflict, making it harder for disputes to be resolved fairly, and faster. When trust is low, people feel aggrieved if the decision doesn’t go their way, further entrenching the adversarial nature of the industry.
The complication of complexity
When adjudication was first introduced, it was meant to be a simple, fast-track process for resolving disputes. But as projects grew in scale and complexity, so too did the cases. Panel chair Anneleise Day KC, leading counsel at Fountain Court, highlighted how some adjudications now involve “very, very large disputes” and “huge amounts of documentation.”
What was supposed to be a swift, streamlined process has, in many instances, turned into a mini-trial of sorts, with vast amounts of evidence and paperwork produced by lawyers. Audience member Sean Gibbs, senior vice-chair of the Adjudication Society and director at advisory firm Hanscomb Intercontinental, said that some “sophisticated parties have learned how to use adjudication, and they’ll quite often test a few points with a view to settling”.
Despite this, he said that fundamental aim of adjudication is “still doing what it was set out to do—to prevent unfairness and keep cash flowing”.
Quality control
The quality of adjudicators formed a major part of the evening’s discussion. Seal puts it bluntly: “I don’t think that the quality of adjudicating decisions is high enough”. Poor adjudication can “ruin companies,” he said, especially when bad decisions lead to substantial financial damage.
Audience member John Delaney, quantity surveyor and principal at consultancy HKA, agreed, but said that competence goes wider than just the adjudicator profession. “The level of detail that comes into substantiating claims and fighting those claims” is often lacking, he said. Poor contract administration, inadequate substantiation and enormous amounts of unnecessary information add to the strain on adjudicators.
Many adjudicators “generally do a solid job”, according to Ian Burnell, head of Commercial, UK Power Networks. But the overall consensus was that more could be done to bring standards up to scratch and bring younger adjudicators into the industry.
Day pointed to one largely untapped pool of talent that could help the quality and quantity of adjudicators. “The number of female adjudicators, for example, is shockingly low,” she said. Traditionally, women are seen as quite collaborative and quite good at resolving disputes. So it seems a shame that we don’t have more women coming forward to do that.”
What needs to change?
One suggestion was to limit the types of disputes that can go to adjudication, especially complex ones. Seal supported this, suggesting that adjudication should be restricted to simpler cases until the industry is “more grown up and collaborative.” But Burnell said that while limiting adjudication might take pressure off the system, it also risks tipping the scales in favour of clients: “Clients might try to bleed contractors dry by screwing them over if they can’t go to adjudication.”
A broader consensus emerged around the idea of face-to-face mediation as a first step, particularly for less contentious issues. Day suggested that mediation could prevent disputes from spiralling out of control: “The power of sitting in a room with someone else” often leads to settlements that wouldn’t have been possible if the issue had gone straight to adjudication or litigation, she said.
Reforms to the adjudication process were mooted to help the industry keep pace with its increasingly complex projects. The 1996 Act hasn’t evolved with the times, despite the technological and contractual changes in the industry, according to Justin Sullivan, chief executive of consultancy Adair and president-elect of the Royal Institution of Chartered Surveyors. “We haven’t substantially changed the adjudication procedures” since they were first introduced, he said.
Seal blamed flaws within the adjudication process partly on patchy implementation of the 1996 Act. “I think [Latham] thought it could be used effectively in a world that had become more trustful because it had adopted all the other things he insisted on. He was anticipating a world and a way of being that isn’t here before us”.
In many ways, adjudication has served the industry well, but Sullivan said it might be a good time for a review of the system. “I do love solicitors,” he said. “They send me work, but it is. It’s lawyers that are running adjudication now, rather than the market and the experts.”
