Jacob Austin 00:00:00 Hi there all Jacob Austin here and welcome to episode 156 of the Subcontractors Blueprint, the show where subcontractors will learn how to ensure profitability, improve cashflow and grow their business. Today's episode is the last in our dispute series, and it's all about when not to fight the battles. You should walk away from the ones that are going to cost you more than they could ever return, and how to run the numbers before you fire in a single notice. So let's dig in. The right episodes. Now I've handed you weapons. How to crystallize a dispute, how to run the adjudication machine, how to win the payment fight, and how to enforce a decision today with the final episode. I'm going to teach you the hardest skill of the lot, and it's the opposite of everything we've covered so far. Knowing when to put the weapons down because even the best in this game don't win every fight. They pick the ones they can win. So now you know your options. You know the gate. You know how to build a case, run an adjudication, defend one and force one.
Jacob Austin 00:01:29 Right now, you could be more dangerous in a dispute than most of the people you'll ever sit across the table from. But I'm going to end this series by taking one thing away from you the idea that just because you can fight, you should. And this is the commercial truth that all good commercial operators and commercial decision makers should know. Winning is not the same as getting paid. Being right is not the same as being able to prove it, and a fight you can't collect on isn't a fight at all. It's not one worth having anyway. It's a donation to a lawyer or a claims consultant. The most dangerous operator in this industry isn't the one who fights everything that moves. It's the one that knows precisely which fights are worth it, and then walks away quietly from the ones that aren't. So today, before you ever fire another notice, I want you to think about the following four tests. Four questions to run cold before you commit a single penny. And if a dispute fails these tests, then the sharpest, most commercial thing you can do is to not fight it.
Jacob Austin 00:02:42 Test number one is the costs test. Does the maths actually work out? Remember, in adjudication you carry your own costs. Win or lose. That means your own advisers, your own experts all the time that you put into preparing a claim. And of course, the referral. So a dispute has a price tag on it before you've won a single thing. And the question is brutally simple is the sum that you're chasing worth what it's going to cost you to chase it? If you're owed ten grand, and fighting the fight properly is going to cost you 12. Then winning is losing. You spent 12 grand to recover ten, and you've poured days of your own time and attention into that that you could have spent out there in the wide world, earning money. The number on the invoice is not the number that matters. The number that matters is what's left in your pocket at the end of the fight. So that is the sum that you need to run first. Sometimes a small debt, however much it might gall you, is simply cheaper to write off than it is to win.
Jacob Austin 00:03:50 Or you look into super cost effective methods like the money claims court, provided that you can establish that it's due properly first. Test number two is the relationship test. What's that fight worth set against what it costs you in a future work? We touched on this briefly in the alternatives episode. Adjudication is brutal and brutal. Carries a price when you're still mid relationship with the contractor. If the party is squaring up to is a client and you want more work from them, a main contractor who feeds you three jobs a year and you work generally pretty well with, then the disputed sum is not the only thing on the table. That relationship is on there too. Now, I absolutely am not telling you to roll over to keep people sweet. That's the opposite of everything this show stands for. What I'm telling you is to put the future work on the scales. Honestly, sometimes the relationship is already dead and then you, without a second thought, can commit to the fight. But sometimes a quiet commercial settlement keeps a client who's worth ten times the disputed sum to you over the next three years.
Jacob Austin 00:05:01 So weigh that up. Don't let your pride make a decision that your bank account is going to regret, and is ultimately going to have to pay for test. Number three is the evidence test. And this is where a couple of episodes ago comes right back to the for before you Fire run the golden thread through your claim. Honestly, can you trace all the items from what you say you're owed back to the instruction and onto the proof and you actually did the work? Or are the holes in it? Because if you can't prove it, your case could fall apart and you're left with a grievance, not a case. And of course, those two things aren't the same. This is the hardest test to pass because it means being honest with yourself at the exact moment that you're angry and you're feeling wronged and you want somebody to pay. But of course, think of the adjudicator. They don't care how wronged you might feel. They care about what you can put in front of them to demonstrate your case.
Jacob Austin 00:06:03 So audit your own evidence, your own bundle, before you commit to anything. If the thread is solid, then you are in a good position to fight and fight hard. If it leaks like a sieve, then you either fix the records first or you settle for what you genuinely can prove. But you shouldn't spend money, good money, adjudicating a case that you already know is going to lose. Feeling right isn't evidence. Test number four is a big one. This is the insolvency test. Is there actually money at the other end of it? I've mentioned this a few times throughout the series, but I'll land the point here with a bit more behind it. You can run the perfect dispute, crystallise it, build it, win it, and force it. Get your summary judgment and if the company you've won against has no money left, you end up collecting nothing. Winning on paper and getting paid are two completely different things, and the gap between them has a name insolvency. So before you spend before you commit your time, look there.
Jacob Austin 00:07:12 Enforcement records are sat with companies House watch the warning signs. Payments slowing across the board. Not just to you key people leaving that site, gossip about the contractor struggling, county court judgment stacking up against their name, hand to mouth materials delivery and skips that haven't been emptied for weeks. If a main contractor is sliding towards the wall, then a dispute against them is just you spending money to join a long queue of unsecured creditors. And if you're an unsecured creditor right at the back of that queue, you'll probably get pennies or nothing. Now there's a landmark case here, and I've deliberately saved it for this moment. Right at the end of the series. It's known as the Brasco case, and it went all the way to the Supreme Court. What it decided cuts against the instinct. So stay with me. An insolvent company. A company actually in liquidation can still start an adjudication. The court said that those two regimes, insolvency and adjudication, can live alongside each other. So being insolvent does not on its own lock you out of the process.
Jacob Austin 00:08:22 But here's the whole point. Winning is not the same as enforcing it. In a related case, the John Doyle case and insolvent subcontractor did exactly that. It went to adjudication and it won. And then when it went to court to turn that decision into actual cash, it was refused because once insolvency is in the mix, the court won't simply rubber stamp the decision and hand over the money. It stands back and looks at the whole picture. If there are any counterclaims in play and crucially, they've got to decide whether the other side could get their money back if the account turned the other way. If the decision was reversed. Would the insolvent company pay up? And it can decide simply not to enforce. And that's a hard lesson that comes from the very top court in the land. Winning the adjudication and getting the money are two different things, and insolvency is exactly where those two things come apart in your hands. So this particular test can run both ways. If the contractor looks like they're going under, think very hard before you spend a penny chasing them, because you're just likely to be buying a place in a queue and seeing pennies on the pound return for all of the time and effort and fees you've just committed.
Jacob Austin 00:09:40 Crucially, if you're the one in trouble, know that the door to your adjudication is still open to you. But the door to actually collecting the money is a great deal narrower than you'd probably hope. Before we consider this as part of a worked example, let me name the four things that make good, sharp people fight. When every test on the list is telling them to walk away because it's almost never the numbers that talk you into the wrong battle. It's what's going on inside your head. The first is principle. If you're a person of strong principles, then the principle of being wronged by the contractor is one of the most expensive words in the industry. If you catch yourself saying that it's the principle of the thing, then stop and have a good think. Because what you're really telling yourself is that you've stopped fighting to get paid, and you've started fighting to be proven right. And proven right is an expensive luxury, with a price tag that you'd never willingly pay if you saw it written down for no money in return.
Jacob Austin 00:10:45 The other side knows that too, and they'll happily let you spend 24 grand of your own money to win a moral victory that's worth nothing at the bank. So if you fight, fight for the money or don't fight. The second is sunk cost. You think we've already spent five grand. Getting this far. We're not going to stop now. When in fact, yes, you can. And that's the exact moment you have to think clearly. The five grand is gone. Whatever happens, it's spent. Whatever you choose to do next. So it isn't part of the decision anymore. The only question that still matters is whether the next pound you invest in winning this victory is going to come back to you with its best friends and lots of them. If it isn't, then you're throwing more money down the drain. Throwing good money after bad. And that doesn't do anything for the money that you've already lost. It just increases it. There's a powerful psychology behind this because as humans, we naturally fear loss more than we value the gains, and that causes us to think and factor in unrecoverable past time and money into your decision making.
Jacob Austin 00:11:56 Seeing that as a loss, it feels twice as painful as making the same amount of money. So we doubled down to avoid facing the reality of that loss. So you have to step back from the situation. You have to look at it as if you're advising a third party, a friend, on the exact same situation. Detached observers rarely fall for sunk costs, so you have to detach yourself from that decision so that you can see it for what it is. And good firms will walk away from sunk cost, proud ones that can't see it for what it is can chase it straight over a cliff. The third thing is heat fighting. Angry fighting. To punish somebody. To teach them a lesson. To make them feel hurt. The way that you felt hurt by them. And whilst I understand that I really do, because some people out there behave appallingly. Anger is a catastrophic commercial advisor. It will talk you into a fight that costs you far more than it ever costs them, and it will see it as a victory.
Jacob Austin 00:12:57 By all means, feel the anger. Just don't use it in your decision making that call needs to be made stone cold. The next morning, a week later, whatever it takes, considering the facts on paper, not your emotions. The fourth thing is the mirror image of our relationship test, and it's every bit as costly. Fighting soft to protect a relationship that's already dead. Kidding yourself that if you just take the hit quietly one more time, the work will keep coming. Sometimes that might be true and the relationship test holds, but sometimes that relationship is finished and you're just not admitting it to yourself yet, and you're handing over money that you're owed to protect something that doesn't exist anymore. Be honest about which one it really is. So you're not paying to keep a client who's already gone. Every one of these four things is your own head talking you out of a good decision when the feeling and the tests we mentioned before disagree with each other. Trust the tests first. Let's put this in a scenario, because the right call here might not be the one that feels good in the moment.
Jacob Austin 00:14:11 Picture a Sube and he's owed 25 grand by a main contractor and is genuinely owed it. He's got a clean account, decent records. They would very probably win an adjudication. But the warning signs are there. Flashing payments across the whole job have gone slow. And not just to them. Recently, two of the contractors, QTS, have walked, and the supplier mentions over a cup of tea that they've heard the contractors in trouble. The instinct, and it's a powerful one, is to fight for the money that the road they've demonstrated the road it. So why on earth should they take a penny less? And on the merits, they're completely right. But run the tests. The evidence test. They've passed the cost test 25 grand of a relatively simple dispute is worth chasing, but the insolvency test is screaming at them. If the contractor folds in the next couple of months, and adjudication is really going to mean spending on legal fees and adjudication fees to become an unsecured creditor and Euro 25 grand buy a company with nothing left in it, they'd win the decision and then collect nothing and critically be out on their costs on top of it.
Jacob Austin 00:15:26 So here's the disciplined move. And it's not glamorous. They get on the phone and they do a deal. They take 18 grand now in cleared funds this week to settle the account in full. It's seven grand less than the road and it feels like a defeat. But it isn't, because just two months later, the contractor goes under. And every other shabby on that job. Once you were there, holding out, insisting that they got paid the full amount, or the ones who just waited and did nothing. They're now standing in the creditors queue holding a worthless account and worthless claim. Our Subi has that money sitting in the bank. They didn't win the argument, but they won. The only thing that mattered in the situation, they got paid. And that right there is knowing when not to fight and what that looks like. And you can actually use that framework to make your decision. Run the four tests cold. Do it on paper before you start a fight. Costs relationship evidence insolvency. You've got to do it calm, not whilst your blood's up.
Jacob Austin 00:16:31 But if a dispute is going to fail one of those tests badly, that isn't weakness talking, it's commercial sense. Doing maths, not emotion. The value of the victory isn't just the value of the decision, it's what's left after costs. After you've lost the relationship and after the real odds of collecting. Audit your own case. Honestly, run the golden thread test through it before you commit to adjudicating. If there's links in the case and you can't fix them, then it's time to settle. Don't fund a loss out of your own pride. Whereas a fast, fair settlement is often the sharpest result on the whole board. 80% this week can beat 100% in 12 to 18 months, and it certainly beats 100% of nothing. Settling or walking away with your eyes open isn't losing. It might be the best commercial decision you can take? So key points to consider to take away from today's episode. Winning isn't getting paid, and being right is not being able to prove it. Knowing when to fight and when to not fight is worth more than any of the tools in your chest.
Jacob Austin 00:17:45 The cost test. You carry your own costs, win or lose. So weigh up the sum you're chasing against the true cost of the fight. A small debt is sometimes cheaper to write off than win, and if you can negotiate 70% of the money without sitting in front of the adjudicator, you're probably up. Overall, the relationship test put future work on the scales. A quick settlement that keeps a client happy can be worth far more than your disputed sum. The evidence test run the golden thread through your own claim first. If you've got no proof, you've got a grievance rather than a case. The insolvency test. Check that there's money at the other side of the table before you spend on fees. The Briscoe case confirms an insolvent company can adjudicate still. But winning and getting that decision enforced are different things. And finally, a fast, fair settlement can often beat a full win that costs more or collects nothing, particularly if it takes months of your time and effort to win it. Walking away with your eyes open for the right reasons is commercial.
Jacob Austin 00:18:59 It's not weak and that there is the end of the series, nine episodes start to finish. If you've come in knowing your owed money and not a lot about how to actually go and get it, then you leave with the whole roadmap, your options, the crystallization gate, how to run the adjudication, the payment fight, how to defend, how to enforce, how to genuinely win with your records, the alternatives to adjudication. And now, the toughest lesson to learn when not to fight at all. If there's one single thing that I've said throughout this series, it's this you don't win purely on being right. You win on being ready, on having the records that you've kept whilst nobody was watching. By having the notice in place that you've served on time, by reading the clauses before, you needed to rely on, those are the commercial hard yards it takes to win in adjudication. And now to add to that, you know the cold commercial judgment to know which fights are worth having in the first place.
Jacob Austin 00:20:03 So that's the whole game and it's now a game you can play. I hope that all helps. My mission with the podcast is to help the million SME contractors working out there in our industry. If you've taken some value away from today's episode, then I really need your help to share the show and pass that value on to somebody else who'd benefit from hearing it so that it can help as many people as possible. And thanks for tuning in. If you like what you've heard and you want to learn more, then please do find us at www.SubcontractorsBlueprint.UK. And we're also on all your favourite socials again at @SubcontractorsBlueprint. And remember, miss the contract detail and the commercial risk falls on you. Thanks all. I've been Jacob Austin and you've been awesome.
