GRSM Receivable Recovery: Getting Paid Should Never be the Hardest Part of the Job

By QUINN MURPHY

My father was a sculptor who utilized natural elements to create artistic beauty.

My father used rock, straw, wood, metal and leather to match a design vision in his mind. Each element was meticulously chosen for its unique qualities, hand selecting rock from the Missouri rivers he fished, leather he meticulously treated by hand, straw bales he retrieved from the farm fields of Oklahoma and metal twisted and weathered by time. Once these elements were combined by his hand, my father’s sculptures became deeply personal to him. As a child I can still picture my father pouring over the combined elements in an endless effort to merge construction with design. My father never sold his sculptures; they were just too personal to him. Many of my father’s sculptures outlived their creator, and some still grace my home and office to this day.

I have thought a lot about why I became a construction attorney. I think my father’s sculpture and artwork were the impetus. Growing up with an appreciation for the creative process and respect for “builders,” it bothered me that contractors who build for others would not be paid for their work. In my view, the injustice of non-payment was the genesis of creating GRSM’s Construction Receivable Recovery group.

Deconstructing Contractor Collections

Ten years ago, I began hearing the same complaint among my contractor clients: “I am owed money for my work, but I will incur more in legal fees than I would ever recover.” The first time I heard this, I understood the frustration, but when the same complaint was repeated by contractors across various specialties, the unfairness of non-payment really hit home with me. The realization that the legal costs associated with my profession contributed to builders accepting non-payment prompted me to take action and find a solution to the problem.

Building a Nationwide Framework for Affordable Construction Payment Recovery

I began by deconstructing the legal process of collection and determined that legal costs are a direct function of two primary factors: legal subject matter and geographical location. In law, niche expertise (like intellectual property or antitrust, for example) warrant higher hourly rates due to the specific expertise required. But most construction disputes are contract-based, and while they can venture into more complex areas of delay or defect, contractor collections are generally not niche.

I next looked at the impact of geographic location on hourly rates and for purposes of evaluation, I divided the U.S. into three vertical zones: Western, Central and Eastern. Interestingly, I found that the rates in the Western and Eastern zones were 25 percent to 30 percent higher than hourly rates in the Central zone. To me, this represented an opportunity to utilize the lower Central zone rates to perform work in more expensive jurisdictions. But to do so, I had to design a system.

I mapped out each step of legal collections from initial file placement to recovery (file placement – initial evaluation – demand – complaint filing – written discovery – motion practice – trial – collection) and determined that even in high-cost jurisdictions (Eastern/Western), the bulk of time intensive legal work could be performed by highly trained attorneys in the Central zone working through local attorneys at significant cost savings.

The last step was to find a law firm with a broad geographical footprint that could support our new program. When I joined Gordon Rees Scully Mansukhani, the only full-service law firm with offices and attorneys in all 50 states, with my colleague Meredith Pitts, the GRSM Construction Receivable Recovery Team was born.

How Our Team Works

GRSM’s Construction Receivable Recovery program utilizes efficient processes to pursue contractor receivables in all 50 states at reduced effective rates. The program allows multi-state contractors to “throw away the legal Rolodex” of attorneys across the nation and enjoy one point of contact for all multi-state collections. The efficiency of the system is what sets the program apart.

On the front end, our group utilizes pre-suit asset searches to evaluate collectability before legal costs are incurred, eliminating legal spend on unproductive accounts. If litigation is initiated, our GRSM Construction Receivable Recovery team utilizes centrally located, highly trained recovery attorneys to perform much of the required legal work at lower effective rates, thereby lowering the contractor’s financial investment and allowing contractors to pursue receivables of all amounts.

Our Construction Receivable Recovery team members are fully trained and intimately familiar with construction-specific recovery rights and obligations (e.g., Fair Debt Collections Practices Act, state mechanics lien statutes, Prompt Payment Acts), allowing the team to maximize contractor recovery throughout the U.S. Finally, our team tracks and provides periodic updates on net return on investment, demonstrating first-hand the economic difference our group makes in contractor collections.

Leadership

Leadership is not always front and center. Often leadership can be found “behind the curtain,” supporting the extraordinary work of others. The success of our unique 50-state collections program brings me back to the impetus of its development – my father’s sculpture. It occurs to me that the pride my father felt in constructing sculptures is the same pride that contractors feel in their own work. I believe that pride in construction and craftsmanship is something to be valued, honored and never taken for free. The hardest part of a contractor’s job should never be getting paid. I am proud of our group’s leadership in aligning our mission with our construction clients to secure payment for the work performed and delivered.

I think my father would be proud, too.

Quinn Murphy is managing partner of the Tampa office of GRSM and chair of its Receivable Recovery Group.