Each winter professional snow and ice management contractors must walk a fine line between entering into a mutually beneficial relationship with their clients and being dragged into a one-sided agreements with little upside and a lot of risk and potential liability.
A great deal has changed within the industry over the years, from equipment and material to best practices and – most importantly – with contract language and who’s responsible for the risk associated with snow and ice management. We selected a group of industry leaders of varying backgrounds to gain more insight on this vital issue and to better understand how to best manage snow and ice contracts.
Q: How has the nature of snow and ice management contracts changed for you in your market over the last five to 10 years?
Troy Clogg, owner of Troy Clogg Landscape Associates in Wixom, Mich., says the process has become much more onerous. “Contractors, as a whole, have lost control and it’s become much less of a partnership. Indemnification has changed. Payment terms have changed.
“The business model is changing back. More clients are ‘partners’ again. The industry is shaking up. Use the ‘salt scare’ drama to turn the tide in the industry. Talk to the client. Drama drives change – drama and pain.”
Steven Jomides, founder and president of Lawns by Yorkshire in Westwood, N.J., says contracts and/or requests for proposals (RFP) are more unilateral than ever. “Owners and/or third-party managers have looked to shift liability onto the contractor.
“Contracts are also using verbiage that looks to define the definition of snow as, ‘freezing rain, sleet, ice snow, etc.’… Snow and ice are treated differently. They also look to use words and phrases such as ‘completely,’ ‘curb to curb’ and ‘maintain safe conditions.’”
Tom Canete, president and CEO of Canete Snow Management in Wayne, N.J.: “New Jersey is currently ranked No. 1 in the nation for frivolous slip-and-fall law suits, so having an Ironclad snow contract is extremely important these days. Lawyers are making a lot of money off of lawsuits due to vague or basic contractor contracts when a lawsuit is run through the judicial system.
“Always have your attorney or insurance agent read and update your snow contracts every year or two to make sure you are in compliance with current lawsuits that have been awarded, settled or thrown out of court…The devil is in the details.”
Kimberly Jewell, general manager of GroundMasters in Denver, Colo., is entering her 16th season in the snow-and-ice-management industry, and she says contract language is ever-changing. “For contractors in the snow removal industry, it goes without saying that the litigious world in which we live has, without a doubt, been the driving force. And that is by no means to infer that we are not willing to take responsibility for our own actions as an organization ... quite the contrary ... we will and we do. The challenge we face is, quite simply, the verbiage within the contract language that could, in any way, be misunderstood or misconstrued.”
Agreements have become more detailed over the years, says Michael Schaal, president and founder of Two Brothers Lawn & Snow in Milwaukee, Wis. “My company has only been in business for 10 years. In the beginning, the contract was signed to set the price; now every contract spells out the customers’ needs and the job we are to perform. It took a few conversations with a lawyer friend to understand that, but without a contract, who is to know what the exact job is, if the customer has an issue with a charge or why something was or was not done? The contract spells it all out and the signature seals the deal to protect you.”
More potential clients are going to national snow maintenance providers, says Josh Przygocki, owner of Sassy Grass Snow Management in Leslie, Mich. “This makes the process of documenting, reporting, invoicing the services provided difficult because [of] all the calling systems, text messaging, more paperwork floating around in trucks. It’s time consuming holding up a truck/employee from starting next site. The billing is much more difficult with added processes, papers and confirmation codes required or combination of more than one required. If you are missing a piece of paper or number – even though you provided the service – you don’t get paid.”
Q: What areas of a snow-and-ice contract do you hope to maintain the most control?
There are so many pieces to snow and ice management contracts, but if Clogg had to pick one ... the out clause has to be the same for both parties. “It’s not a three-year contract if the client can get out in three days.”
“If you’re not willing to talk, is that really a compromise?” Clogg asks about the contractor-client partnership. “Compromise is when both parties are equally uncomfortable ... and satisfied.”
Jomides: “The indemnification clause is most important.”
Canete: “After a snow event, when our properties have been plowed, salted and inspected, we cannot be held responsible for a slip-and-falls days after ... as a result of a property manager not notifying us of solar melting during the day and refreeze at night or wind-blown snow off roofs back on the lot, etc.”
The legal part which protects the customer and the company is the most important part, says Schaal. “And explaining that so the customer understands it is the hardest part. It is very important to understand, because it protects both parties if any problems occur.”
Przygocki: “Maintaining that I make the decision of when it’s time to service an account such as the ‘trigger depth’ is of high importance. We as professionals know when weather conditions and/or site conditions require services to start and when to stop throughout a storm. If we aren’t making the decision on an account of when to service, and instead have to wait for a request by the customer, the No. 1 risk is having an account needing service left vulnerable to slip and falls.”
How do you find a compromise with property managers and owners who either want to use their own contracts or are stubborn about contract language or particular areas of contracts?
This is a challenge and is handled on a case-by-case basis, says Jomides. “The main sticking point usually centers on the indemnification clause. Most times we can achieve a happy medium, but sometimes we cannot and have actually signed a contract provided by the client as long as we feel we can properly manage the risk.”
Clogg rarely uses the client’s contract these days, though that hasn’t always been the history, adding that he uses “honest and transparent” knowledge of the industry and sends them the numbers he needs. “If they don’t want to talk, what kind of relationship can it be? That’s never healthy.”
Canete: “We basically will read their contract and cross off language we do not feel comfortable with. Most of the time the client will allow us to dismiss the language we feel is unacceptable to us. We can negotiate and try to compromise any remaining contract verbiage the client does not want to remove. It basically comes down to how bad do you want this account and if the risk is worth the money.”
A decade ago, Jewell says GroundMasters’ contract was the contract used. “So we could modify it as necessary to meet a client’s criteria and we knew the level of expectation. However, this is no longer the case, as in almost 90 percent of all agreements it is now the property manager’s contract, dictated by their organization, or the use of the contractor’s as an ‘exhibit.’ However, it is secondary to the clients and their contracts ultimately prevail in the case of conflict.
“The flaw in all of this is that the contracts our clients dictate us to use are drafted by their legal department and is often so cookie cutter in design, never read or even understood by the property manager or ambiguous and contradictory to what the manager says they need or want for their particular site.”
Schaal: “I have been lucky enough to not have any major conflicts with a customer wanting to use their own contract. If there is an issue with the way something is written in my contract, the customer and I will add or take out information so both have a same understanding.”
Przygocki: “When they want to use their own contracts, there is no compromising. If we want to change something, they will just go with someone else to do the work, but if it’s our contract, it’s OK to change.”
How do you work through differences in contract language without losing the account?
Do we wish to control the wording of the contract, asks Jewell. “No, but what we do desire is to hone in on what the client really needs and wants and, this is a biggie, what the client is willing to pay in order to achieve their needs and wants.”
She points to an earlier version of their contract that stated the company would service sites on holidays at an additional cost of 25 percent. When Denver was nailed with back-to back-blizzards late one December, many people were required to work Christmas Eve and/or Christmas Day as well as New Year’s Day. Upon receiving the bill, some clients demanded the charges be reduced to normal rates. The paragraph about holidays within the GroundMasters contract was disregarded by the property manager. What was the lesson learned on Jewell’s end to avoid future conflict?
“We determined it is not only necessary to relay information, but at times to require the customer to become ‘engaged’ in the contract. We did this by simply adding verbiage within our contract that requires the manager to indicate whether their site is open on holidays, and if not, when they truly want/need to be serviced. Result, no more misunderstandings.”
Clogg: “If their demands are tough, compensate me accordingly. Give me time and money to accomplish a goal and I’ll do it.”
Jomides: “In some cases we end up having to walk away from bids. This is something we prefer not to do, but does occur.”
For Schaal, relationships are No. 1. “Being a family-owned company, every customer counts. Contracts are written and signed to protect both parties, not to benefit the one side. As owner, I personally meet with and talk to every customer and walk the property so we are on the same page. They know what I have in mind and if it’s not what they want, I change or I don’t get the contract. Each contract has a summary of what was discussed and, once agreed on, both parties sign at the bottom.”
Przygocki: “The customer is always right. You suck it up and do the work or else you will not be out working. Especially when it’s a customer that provided the contract.”
When is walking away from an account – due to differences over a contract – the most feasible action?
Walking away from an account can be a good thing if there are non-agreeable issues within the contract, says Canete. For example: The client must give the contractor the approval to start snow-and-ice services; client’s bad payment history or long payment terms; salt is to be applied only upon client approval; only one salt application is to be applied per event; and no salting will be done by contractor. “There are more issues that can cause liability issues for the contractor, but these are a few important ones to steer away from.”
It’s on a case-by-case basis, Clogg says, acknowledging contractors starving to get work may be forced to take some unhealthy terms. “Starting with a difficult contract isn’t easy, but not necessarily a deal breaker. Don’t need a new client relationship to start badly.”
Jomides: “We need to weigh the exposure, how much we can control and the upside on the finance side. If we feel the site has heavy pedestrian activity 24/7 and our exposure for a slip and fall is high, we may pass on this, unless the dollars are there to fund proper service.”
Jewell: “As a snow and ice management company, we haven’t walked away from a contract, or a client because of the contract language. That is not to say that we wouldn’t if we could not come to agreeable terms, but if you strive to truly understand the level of expectation of services on the front side, and ensure it’s spelled out within the contract language on the back side, all parties can truly win.”
Schaal: “The only time I have walked away from a contract is when the customer wants me to lower the price to compete with a much smaller company, knowing they cannot complete the job but wants to work with a reputable company. That is when the contract helps to give the customer the piece of mind that the work is completed 100 percent every time.”
Przygocki: “If you’re unable to come to an agreement; if you foresee that potential differences may occur later in season… then the account will not be profitable. And if we are unable to make the decision on when to service because they want it ‘request only’ or a ‘trigger depth’ of 4 inches.”
According to Clogg, a shift in the way the industry operates – returning to a truer sense of a partnership between client and contractor – will take time and won’t come easily. The first step is having a difficult conversation with the client. “People feel like we have to do the same old thing. The only way it’s going to change is if it hurts. People change with pain, crisis and drama. Ask for help… Be honest and transparent. You’re in control.”
Rob Thomas is a Cleveland-based writer and frequent Snow Magazine contributor.