Few companies can claim to have been in business for more than a century. The year 1906—decades before the invention of power tools and trucks—is when PCL Constructors Inc. was founded in Saskatchewan. In the 108 years since, the company has erected such major projects as the Hawaii Convention Center, the Staples Center in Los Angeles, and the 69-story Scotia Plaza in Toronto. Its work, seen throughout the United States and abroad, has made PCL one of the largest construction companies in North America, with 10,000 employees and $7.5 billion in sales in 2013. Perhaps most remarkable, however, is that despite the company’s wealth of work and its size, it only recently—in 2006, to be exact—felt the need to create an in-house legal department.
“The caliber of PCL’s management is noteworthy when you consider that 100 years of growth occurred—and largely without incident—before in-house attorneys showed up,” says Steve Richards, the company’s current general counsel, who joined in 2011. According to him, PCL’s legal department got off the ground when the company’s growing project portfolio and new contractual intricacies converged to make having a team of in-house lawyers seem like a good idea. Since taking over for the company’s first general counsel, Richards has worked to expand the role.
By the Numbers
gross sales in 2006
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launch of the legal department
Claims management, Richards says, was the initial impetus for launching the legal department. The top line of the company had grown remarkably—it was well past $3 billion at the time—and claims were ballooning both in volume and size. That was a challenge. “A bad claim can sink not just a project but a company if not properly attended to,” Richards says.
Additionally, deals were becoming more complex. For much of PCL’s history, the firm had used industry templates to draw up its contracts, but as time passed, bespoke models became more common. “Lenders entering the construction arena insisted on terms that would benefit them,” Richards explains, “and a lawyer was needed to navigate through that.”
A popular new construction model was the public-private partnership, or P3, and PCL became actively involved in a good number of them. “They looked nothing like the standard industry templates we’d worked under for a hundred years, and they required negotiation so [that] we could proceed with comfort,” Richards says.
These deals were also growing in size, sometimes with three- or four-year construction schedules and massive budgets. “We often see deals of $100 million, and some go north of $1 billion,” Richards says.
Against the backdrop of these complications, PCL hired its inaugural general counsel, Doug Stollery, whom Richards later succeeded. During their tenures, the scope of the position has expanded, particularly with regards to regulatory compliance matters in the United States. “We have a good book of business with governments, and enforcement agencies began toughening up on the rules that come with doing business with the US government,” Richards says, citing as an example the Federal Acquisition Regulation, which contains, among other things, standard solicitation provisions and contract clauses. “That led to the creation of our ethics platform, which started with a code of conduct, followed by training modules, internal committees, investigation processes, hotlines—all of which was built in the years following the launch of PCL’s law department.”
The benefits of having in-house counsel soon became evident, Richards says, so PCL expanded the department from one to three attorneys during the first few years. And, as the company more than doubled its billings between 2006 and 2014, the law department continued to grow as well. Today it has seven lawyers: three in the United States and four in Canada.
Currently, Richards is fine-tuning the company’s contract-review process. “We only have seven people, but we sign thousands of contracts a year, so we can’t read every one of them,” he says. “So, we’ve triaged the system, turning our attention to the highest-risk contracts, like design-build projects of a certain size, project-finance deals, P3s, and the like.”
Richards, who became general counsel in 2013, enjoys his work immensely, in part because PCL is an employee-owned company. It means more people understand why he’s there and why it’s important. “I’ve worked in public corporations and understand what that looks and feels like, but this is arguably even more demanding,” he says. “With an employee-owned company, scrutiny is higher. Almost every person who works with you on a daily basis is also a shareholder and thus has a natural appetite for understanding how the company’s money is being invested and how ethically the company is doing business.”