Scrap Metal

In Chicago, David Axelrod and Associates saved a local industrial demolition firm by acquiring nearly $1.3 million for it from a chemical plant customer. The demolition company’s dilemma presented a number of industry specific issues. Frequently, in the demolition industry, a demolition firm will be paid the majority of its fee in the form of the scrap material that remains once the demolition is finished. Metal, equipment and various industrial tools can be sold for a substantial profit on the scrap metal market.

Rather than receiving payment in cash, demolition firms are allowed to obtain ownership of the materials, and then sell them on. In this particular instance, the client found out that the chemical plant owner had removed a large quantity of valuable materials from the site of the demolition. These materials had been contractually promised to the client, to serve as the sole payment for the work. Consequently, J&L took a disastrous financial hit.

Furthermore, the chemical plant owner had decided to change the project in a way that caused expensive delays. While the demolition firm was racking up sizable labor and equipment costs, the plant owner proceeded to stop them from commencing the demolition. Then, he refused to pay the firm for its resultant losses. The chemical plant owner claimed that his staff had not removed any unauthorized scrap material, and said that the demolition firm was to blame for the project delays.

At the time that David Axelrod and Associates were hired, the demolition firm was faced with difficult financial circumstances, because of the scrap material removal and the delays. Moreover, the agreement between the 2 firms stipulated that a precise dispute resolution process had to be followed, which required the use of binding, private arbitration. Lastly, the 2 claims needed comprehensive and separate factual evidence, and related to areas of the law that are rarely invoked. This all meant that the demolition firm’s potential compensation had to be constantly measured against what were sure to be large litigation costs.

Initially, David Axelrod and Associates took the important step of persuading the plant owner’s lawyer to agree to Mr. Axelrod’s selection of a particularly capable former judge as arbitrator. Mr. Axelrod knew, from his past work, that this judge was fair, and that he would spend the necessary time mastering the unconventional factual and legal issues. After arbitration started, the law firm repeatedly dismissed the chemical plant owner’s attempts to block the evidence the demolition firm required to support its’ argument. In the end, J&L managed to make a case for damages that the arbitrator had to recognize was compelling.

Once the arbitration process started to approach the 14 day mark, the chemical plant owner suggested negotiating initially part, and then all, of the disputed claims. David Axelrod and Associates were able to negotiate a settlement of nearly $1.3 million, soon after the 2nd mediation meeting. This financial settlement was crucial, in that it allowed the client to carry on running a profitable business.

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