Solutions for Distressed Businesses in the Construction Industry
The construction industry is facing a tidal wave of financial challenges, with recent statistics painting a grim picture of the sector’s health. Go Legal understands that a staggering 5,919 construction companies are teetering on the brink of collapse, classified under ‘critical’ financial distress.
This alarming figure represents about 1.6% of the total 353,365 firms operating within the UK’s construction sector, according to the Office for National Statistics’ 2021 data. Furthermore, the Red Flag Alert highlights that an additional 72,257 companies, equating to a significant 20% of the industry, are grappling with substantial financial difficulties.
Common Challenges in the Construction Industry
Construction companies are facing financial difficulties for several reasons, with construction insolvency, payment disputes, and adjudication processes being particularly prevalent.
These issues are exacerbated by the broader economic pressures of rising interest rates, surging inflation, and dwindling consumer confidence, which extend their impact beyond direct consumer services.
The real estate and property services sector, closely tied with construction, has seen a 38% increase in companies under critical distress between the second and third quarters of the year, now standing at 4,994 firms. With the manufacturing industry experiencing 8% of total UK insolvencies, the repercussions are widespread, cutting across various sectors.
5 Tips to Avoid Insolvency in the Construction Sector
- Enhanced & Strict Credit Control: Tighten credit control mechanisms to ensure timely payments. Using credit check platforms can offer a deep dive into the financial status of clients and suppliers, enabling pre-emptive action against potential defaults. Our lawyers use several different platforms to monitor clients and suppliers who may be in financial difficulties so that you can plan and act accordingly in advance of other creditors.
- Strategic Financial Planning: Develop a strategic financial plan that includes thorough risk assessments and cost-benefit analyses for each project. Our construction lawyers can provide critical insights into the financial implications of contracts and negotiations.
- Supply Chain Resilience: Strengthen your supply chain by diversifying suppliers and considering alternatives that can offer more competitive rates or more reliable delivery schedules.
- Legal Risk Mitigation: Engage with our construction solicitors early to identify legal risks in contracts and dealings. Proactive legal support can prevent disputes from escalating into costly litigation or insolvency scenarios.
- Investment in Technology: Adopt advanced project management and financial software that provides real-time data to aid in decision-making and helps to avoid costly overruns and delays.
If you wish to obtain any advice specific to your needs, our construction dispute lawyers are here to help. Please give us a call on 0207 459 4037 for a Free Consultation today.
Expert Construction Solicitors in London
Given the financial difficulties and challenges, the value of experienced construction lawyers becomes evident. Our London law firm specialises in commercial litigation, with a keen focus on the construction sector. We understand the intricacies of construction payment disputes and the nuances of construction adjudication. Our legal team are experts in navigating the complexities of construction insolvency, ensuring that our clients are equipped with the best strategies to weather financial storms.
Our Comprehensive Construction Legal Services
Our services are designed to support construction businesses in critical times:
- Dispute Resolution: Our expert construction lawyers excel in resolving construction payment disputes efficiently to maintain your cash flow and business operations.
- Contract Review and Drafting: Our construction solicitors meticulously draft and review contracts to shield your business from unforeseen liabilities and conflicts.
- Adjudication and Insolvency Advice: We guide clients through the adjudication process and offer strategic advice on managing insolvency risks.
- Credit Management: By leveraging our expertise, businesses can improve their credit management, a critical aspect of financial health in the construction industry.
Our proactive approach is tailored to preserve your business’s solvency, ensuring that legal hurdles do not hamper your growth and stability. We encourage construction companies to consult with us early to set a strong foundation for legal and financial health.
Case Example – £1.2m recovered for sub-contractor plus costs within 1 month
Client A approached our expert construction lawyers after receiving a contentious Pay Less Notice which the client assessed at zero. Our dedicated lawyers swiftly analysed the situation, and evidence (including an expert valuation report), identified key areas of contention, and helped Client A successfully challenge and mitigate the financial implications of the notice. Our lawyers were able to recover a significant multi-million-pound sum of over £1.2m for the subcontractor.
Winning Approach to Construction Dispute Resolution
Our lawyers’ extensive industry-specific knowledge and our commitment to justice make us the preferred choice for many businesses in the construction industry.
Our construction dispute lawyers are recognised among the best lawyers in England & Wales, and have regularly been asked and featured to write authoritative articles in the Financial Times, the Law Society and LexisNexis and have been quoted in City AM, the New Law Journal, Law Society Gazette and Litigation Futures.
Our unique approach to construction disputes means that we will:
- Arrange a Free Consultation with you & a qualified lawyer to discuss your construction dispute
- Free Asset Tracer & Due Diligence Report
- Arrange a WhatsApp group with you & your legal team in case you have any questions
- Investigate the merits of your issue & create a strategy for success
- Send us your case documents easily through our secure client portal, Go Transfer
- Advise on any judgments & tactics that have proved successful in construction disputes
- Consult with independent surveyors & experts to strengthen your position
- Free sign-up to our Insolvency Tracker & Claims Protection service (worth £1k pa)
- Fixed fees & “no win no fee” arrangements are available
- Work hard to achieve the best outcome in your construction dispute
Our construction dispute lawyers offer regulated, independent & confidential legal advice and are also dedicated members of the Professional Negligence Lawyers Association, the London Solicitors’ Litigation Association, the Association of Cost Lawyers, the Insolvency Lawyers Association and the Commercial Litigation Association.
Free Consultation with Expert Construction Dispute Lawyers
Want to know more about the services we provide to clients within the construction sector? Please see our dedicated sector pages on construction or read one of our Free Guides.
Our construction lawyers in London are committed to providing the robust legal support your business needs to not only survive but thrive amidst industry challenges.
If your construction business is facing financial difficulties or you want to proactively protect against future disputes, our expert construction lawyers are here to help. Reach out to us for a Free Consultation at 0207 459 4037 or by completing our online booking form.
