Shapiro, Lifschitz & Schram

“This firm’s greatest strength is their intense detail.”

Mike Hubert – President, Glen Construction Company

Judah Lifschitz and Gregory Seador author an article for Construction Executive discussing recoupment and setoff in construction contracts.

In an article published on Wednesday, February 28 in Construction Executive, Judah Lifschitz and Gregory Seador discuss recoupment and setoff in construction contracts.


They explain that the key difference between the two is that setoff allows the party to offset payments due on one job against amounts owed on another job, while recoupment limits a party’s right to offset payments to the same job. “A useful technique for owners, general contractors and subcontractors to protect themselves from losses when contracting with the same party on multiple jobs lies in the careful drafting of the contract language before the job even begins,” they state.


Even where the contract contains a setoff provision, local laws need to be considered before offsetting payments. “For example, some states have enacted ‘trust fund’ laws which protect subcontractor payments by providing that monies paid by the owner to the general contractor for labor, material and services are held in trust for the benefit of the subcontractors,” they discuss. “In New York, for instance, the law applies to projects for ‘improvement of real property, including home improvement or public improvement’ and protects ‘payment of claims of subcontractors, architects, engineers, surveyors, laborers and materialmen.’” Therefore, local law may dictate whether and to what extent a contractor has the right to setoff a payment due to a subcontractor even if the contract contains a provision expressly allowing it. Trust fund laws vary by jurisdiction, and parties should confirm whether laws of this type affect their right of setoff.


“The right of setoff or the lack thereof can have implications for project participants,” they share. “Project parties would be wise to understand the applicable setoff law and carefully consider contractual setoff language before entering into contracts and before any disputes arise.”


Read the full article here.


Did You Know . . .

Members of the SLS trial group have tried in excess of 50 jury trials and 75 bench trials?

The SLS construction group has worked on sports stadiums across the country including Orioles Park in Baltimore and Paul Brown Stadium in Cincinnati?

The SLS construction group has worked on power plant projects across the country?

In 2007 SLS was selected for an Honorable Mention as one of the Best Places To Work in Washington DC?

Ron Shapiro, Steve Schram and Judd Lifschitz have all been selected as SuperLawyers by Law and Politics?

The SLS office building is an historic townhouse constructed in the late 1800s?

SLS has been selected by Martindale-Hubbell as a Preeminent Law Firm?

SLS trial lawyers have argued appeals in the U.S. Circuit Courts of Appeal for the 4th, 5th, 9th, D.C. and Federal Circuit?

SLS trial lawyers have been lead trial counsel in cases in Arizona, California, District of Columbia, Florida, Louisiana, Maryland, New Jersey, New York, North Carolina, Oregon, Texas, and Virginia, - to name just a few?

Virtually all the cases that SLS trial lawyers mediated have been favorably settled at mediation?

The transactional group at SLS was lead counsel on one of the largest, most complex mixed-use projects in downtown Washington, DC involving 4 lenders and 6 property owners?

In appreciation for the outstanding efforts of each of its employees during 2007, SLS gave everyone (attorneys, paralegals, and staff) a 4 day/3 night expense paid trip to Key West, Florida?

The transactional group at SLS has represented tenants in more than 200 retail leases in the Mid-Atlantic region?

Every attorney in the transactional group at SLS has at least 15 years experience?

The transactional group at SLS has represented developers in the purchase, construction, financing and/or sale of more than 75 multi-family apartment projects?

The transactional group at SLS has represented real estate investors and developers with respect to property in Pennsylvania, West Virginia, Delaware, Maryland, the District of Columbia, Virginia, North Carolina, South Carolina, Georgia, Florida, Texas, Tennessee, Michigan and the U.S. Virginia Islands?

Attorneys in the transactional group at SLS have represented eight national banks in commercial real estate loans?

Attorneys in the transactional group at SLS have represented the FDIC, the Resolution Trust Corporation and several banking institutions in loan workout transactions throughout the Mid-Atlantic region?

The transactional group at SLS has represented homebuilders and commercial real estate developers in work-outs of individual loans and also for work-outs of large portfolios involving dozens of properties in several states?

The trial lawyers of SLS have numerous reported decisions to their credit?