Now, assuming that NONE of the steps will ever be 'sitting' in water due to the high water table at the lake, then as long as they DON'T set the timbers on the dirt, you should be fine.
Ask them what the 'base' will be for the timbers and ask how drainage will occur. The KEYS to a stable, long-lasting retaining wall are: Landscape / Filter fabric is used; Gravel is layed AND compacted for a base (about 4"); and the backside of the retaining wall (or step area) is back-filled w/gravel on TOP of the fabric for drainage. The fabric allows water to pass through but NOT the dirt. If the dirt gets into the gravel, then the dirt will 'pollute' the gravel AND start collapsing behind the gravel. If this occurs, your wall / steps will be destroyed in quick order. And I DO mean quick order!
You may want to stop by a Stone & Gravel Quarry or at a place that sells Timbers and/or Blocks for steps and walls. Hopefully, they'll have instructions for Do-It-Yourselfers. You can at least read how it's done, then question the Contractor about the 'particulars' BEFORE you sign anything.
My best to ya and hope this helps.
Jay J -Moderator
PS: Any wall that's higher than 4' MUST be 'tied-into' the hill behind it ...