In a typical year, construction law doesn’t change all that much—but so far, 2025 has been anything but a typical year. Before the Trump administration reached its first-100-days mark, attorneys were already combing through the language of nearly 130 executive orders. While executive orders are nothing new—President Biden signed more than 160, and President Trump signed more than 200 in his first term—many of the recent actions are fundamentally changing the way that construction firms operate.
How should you manage an uptick in uncertainty? Which cases are moving through the courts that could impact your jobsites? And what can you do to increase your odds of avoiding mediation, arbitration or litigation? There are no easy answers to any of these questions, but following the lead of some of the industry’s brightest legal minds—all of whom practice among CE’s most recent edition of the Top 50 Construction Law Firms—can put you on a course for success.
TARIFF TALK
When the Trump Administration unveiled plans to impose a sweeping new set of tariffs in the spring, the vast majority of construction firms felt a figurative crack in their foundations: In April, around 80% of ABC contractors reported that suppliers had notified them of price increases, and nearly 20% of them had projects paused or interrupted. As leaders continue to worry about what those price increases might do to their business models, they’re spending more time talking to their attorneys.
Gary Stein, co-managing partner of Peckar & Abramson’s Miami office and a member of the firm’s executive committee, says his clients are very concerned. As Stein analyzes the increased tariffs—the majority of which were on a 90-day pause as this issue went to print with a notable exception of a 145% tariff on most Chinese goods—he separates projects into two buckets: those that are under contract and underway to some degree and those that are still being negotiated. In both cases, however, his advice is to “deal with the issue head on with the owner.”
“If you have a contract, talk to your client about how best to bring it to the finish line where the owner and the contractor can share in the pain to some degree, despite what the contract may say, to avoid slamming fists down,” Stein says. “Without a contract in place, discuss a fair way of dealing with it to try to apportion the risk. It’s difficult to do it fairly when you don’t know what the full impact is going to be, but the parties should be engaged in trying to do the right thing by each other.”
For future contracts, Levy believes that construction parties should work with the developer to protect themselves from the risk of uncapped price escalation. “If we’re going to sign a contract on April 15, we can see the price of lumber on April 15 and say that’s our benchmark,” Levy says. “You can insert a clause that says the contractor will accept the risk of price escalation of 10%, and the owner has to give a change order for anything beyond that.” Levy says that contracts should also account for movement in the opposite direction. If, for example, a tariff is suspended and the price decreases, the owner should get a discount. “What’s good for the contractor,” he says, “should also be good for the owner.”
And speaking of good, some members of the industry believe that the tariffs will have positive effects. Ed Seglias, co-CEO and construction partner at Cohen Seglias, points out that there are portions of the building ecosystem that favor the Trump administration’s initiatives.
“The steel mills and the fabricators have been undercut in pricing by imported steel—particularly from China, Canada or Mexico,” Seglias, who also serves as general counsel for the American Institute of Steel Construction, says. “Their cost structure is different due to government support for those industries, and as a result, they’re able to sell steel in situations below what a competitive fabricator could produce it for in the United States.”
DIGGIN IN THEIR HEELS
Despite all the changes that have shaken up the industry this year, there is one constant that will always be part of construction: Projects will fall off track, parties will disagree and problems will arise. However, those disputes are looking a bit different these days—and not in a good way. Seglias says he has noticed a trend of parties who are in contract disputes “digging in harder and deeper.”
“Getting cases to resolve has never been easy, but it seems to be more difficult than it used to be,” he says. “In the mediation process, I’m having less initial success than we have had in the past.”
Seglias believes that economic factors including supply-chain volatility and pricing are playing a role as both sides of the bargaining table face increased pressure to manage their bottom lines. Despite spending full days in mediation without making any meaningful progress, Seglias points to a reason to be hopeful for a smoother process in the future. “I believe AI may help us,” he says. “Commercial cases like ours are heavily documented with drawings and specifications, contracts, project records, correspondence, meetings minutes and more.”
All those documents translate to very valuable inputs for AI. As that technology gets more sophisticated, Seglias expects that attorneys will be able to share AI-generated narratives that offer a forecast of which party will win and by how much. That kind of third-party opinion may be able to encourage parties to agree to a settlement rather than dragging it out in arbitration. He adds that AI is already playing a role in fueling greater efficiencies in the construction legal process, too.
“It’s helped our firm with summation of depositions,” he says. “At one point in time, it could easily take a paralegal a full day to read through a 200-page transcript. Now, we can put it into an AI program that can generate a 10-page summary in a few minutes. It’s a big time saver.”
TRUST BUT VERIFY
In addition to talking to surety bond brokers, Levy says that he has needed to encourage clients to double check that an owner really has the cash to cover the project. For contractors, that can be an uncomfortable conversation. After all, if you’re dealing with a big company that has promised a big budget, you don’t want to worry about offending them with a request to prove they’re good for it. However, Levy says that Article 2.2 of the AIA General Conditions of the Contract for Construction gives the contractor the ability to request additional “assurance that they have financial arrangements in place to complete the work” at the start of a job or after a large change order.
“If the owner is unable to provide that financial assurance, it allows the contractor to suspend performance until that assurance can be furnished,” Levy says. “It’s important to diplomatically open this discussion with the developer. Make it clear that you’re very excited to complete the $80-million project, but that you’ll need to know due to these volatile circumstances that you’re covered for payment.”
THE FUTURE OF DEI
These three letters started appearing on just about every company’s website after the spring of 2020. Now, they’re beginning to disappear. As major companies like Meta, Target and Walmart scale back their corporate diversity, equity and inclusion initiatives, John Neary, co-chair of Akerman’s Construction Practice Group, says that federal contractors are trying to sift through “the complete reversal the new administration has had with respect to federal DEI initiatives.”
While the Office of Federal Contract Compliance Programs had been conducting increased audits on construction contractors during the Biden administration, Neary says that all those open audits and investigations have been closed. “These developments could impact the way federal contractors and others address employment activity with respect to applicants, hires, promotions, layoffs, recalls and terminations,” he says.
Keeley McCarty, a Washington, D.C.-based partner at Fox Rothschild, adds that her clients have been struggling to fully understand the Trump administration’s plan to end all DEI programs across the federal government. “There’s a collective cautiousness about how the Trump administration’s DEI executive orders will be enforced,” McCarty says. “What exactly constitutes illegal DEI is a question I’m receiving a lot.”
McCarty says that many of her clients are working to distinguish what is protected under free speech versus what violates anti-discrimination statutes. “Under the statutes, you’re not allowed to make employment decisions or take employment-related actions on the basis of a protected characteristic,” McCarty says. “That means you can’t give employees special promotions or special opportunities. However, in terms of messaging that highlights inclusion is important to your company’s values, that’s free speech as long as you’re not discriminating to accomplish it.”
RED LIGHT, GREEN LIGHT
As some firms navigate the murky waters of attracting historically underrepresented communities, others are dealing with a different challenge: determining how to move forward as a company owned and operated by members of one of those communities. When Levy recently spoke to the Wisconsin chapter of the National Association of Minority Contractors, he compared today’s business environment to a game that many construction leaders played long before any of them were familiar with change orders, delays and supply-chain challenges. “We are in a period of time that reminds me of playing red light, green light in grade school,” Levy says.
To stay on top of things, Levy advises anticipating transitions, focusing on strategic movements and using available tools wisely. And for minority contractors, Levy pointed out that certain tools have been available for many years: programs designed to provide certified disadvantaged business enterprises the opportunity to participate in projects through the setting of goals for small-business involvement.
“The minority or developing business certification should amplify a company’s tool kit, but not be relied on as a primary attribute,” Levy says. “In any climate—but particularly now—small and developing contractors must base their value propositions on being the best in their trades. Those certifications are under scrutiny and can be impacted with the stroke of a pen on an executive order.”
MONITORING IMMIGRATION ACTIONS
While it’s tough to pinpoint an exact number of undocumented immigrants who work on construction jobsites today, it’s safe to say there are plenty who lack legal resident status and make an easy target for deportation initiatives. “In Florida, there are a lot of immigrants working in the industry,” Stein says, “and there’s a concern that there will be ICE raids that target construction sites.”
For now, the ICE impact has been fairly muted. The agency publicized an operation on a construction project in Port of Lake Charles, Louisiana, in the middle of March that resulted in the arrest of 11 undocumented workers from Mexico, Nicaragua and Ecuador; otherwise, construction firms have reported minimal impact. In February, a survey conducted by John Burns Research and Consulting showed that 11% of homebuilders had felt labor force impacts due to deportations and changes in immigration policy.
However, Stein believes that the fear of deportation alone may add to the challenge of finding labor that is creating so many problems for firms. “I think there’s a concern that the increased scrutiny on immigration might be scaring some people off that might otherwise be available to work in the construction industry,” he says.
THE GOOD, THE BAD AND THE UNCERTAIN
The good news: PLAs may eventually be gone forever. The bad news: Government efficiency efforts may have some negative impacts. The uncertain news: What’s going to happen to FAR?
The year kicked off on a bright note when the Court of Federal Claims determined that the project labor agreement requirement in place for federal contracts of $35 million or more violates the Competition in Contracting Act. A few of McCarty’s colleagues represented some of the contractors in the case, MVL USA Inc., et al. v. United States. McCarty points out that it is a limited holding without an injunction, but it puts PLA viability in question with the potential for further challenges that may eventually eliminate it for good. It’s an issue that Associated Builders and Contractors has worked relentlessly to address, testifying before Congress about the downsides of PLAs—including preventing fair and open competition as well as the potential to increase costs by 12-20%.
As the industry celebrates that progress, however, there are new challenges impacting federal contractors. Neary says that he has seen an increase in terminations for convenience, suspensions/stop-work orders and contract modifications in recent months. The “flurry of activity” is related to directives from the Department of Government Efficiency to review and cancel contracts. “Federal agencies have delayed payments and other Executive Order and DOGE-related impacts—as well as mass federal employee layoffs—have given rise to various claim issues,” Neary says. “Many contractors have been left perplexed and unsure how to proceed in response to these developments.”
As contractors work to make immediate adjustments and determine how to best proceed in the current environment, McCarty is also looking well into the future to understand the long-term impacts of other executive orders, including an effort to completely overhaul the Federal Acquisition Regulation. “I don’t know exactly what the overhaul will look like, but my understanding is that they’re trying to cut it down in size and simplify the requirements so that there is less red tape,” McCarty says. “It’s going to be interesting to see how they do that.”
TOOLS TO PROTECT THE BOTTOM LINE
As many firms worry about a potential economic slowdown, Levy says there are other instruments that can help mitigate risk and ensure that money keeps flowing through a project:
Release of retainage bonds: “These can be useful for subs that are early in on a project,” Levy says. “The steel erector and the excavator, for example, can get the money earlier by posting the bond.”
Advanced payment bonds: While Levy says these are more common in manufacturing, these bonds can be useful with large payments made on materials. The bond guarantees these upfront funds will only be used for that specific project.
Supply bonds: These guarantee a supplier will produce the materials or specialty components for a specific project. While Levy says the bond doesn’t cover installation, these are used for large material suppliers or specialty materials when those vendors require upfront payments to begin performing their duty of supply.
STAGE SPOTLIGHT: RETHINKING REPOSE LAWS
Construction firms are all aware of the implications of a statute of repose, and the runway toward being able to breathe a sigh of relief looks different depending on where the work is completed. In Florida, the sky is looking a bit brighter after a move to reduce the statute of repose to seven years—three years shorter than the state’s previous window for lawsuits after discovering a defect in construction work.
“Obviously, one of the benefits is that after seven years, contractors don’t have to worry about those kinds of claims being brought against them,” Stein says. “There are positive residual effects, too. We’ve seen the insurance companies bring their premiums down because now they’re taking on risk for seven years as opposed to a full decade.”
Head north to Pennsylvania, and there’s another case that may change the industry. There, Seglias is keeping a close eye on Aloia v. Diament Building Corporation. The case is pending review in the Pennsylvania Supreme Court and could lead to potential changes to the state’s 12-year statute of repose. While it’s a homeowner’s case, Seglias says it could have “far-ranging ramifications.” The plaintiff argued that because the contractor violated the building code, it did not lawfully construct the home. Because of that violation, the homeowner believes the builder is not entitled to the benefit of the expiration of the statute of repose.
“It would be a big loss and open up a lot of liability exposure [for the larger industry] if the court says the defendant can’t claim the statute due to violating the building code,” Seglias says. “I don’t think that the lawfully performed language in the statute is going to be enough for the plaintiffs, but the Pennsylvania Supreme Court could see it another way.”
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