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Business disputes may become more common in some sectors in 2026, but the available evidence does not prove a nationwide surge caused solely by a worsening economy. A March 2026 report from the Rochester Business Journal describes local attorneys seeing more breach-of-contract and business litigation amid economic uncertainty. A separate BRG survey found that 69% of respondents expected M&A dispute volume to increase in 2025, while Freshfields expects technology-related arbitration matters to continue in 2026. Those are different kinds of evidence, from different periods and industries.
For construction companies, the practical issue is less whether every region is experiencing an “uptick” and more how financial pressure can turn ordinary project friction into a claim. Higher borrowing costs, supply disruption, cost overruns, scarce labor or materials, tighter margins, missed payments and disputed performance measures can all expose gaps in contracts. The best response is disciplined contract review, better project records and early, informed intervention before a disagreement becomes expensive litigation or arbitration.
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Is there really an uptick in business disputes this year?
There is evidence of increased concern and activity in particular settings, not a comprehensive count showing that disputes are rising everywhere. The Rochester Business Journal’s March 3, 2026 report quotes Rochester-area attorneys who said breach-of-contract and business litigation issues were increasing during economic uncertainty. That is a local practitioner observation, not a national or global case-count series.
BRG’s 2025 M&A Disputes Report provides another signal: 69% of survey respondents expected M&A dispute volume to increase in 2025. The figure is a respondent expectation made for 2025; it does not establish what happened in 2026. In the same survey, 45% anticipated more financial-services M&A dispute activity, a sector-specific expectation that should not be generalized to construction.
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Freshfields’ 2026 arbitration outlook says technology-related disputes, including post-M&A and digital-asset matters, are likely to continue. It also cites 180,000 filings against technology companies in 2024, attributing that figure to the American Arbitration Association. Filings are not the same as unique claimants, resolved cases or a measure of all commercial disputes.
Taken together, the sources support a cautious conclusion: financial pressure and complex transactions can create conditions for more conflicts, and some lawyers and survey respondents expect that risk to rise. They do not prove that the economy alone is causing a universal increase.
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How does a weaker economy turn project friction into a contract dispute?
Economic stress changes the consequences of a small miss. When a contractor, owner, supplier or lender has little margin for delay, a disputed invoice or one-week schedule slip can threaten payroll, financing covenants or a project’s completion date. The Rochester attorneys described several mechanisms that can make contractual performance harder.
- Higher interest rates: More expensive project debt and working-capital lines can make delayed payment materially more damaging. Parties may scrutinize payment timing, retainage, change orders and interest provisions.
- Supply-chain disruption and scarcity: If a specified material is unavailable, a replacement may cost more or fail to meet the original specification. The resulting dispute can involve notice, substitution rights, delay responsibility and the definition of a force-majeure event.
- Cost overruns and tighter margins: A fixed-price commitment becomes harder to absorb when labor, fuel or materials rise unexpectedly. Parties may disagree about escalation clauses, allowances, contingencies and whether a change was authorized.
- Missed payments and defaults: Cash-flow pressure can produce late progress payments, unpaid subcontractor invoices or demands to draw security. Those events can trigger contractual notices, suspension rights and claims for fees or interest.
- Performance metrics: Owners and general contractors may enforce schedule, quality, productivity or commissioning targets more aggressively when a project is already under financial pressure. The disagreement often turns on how the metric was measured and what assumptions were documented.
- Business strategy and owner conflict: The Rochester report also points to internal business dynamics and a greater willingness to enforce negotiated rights. A dispute may therefore reflect a strategic decision, not simply an inability to pay.
These are practitioner observations, not a quantified causal study. They describe why a stressed environment can expose ambiguity that was tolerable when schedules and budgets had more slack.
Which construction disputes are most exposed?
Construction contracts contain many interfaces where economic pressure can create competing interpretations. The following categories deserve particular attention.
| Dispute area | Typical pressure point | Records that matter |
|---|---|---|
| Payment and retainage | Late payment, disputed percent complete, withheld retainage or an owner’s financing problem | Payment applications, approvals, lien waivers, notices, bank or funding communications and the contract’s payment timetable |
| Change orders and scope | Work performed before written authorization, design development or an owner-requested acceleration | Drawings and revisions, requests for information, written directives, daily reports, pricing breakdowns and contemporaneous notice |
| Material escalation and substitution | Price increases, unavailable products or a substitute that affects schedule or performance | Supplier quotations, purchase orders, delivery notices, approved substitutions, specification compliance and mitigation efforts |
| Delay and disruption | Late design information, access restrictions, labor shortages, weather, utility conflicts or resequencing | Baseline and updated schedules, notices, site diaries, photographs, meeting minutes, productivity data and critical-path analysis |
| Defects and testing | Failed inspections, commissioning problems or disagreement over whether work meets the required standard | Specifications, submittals, test results, punch lists, inspection records, cure notices and corrective-work costs |
| Subcontractor and supplier insolvency | A lower-tier party cannot complete its scope or pay its own vendors | Subcontract terms, bonds or guarantees, payment records, default notices, replacement bids and evidence of completion costs |
| Claims after a business transaction | Acquisition-related obligations, indemnities, earnouts or post-closing responsibilities | Purchase agreement, completion accounts, representations and warranties, disclosure schedules and post-closing correspondence |
The last row is more closely associated with M&A than a conventional project claim, but it matters to construction groups that acquire a contractor, developer or specialty business. BRG identifies purchase-price agreements and completion accounts, indemnities, earnouts, post-closing obligations, and representations and warranties as recurring M&A dispute terms. Its respondents also frequently cited financial and operational performance as an underlying factor.
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What does the M&A evidence add to the construction picture?
M&A data should not be presented as construction litigation data, but it illustrates how economic expectations can affect contractual interpretation. A buyer may value a business on projected earnings, backlog or working capital. If performance falls after signing or closing, the parties may disagree about a completion account, an earnout calculation or the scope of an indemnity. In a construction company, that disagreement can be tied to project losses, unapproved claims, warranty reserves or delayed receivables.
BRG’s 69% expectation for increased M&A disputes in 2025 is therefore useful as a risk indicator, not a 2026 count. A separate BRG discussion of a possible downturn describes historical mechanisms in which debt-financed acquisitions became contentious after a lender took control of an asset and equity holders disagreed with the sale strategy. It also notes that distressed deals can leave less time for due diligence. Those examples are historical context, not a current forecast and not a reason to assume every distressed transaction will produce a claim.
What should a construction firm do before a dispute is filed?
Early preparation is usually cheaper than reconstructing events after memories and records have deteriorated. The Rochester attorneys’ practical recommendations are to revisit long-term and standard-form contracts, consult counsel when entering agreements and seek early resolution where possible. A construction-focused process can make those recommendations concrete.
- Inventory the contracts that carry the most exposure. Start with fixed-price, guaranteed-maximum-price, design-build, large subcontract, supply and financing agreements. Note renewal dates, notice deadlines, escalation language, payment conditions, dispute forums, insurance requirements and termination rights.
- Build a notice calendar. Put contractual deadlines for delay, differing-site-condition, payment, suspension, change and force-majeure notices on the project schedule. Assign an owner and backup for each notice. A good claim can be weakened if the contract’s notice procedure is ignored.
- Define who can authorize extra work. Tell field staff which written or electronic directives qualify as authorization and how emergency work is documented. If work proceeds without a formal change order, preserve the instruction, the reason for acting and the cost and time effect.
- Track cost and schedule causation contemporaneously. Separate base-scope costs from change-order costs, acceleration, inefficiency and delay. Update schedules and keep daily records that connect an event to labor, equipment, material and completion impacts.
- Review payment-chain health. Monitor aging receivables, supplier notices, subcontractor payment applications and evidence of funding. Escalate a pattern of late payment before it becomes a default or a project stoppage.
- Check flow-down and conflict clauses. Confirm that prime-contract obligations, notice periods, indemnities, dispute procedures and insurance requirements are passed to subcontractors where intended. Inconsistent terms can create gaps between an owner claim and a subcontractor recovery.
- Preserve records when a conflict appears. Issue a focused document-preservation instruction covering email, project-management platforms, text messages, drawings, schedules, photographs, invoices and meeting recordings. Do not delete or rewrite routine records to make the story look cleaner.
- Escalate for legal advice at the right trigger. Involve qualified counsel before signing a high-value or unusual contract, when a notice of default arrives, when a party threatens suspension or termination, or when a claim could affect multiple projects. Counsel can assess the governing law and the contract’s forum; this article is not jurisdiction-specific legal advice.
How should firms revisit long-term and standard-form contracts?
A contract review should test the document against the conditions the parties now face, not merely confirm that a familiar template was reused. Compare the written allocation of risk with actual project practice.
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Check whether the agreement has a material-price adjustment, index, allowance, substitution or force-majeure mechanism. Identify who bears a price increase between bid and purchase, what evidence is required and whether notice must precede the cost. If the clause is silent, do not assume that general economic hardship automatically changes the price; obtain advice on the governing law and the contract’s exact language.
Payment and security
Map the payment application process, approval timing, retainage, pay-if-paid or pay-when-paid wording where applicable, suspension rights, interest and security instruments. Make sure the field and accounting teams can prove when an application was submitted, what was rejected and why.
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Schedule and relief
Clarify the baseline schedule, updates, float treatment, owner-caused delay, concurrent delay, acceleration and time-extension procedure. A clause that requires prompt notice should be paired with an internal process that can produce a factual notice quickly.
Scope and performance standards
Resolve conflicts among drawings, specifications, addenda, proposals and incorporated standards. Define objective acceptance tests and identify who supplies the data. Vague “satisfactory” performance language is harder to administer when the parties’ financial incentives diverge.
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Dispute process
Confirm the sequence for project-level escalation, mediation, arbitration or court proceedings, along with venue, governing law, consolidation and emergency-relief provisions. A clause copied from another project may be unsuitable for the parties, location or financing structure of the current job.
When is early resolution better than immediate litigation?
Early resolution is not the same as conceding a claim. It means identifying the commercial objective, preserving rights and exploring a solution before legal fees and disruption consume the value at stake. Options can include a senior-management meeting, a neutral facilitator, a targeted schedule or cost review, a partial payment of undisputed sums, a written change order, or a standstill while records are exchanged.
Use a structured approach: state the disputed obligation, identify the documents that support each side, separate admitted from disputed amounts, estimate the cost and time of each remedy, and set a deadline for the next decision. Keep settlement communications and formal notices distinct where local law requires different treatment. A lawyer can advise how to preserve privilege and procedural rights.
Early settlement is less attractive when a party needs urgent injunctive relief, a limitation period is close, records are at risk, or the counterparty is preparing to dissipate assets. Those circumstances call for prompt legal advice rather than an informal conversation that could miss a deadline.
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Should a construction dispute go to arbitration or court?
There is no universal answer. The contract may already require one forum, and the appropriate choice depends on the clause, governing law, parties, evidence, urgency, confidentiality needs and available remedies. Arbitration can provide a private, specialized process, while court proceedings may offer broader procedural tools or appeal rights in some jurisdictions; the trade-offs are contract- and jurisdiction-specific.
Freshfields’ 2026 technology-arbitration outlook quotes Elliot Friedman saying that, amid tariffs, sanctions, geopolitical shifts and rapid regulatory change, arbitration can offer “a degree of commerciality and objectivity” that national courts in politically sensitive jurisdictions may not. That observation concerns global technology disputes, not a finding that arbitration is superior for construction. Construction parties should read their own dispute clause and obtain local advice before choosing a forum.
Independent reader supportYour contribution helps us test, update, and keep practical guides available for everyone.What should owners, general contractors and subcontractors watch for?
Owners should verify funding, make realistic payment commitments, issue timely decisions and avoid informal scope changes that later look like directives. If a project is distressed, document the business reason for a change in sequencing or scope and communicate it consistently.
General contractors should align the prime contract with subcontracts, maintain a reliable change-management process and protect the notice rights needed to pass through owner-caused delay or cost. They should also investigate a subcontractor’s financial warning signs without making unsupported accusations that could create a separate claim.
Subcontractors and suppliers should preserve delivery promises, approved submittals, payment applications and evidence of delay or disruption. Before agreeing to a discount, acceleration or substitution, document whether it changes scope, schedule, warranty or payment rights.
All three groups benefit from the same discipline: one factual project record, clear authority for commitments and prompt escalation of deviations from the contract.
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What does the current evidence not prove?
It does not prove that disputes are increasing in every country, state, construction segment or court system. It does not show that a worsening economy is the sole cause. The Rochester report identifies economic pressure alongside internal business dynamics and a stronger willingness to enforce rights. BRG’s percentages are survey expectations tied to 2025 and M&A. Freshfields’ outlook is focused on technology arbitration, and its 180,000 figure is an attributed 2024 filing count against technology companies, not a total for commercial litigation.
There is also no comprehensive current 2026 case-count series in the supplied evidence that would support a precise growth rate. Businesses should therefore use the reports as warning signals and planning prompts, not as proof that a claim is inevitable or that a particular remedy will succeed.
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Economic uncertainty can make contract expectations harder to meet and more valuable to enforce. For construction firms, the immediate risk is concentrated in payment, escalation, supply, schedule, scope, performance and insolvency interfaces. Reviewing those terms, documenting events as they occur and seeking advice before signing or defaulting can reduce avoidable surprises.
The sound posture is neither panic nor complacency: assume that a narrow disagreement can become material when margins are tight, preserve the evidence that explains what happened, and pursue an informed early resolution while protecting contractual rights. That approach remains sensible whether local dispute activity rises, stays level or varies by project and sector.
Frequently Asked Questions
Are construction disputes actually rising nationwide in 2026?
The supplied evidence cannot establish a nationwide increase. It includes a Rochester-area attorney observation, a 2025 M&A survey expectation and a 2026 technology-arbitration outlook, each covering different places, industries and periods.
Can inflation or higher material prices automatically excuse a construction delay?
Not automatically. Whether price or availability problems provide relief depends on the contract’s escalation, substitution, force-majeure and notice language, plus the governing law and the facts. A party should document the event and obtain jurisdiction-specific advice before stopping work or refusing performance.
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One free scan finds every outdated or missing driver and matches the right update for your exact hardware.Free scan · exact hardware matchWhat project records are most useful in a payment or delay claim?
Keep the executed contract and revisions, approved schedules, daily reports, photographs, delivery records, payment applications, change directives, meeting minutes and contemporaneous notices. Records are most persuasive when they connect a specific event to a measurable cost, schedule or performance effect.
Should a company renegotiate every construction contract during an economic slowdown?
No. Prioritize contracts with fixed prices, long durations, major supply exposure, weak payment security, unusual notice requirements or financially stressed counterparties. Review the risk allocation and operational reality first, then amend terms only where both sides clearly understand the change.
