Last week marked the 20th anniversary of West Coast Casualty’s Construction Defect Seminar (WCCCDS). I was unable to attend, but by all accounts, the event was a mixture of both old and new. WCCCDS is the biggest conference dedicated to construction defect litigation and has become the de facto venue for debuting new products, services and even companies. This is the story of one such company – Construction Defect Professionals, Inc.
Two years ago, a curious press release caught my attention. A new startup company called LiMa Solutions put the entire construction legal industry on notice that it was high time that things change. A couple weeks later, I found myself at the Karl Strauss Brewery in Carlsbad learning about an innovative approach to construction defect litigation management that was about to debut in a few days time at WCCCDS. (You can read the interview here: Part 1, Part 2, Part 3, Part 4.) Since then, LiMa Solutions has captured the attention of the entire industry and is making significant progress towards its goals.
The Times They Are A-Changin’… Again
Sean Kabo – General Contractor / President of Construction Defect Professionals, Inc.
During my initial interview with the LiMa Solutions team, a young man named Sean Kabo was present, but largely silent. As I understood it, he was working at the time as an independent contractor, assisting LiMa with investigations, analysis and project management. Sean had worked with Ed Martinet (LiMa’s founder) at Ed’s previous consulting firm, MC Consultants. A year after our interview, Sean was Vice President of LiMa Solutions and was a featured speaker at the incredible VE-ADR 2012 conference in Key West
A little over a month ago, Sean told me that he was forming a new company. Intrigued, we agreed to meet to discuss in more detail. Over beers at BJ’s Restaurant in Carlsbad, Sean and Tom Spangler told me about the new company: Construction Defect Professionals, Inc. or cdP for short.
“Just when I thought I was out… they pull me back in.”
In my interview with LiMa Solutions, Ed made it clear that the company was focused on two primary services: litigation management (based on the value-engineered alternative dispute resolution process he developed) and neutral expert services. The firm would not be offering expert services on behalf of a particular side.
According to basic economics, value is based on the relationship between supply and demand. While demand is increasing for neutral expert services, there is still a need for experts to represent a specific party in a dispute. This void is precisely what cdP was created to fill.
Aren’t there too many construction defect “experts” already?
According to Sean, the answer is both Yes and No. On the one hand, there are a lot of expert firms, many of whom are cutting staff and struggling to survive dramatically decreased workloads. On the other hand, there are so many obvious inefficiencies in the technical aspects of construction defect expert work, that significant opportunity exists.
I found it interesting that both Sean and Tom are relative newcomers to construction defect litigation. In fact, both were still building real buildings in the 2000’s. Many of the prominent experts in the industry hung up their tool bags before the end of the last century.
“What you see is what you get”
Tom Spangler – General Contractor / Construction Defect Professionals, Inc.
Also interesting is that both Sean and Tom have worked as project managers for other designated experts. A nasty secret in the CD litigation industry is that most designated experts account for 5% or less of the billings on a typical case. That is because the bulk of the work is handled by project managers and support staff. While this allows an expert to oversee many more cases, in order to offer testimony, a great deal of knowledge transfer must take place between the expert’s staff and the expert.
These inefficiencies have been the topic of numerous panel discussions at various legal and insurance seminars and conferences over the years.
When cdP is engaged, you can be assured that the designated expert has been personally involved in every aspect of the case. That includes everything from on-site investigation, through the analysis and categorizing of data, through development of repair recommendations, through estimated cost of repair, appearing at mediations and ultimately testifying. Few firms that operate on a nationwide level can offer that level of personal service.
In addition to the hands-on, no-nonsense work of Sean and Tom, Ed Martinet will serve as a consultant to Construction Defect Professionals, Inc., lending his expertise as necessary.
Technology is about using the right tools for the right task
Sean has worked in construction for 10 years as a general contractor, and framer, while obtaining a contractor’s license and earning his bachelor’s degree in business administration. He has been a forensic consultant in construction for the last 8 years working with Ed Martinet, and as Vice President of LiMa Consulting before starting cdP.
I asked Sean what made him decide to leave active building to pursue the crazy world of construction defect litigation. He replied that it was an opportunity to blend his background in construction with his knack for technology. In that way, Sean and I have a lot in common – always looking for what’s next in technology to find the tools that will actually make a difference for our clients.
At this year’s WCCCDS, attendees that had a chance to meet with Sean and Tom, were treated to a neat little demonstration of the practical application of technology. Pictures taken on a digital camera were immediately transferred wirelessly to an iPad for tagging and sorting, before being uploaded automatically to a secure “cloud” server.
Here is how that process works at a typical, larger expert firm:
- An inspector takes a picture with their camera on site
- Back at the office, the photos are downloaded onto a computer
- The photos are categorized and sorted based on location, and other factors, such as a reference to a particular defect allegation
- Observations are tabulated in spreadsheet form or in a proprietary database
- Field notes, photos and other evidence must be distributed via CD, DVD, or uploaded via some other means
Show me the money!
Since most expert firms bill by the hour, less work also means less revenue and ultimately, profit. How does cdP plan to stay in business by shortcutting the processes that are so commonplace?
Simple. Sean Kabo and Tom Spangler are just responding to what the insurance carriers and attorneys have been demanding for years.
The value proposition that Construction Defect Professionals, Inc. offers is this: Personalized, hands-on attention by qualified experts using appropriate and relevant technologies to achieve solid results in less time and therefore less cost.
Still, though, with a 75% overall reduction in construction defect cases predicted over the next several years, how will cdP differentiate themselves enough to steal away market share from well-established companies?
“Triple A W” (Acquire + Analyze + Answer = Win)
The tagline of Construction Defect Professionals, Inc. is Pioneering Forensic Advancement and the key to that is a process they call 3A=W and is outlined in more detail on their website under Services. In essence the following steps are involved:
- Acquire – Data is acquired from on-site investigation and through other sources
- Analyze – Evidence is processed and analyzed to form opinions
- Answer – cdP responds in mediation, deposition, arbitration and/or trial
- Win – The result is a win-win-win situation for counsel, carrier and party represented
Here is how Sean explains the advantages that cdP offers over the competition:
The CD market is always changing. We are a small company and can adapt to changes in the marketplace, as opposed to the larger, slow moving companies in the industry. We also bridge the gap from the “paper generation” to the “digital generation” giving us the competitive advantage. Combining knowledge, adaptability, and technology giving us a unique offering to this industry.
We utilize state of the art technology to organize documents, including drawings, contracts, and all other contract documents. We store the documents on secure servers and access them via “the cloud” making them available from anywhere in the world and provides us the ability to share them with our clients at a moments notice.
“Lightning fast” photo sorting, filtering, and search capabilities saving our clients time and money. Video conferencing via the internet making our process more efficient, less costly, and easier for our clients.
Reading the Tea Leaves…
As I was unable to attend this year’s WCCCDS, I asked Sean what three things he learned from the event that would shape the future of his new company.
1. Age – The construction defect industry is mature. The first generation of attorneys, carriers, mediators, judges, and experts is ready to retire, or has retired. The new generation is crawling out of the trenches, more tech savvy, and popping up from anywhere in the country. 7 of the first 10 people I talked to that were attending the seminar were from the central to East coast.
2. Women – They are in charge of a large market share of the industry. The introduction of the WCLA, a women lead organization will be a real “mover and shaker” in the near future.
3. Change – Everything changes. The law introduces new statutes, Insurance changes policies, and technology; from Esquire’s caricatures to the wireless devices in the ballrooms we answered our questions with.
From what I have witnessed, Sean’s observations are spot on. The industry is older, and more people are nearing retirement age. Additionally, long-held gender (not to mention sexual orientation) discrimination is being replaced by a healthy dose of reality. And no matter where you turn, change is occurring throughout construction defect litigation circles as well as in the larger construction, insurance and legal communities.
It will be interesting to see how Construction Defect Professionals, Inc. is received in the marketplace. Competition is fierce among expert firms in this industry. Not to mention, that the decrease in workload across the board has resulted in dire situations for many.
At VE-ADR 2012 in Key West, West Coast Casualty’s own Dave Stern said something that I still find to be true:
This is the biggest “people business” outside of retail.
Construction defect litigation is definitely personality-driven, and many of those dominant personalities are extremely resistant to change. The big expert firms that have come to dominate the industry continue to get work out of habit, and by rote. However, carriers, attorneys, mediators, judges, arbitrators and other decision makers are seeking ways to improve the dispute resolution process. Expert firms that refuse to adapt, will eventually cease to be relevant.
The experts that are agile – and thus able to respond to changing demand – will survive.
For more information about Construction Defect Professionals, Inc. please visit their website at DefectPro.com.
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