Laura Fraher, Power & Energy Construction Practice Area co-chair, was featured in the Construction Dive article “How Contractors Can Mitigate the Risks of Joint Ventures.” The article outlines how contractors can mitigate the risks associated with joint ventures (JVs) by carefully structuring their agreements and clearly defining each partner’s role.
As JVs become more common for handling large and complex construction projects, attorneys emphasize the importance of well-drafted contracts to avoid disputes. Key recommendations include:
- Clearly define roles and responsibilities during negotiations, not after the JV is formed.
- Spell out profit splits, scopes of work, dispute resolution methods, and exit strategies in the Joint Venture Agreement (JVA).
- Use complementary strengths of JV partners to determine the division of labor. Laura said, “Many times a joint venture is formed between two parties because they have different areas of expertise and in those circumstances the division of labor is quite obvious.” However, when it isn’t obvious, “the work should be divided cooperatively between the parties based on considerations such as strategy, respective strengths and availability of resources.”
- Include internal dispute resolution mechanisms—such as executive review boards or tiered resolution steps—to handle conflicts efficiently.
- Add provisions for resolving deadlocks, such as buy-sell clauses and capital call terms.
- Avoid ambiguity, as vague contracts can lead to costly legal disputes and unclear liability when issues arise.
The article compares JVs to “marriages of convenience” and notes that successful ventures depend not only on contract terms but also on the working relationship between partners.
Click here to read the full article.