The legislature is in the business of solving our problems through cooperation, collaboration, and consensus-building. Right? These days, not many would agree. Instead, from the perspective of an outsider, it looks more like contentiousness, conflict, and confrontation. This is a story about ancient times in which it was possible to work together to solve a complicated problem that was causing grief to many Michiganians.
By 1979, the antiquated Mechanics Lien Act of 1891 was a serious problem for both the construction industry and for consumers. For over 20 years, efforts to fix it were undertaken and abandoned. The many interested parties simply could not agree on the proper solution, so everyone suffered with the consequences.
For the industry—which consists of general and subcontractors, lenders, lawyers, unions, and many others—the old act was a nightmare. The first sentence ran more than 1,000 words, and courts had interpreted it in directly contradictory ways. As a result, no one knew what the law meant, and disputes were expensive and difficult to resolve. According to the Michigan Law Revision Commission, the old law was, “…a veritable obstacle course strewn with pitfalls, uncertainty of achievement, subject to interminable delays, expensive litigation and haphazard results….”
For consumers, the consequences could be devastating. Imagine you had contracted for an addition to your house. You hired a contractor, the work was completed, and you paid the contractor in full. All is good, right? Not necessarily. If the contractor failed—for whatever reason—to pay the subcontractors, suppliers, or lenders, you could find that a lien had been slapped on your property. This would cloud the title, which could interfere with a property sale, but in the worst cases, it could result in you paying again to satisfy the lien. If you failed to do so, your house could be sold out from under you. Sounds like something the legislature should fix.
In 1979, the Michigan Consumers’ Council brought this mess to the attention of Fred Fry, an attorney on the staff of the speaker of the Michigan House of Representatives, and he brought it to me due to my position on the House Consumers’ Committee. Together, we decided that the time had come for action. We thought fixing these problems was a long overdue job of the legislature, so we set about to make that happen. Fortunately, we didn’t know any better. We were told repeatedly that because of the complexity of the issue and the vastly different interests involved, finding a solution was impossible. For us, that just made the challenge more interesting. Our view was that if it wasn’t impossible, it wasn’t worth doing.
Earlier in 1979, Rep. Jelt Sietsema (R-Grand Rapids) had introduced a bill to simply repeal the obsolete act, which horrified the industry. It would have meant that every dispute would have needed to be litigated without any statutory framework at all. For the industry folks, repeal was the nuclear option. We decided to create a different path.
After scurrying about to ensure that we did not step on any legislative toes, we got approval from Speaker of the House Bobby Crim and Lynn Jondahl, chair of the House Consumers Committee, to proceed. Although their expectations were low, they agreed that we could form a subcommittee and convene a workgroup to attack the issue. We did so with some relish.
The subcommittee included me as chair. The other members were both new legislators, Nick Ciaramitaro (D-Roseville) and Fred Dillingham (R-Fowlerville). While our names didn’t imply any sort of political clout, the mandate from Crim and Jondahl did. Thus, when we invited industry advocates and consumers to join the workgroup, virtually all agreed. Both the committee and workgroup were staffed by Fred Fry.
The terms of service on the workgroup were somewhat daunting. We told the industry folks that we would help them solve their problems, but that first they had to help us solve the consumer problem. We scheduled meetings for 7:30 a.m. on Wednesdays and told the parties that we would keep meeting until all the issues were resolved. It took 26 meetings. We made a commitment that we would listen to all parties and consider all perspectives. Political party would not matter; good ideas would win.
The process seemed to take forever. We would start down a path only to find that it did not lead to a solution that worked for all parties. Sometimes, technical flaws would be discovered that made an obvious approach useless; we knew it was better to discover those flaws around the workgroup table than in a courtroom. Occasionally, some parties would dig in their heels and threaten to blow up the process. When that happened, we would roll out our secret weapon: Rep. Jelt Sietsema, a Kent County Democrat. He was happy to remind the players that if we didn’t work it out, he would move the bill to “just repeal the goddam thing.” He was very effective at refocusing the workgroup members.
We did not invent this process. Instead, we borrowed from the toolkit of state Rep. William A. Ryan (D-Detroit), one of our mentors and a legendary figure in Michigan legislative history. He was known for never admitting defeat. When a bill of his failed on the floor of the House and he was asked, “What will you do now that you’ve lost?” He said, “We haven’t lost, we just haven’t won yet.” His persistence, tenacity, and intelligence led to landmark solutions to a wide variety of problems that had faced Michiganians.
In the end, we found a solution that worked for everyone. All decisions were reached by consensus, which we came to define as “85% of the participants can live with 85% of the content.” Unanimity is too hard to achieve and, has been said so often, perfection is the enemy of the good. Our collectively-crafted solution was very good, and we believe it far surpassed the 85/85 standard.
A funny thing happened along the way. Most of the participants—legislators and workgroup members—developed a sense of purpose and camaraderie. The more progress we made, the stronger the commitment to the process became. In the end, many members considered the work to be some of the best they had done in any legislative undertaking. More than 40 years later, many still consider that long process and those early morning meetings to be a highlight of their legislative experience.
So, what was the brilliant solution that we developed through this excruciatingly long process? We trashed the old law and started all over, creating an entirely new Construction Lien Act. The new act set out a clear, consistent process for providing written notices and sworn statements throughout the construction process, thereby ensuring that all parties were fully apprised of progress and of potential liens. The series of notices culminated with waivers of lien that released the parties from liability for possible later claims.
To address the consumer problem, a Construction Lien Recovery Fund was established. Capitalized by a $50 fee on building contractors and subcontractors, it created a vehicle for settling disputes without forcing a consumer to pay twice or to risk losing their home to satisfy a lien. It’s worth noting that, because of the process that led to its development, the contractors actually supported the fund and the fee. In cases where a legal dispute arose, the consumer would simply need to show evidence that they had filed a notice of commencement and had paid the contractor for the work. With that evidence in hand, the court would excuse the homeowner from the proceedings and the attorney general (AG) would step in to defend the Recovery Fund. In cases resulting in a payout from the fund to the aggrieved party, the AG would pursue restitution from the contractor responsible for the payout. It was a simple, elegant solution that satisfied all parties.
The industry and consumer groups supported the bill almost unanimously, and it passed both houses of the legislature overwhelmingly.
Although the fund was eliminated in 2010, the protections for consumers and the improved process for the industry remain in place, 44 years after enactment. Perhaps a solution that persists for decades reveals lessons relevant to today’s legislature. Maybe problems that are considered impossible to solve only look that way because not all the right people are around the table. Maybe folks can commit to a fair and open problem-solving process with the belief that good results may be found. Maybe working long and hard to create consensus among all parties and across party lines can build something that endures. In the end, maybe cooperation, collaboration, and consensus-building can still help the legislature solve tough problems.